Tennessee Complex Will - Max. Credit Shelter Marital Trust to Children
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FAQ
Upon the death of the surviving spouse, the trust transfers to the heirs, who are exempt from the estate tax that would have resulted from a combined inheritance. Disadvantages of a CST include formation costs and the surviving spouse's lack of control.
Five by Five Power ? The ability for the beneficiary to take the greater of $5000 or 5% of the trust each calendar year; a 5% version of the Lifetime General Power. Some access translates to 5% of the income being taxable to the beneficiary, and 5% being included in the power holder's estate.
A 5 by 5 Power in Trust is a clause that lets the beneficiary make withdrawals from the trust on a yearly basis. The beneficiary can cash out $5,000 or 5% of the trust's fair market value each year, whichever is a higher amount.
Credit Shelter Trust vs Marital Trust - Is a Marital Trust the Same as a Credit Shelter Trust? No. A Marital Trust is a type of Credit Shelter Trust. You and your spouse can use a Marital Trust to pass assets to a surviving spouse, children or grandchildren.
The 5&5 Power allows the surviving spouse to request the greater of $5,000.00 and 5% of the trust principal every year to be used in any manner of the surviving spouse's choosing. The beauty of the Disclaimer Trust is that it is flexible.
This trust is irrevocable and will pass to beneficiaries other than the surviving spouse (usually their children). The surviving spouse must follow the trust's plan without overly benefiting from its operation, but this trust often passes income to the surviving spouse to live on for the rest of their life.
Key Takeaways. A 5 by 5 Power in Trust is a clause that lets the beneficiary make withdrawals from the trust on a yearly basis. The beneficiary can cash out $5,000 or 5% of the trust's fair market value each year, whichever is a higher amount.
