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Don’t Use a Bypass Trust

My last post was really long. Here is the quick summary.

  • The American Taxpayer Relief Act raised the estate and gift tax exemption amount to $5,250,000, indexed for inflation.
  • Most or you will now not have to pay estate taxes, so you won’t need a mandatory bypass trust in your living trust.
  • Better to leave your assets to your spouse in a QTIP trust or outright. That way you will save your family capital gains and income taxes.

For almost all of you there will be no need to do planning to reduce your estate tax. Congress has done that for you. Instead, do planning to reduce your capital gains and income tax.

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