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 diverse solo law practice, and it is one of a small number of “legacy posts” that I have retained on the site. When published, this was one of my most popular posts. Since April 2015, I have been working as an executive 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. Please seek legal counsel for any trust-related matters and do not assume that the information here is maintained on a current basis or applicable to your individual situation.

Author: Anne Marie Segal

ABOUT ANNE MARIE SEGAL Anne Marie Segal, founder of Segal Coaching LLC, is a career and leadership coach, author and resume writer who guides attorneys, executives and entrepreneurs through career transitions, advancement, job interview preparation, leadership development and personal branding. A former finance and hedge fund attorney, Anne Marie has presented to the United Nations (ICTY/MICT), University of Chicago, United Way, Association of Corporate Counsel and National Resume Writers Association, among other organizations. She has published two career-related books: Master the Interview: A Guide for Working Professionals and Know Yourself, Grow Your Career: The Value Proposition Workbook, written on career and resume topics as a Forbes Coaches Council member at and been quoted on, and other media outlets. You can learn more at or visit her LinkedIn profile at

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