Formula and Disclaimer Bypass Trusts Explained

As you may know, unless Congress acts, as of January 1, 2013 the federal estate tax exemption amount is scheduled to drop from $5.12 million to $1 million, and the maximum tax rate will increase from 35% to 55%. In addition, New York and Connecticut each levy state estate taxes on estates over $1 million and $2 million, respectively.

[Note: This post was written while I was a practicing attorney running a solo law practice. Since April 2015, I have been working with attorney, executive and entrepreneur clients as a career coach and writer, and I am not currently available for legal engagements.]

Formula and disclaimer bypass trusts are irrevocable trusts used by married couples to minimize estate taxes on their combined estates. These credit shelter trusts work by channeling the assets into a trust for beneficiaries, such as the couple’s children or other family members.

Either type of trust may be a useful component of your estate plan, depending on your needs and goals. As with any planning, there are advantages and disadvantages to consider, as discussed below.

For the full memorandum, click on the link: Disclaimer and Bypass Trusts Explained

None of the information posted on this site constitutes legal advice or forms an attorney-client relationship. This is a public forum. Please do not post confidential or fact-specific information regarding your legal questions on this site. Any references to Law Office of Anne Marie Segal in the enclosed are references to my prior law office, now closed.