Credit Shelter Trust

A credit shelter trust, also known as a bypass trust or a family trust, is a type of trust designed to avoid estate tax on the trust’s assets upon the second death. The basic idea behind a credit shelter trust is to make full use of the estate and gift tax exemption upon the first spouse’s death. 

Through the use of the estate and gift tax exemption, the credit shelter trust essentially “shelters” the assets in the trust (and their future appreciation) from being included in the estate of the surviving spouse.

Learn more about credit shelter trusts, how they work, and their pros and cons here.