Is a Credit Shelter Trust for Me?

When Michigan residents are considering how to protect their assets following death, they often consider a variety of trusts. One such trust is a credit shelter trust. This trust is not for everyone, but in some situations, it can be quite beneficial.

For couples interested in taking full advantage of estate tax exemptions, the credit shelter trust may be useful. It can save a couple over one million dollars in estate taxes. Plus, the trust remains completely flexible and revocable throughout the grantors’ lifetimes. They are free to revoke a credit shelter trust or change any of the trust provisions whenever they choose.

For a surviving spouse with a credit shelter trust in place, the benefits are many. The surviving spouse can withdraw the greater of five percent or $5,000 of the trust principal each year, as well as receive income from the trust. The surviving grantor also can direct the investment of trust assets, designate certain property to pass to certain individuals, replace and/or remove trustees, and remove trust assets to use for maintenance or education.

With recent tax cuts, however, estate tax may no longer be an issue for most households. In fact, only one percent of American households are even subject to the estate tax at this point. As a result, a credit shelter trust may no longer be necessary, depending on a couple’s circumstances. Instead, couples may realize more cost savings by focusing their estate plan on lowering their income tax, rather than estate taxes that no longer affect them.

Legacy Law Center consists of Michigan estate planning lawyers who have extensive knowledge and experience in creating all types of estate plans, including those that contain credit shelter trusts. We are devoted to advocating for your interests and helping you protect your family’s financial future. A comprehensive estate plan is a necessity for all individuals, and we are here to guide you through the often complex process of creating such a plan. Contact our Ann Arbor office for an appointment with our estate planning attorneys and learn how you can best protect yourself and your family.