Credit Shelter / Bypass Trust
Using the estate tax exemption at the first death while preserving access for the surviving spouse.
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Overview & Purpose
A trust funded at the first spouse's death with assets up to the estate tax exemption amount, sheltering them from tax at the second death while allowing the surviving spouse beneficial access.
Who May Consider It
- Your combined estate exceeds the estate tax exemption and portability is not sufficient for your plan.
- You want to use the first spouse's exemption while keeping assets available to the survivor.
- Shelters the first spouse's exemption amount from estate tax at the second death.
- Can provide income and principal access to the surviving spouse under trust terms.
- With high portability, the need for a bypass trust is reduced for many estates.
- Does NOT eliminate tax on growth above the funded exemption amount.
Important Trade-offs
- Portability elections may make bypass trusts unnecessary for some estates; discuss with an attorney.
Relevant Assets
Federal estate tax exemption and portability rules apply.
Questions to Discuss with an Attorney
- Given current exemption levels and portability, does our estate still benefit from a bypass trust?
Related Documents
Sources & References
This article was prepared using publicly available legal and government sources. Laws change, and readers should verify current rules in their jurisdiction.
Reviewed for educational accuracy
Last reviewed: September 30, 2026 · Next scheduled review: March 2027
This article is educational information and is not legal advice. Laws vary by jurisdiction. No attorney has reviewed this material unless a named, licensed attorney is credited above.
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