Knowing the requirements of an exempt trust can be beneficial

Learning what an exempt trust can do for you in Florida may be beneficial if you are married and want to save as much money as possible on estate taxes. Using this type of trust allows your assets to be held by a surviving spouse.

What are the requirements for an exempt trust?

Utilizing an exempt trust when you’re planning your estate allows you to bypass federal taxation. However, using one can only be completed when you satisfy the appropriate legal requirements, which include the following:

– All assets in the exempt trust must be held in the name of the trust.
– Neither the trustee nor the trustor can cancel the trust.
– Neither the trustee nor the trustor can amend the trust or change the beneficiaries.

How an exempt trust works

When you or your spouse dies under an exempt trust, your assets will be transferred to the surviving spouse and are exempt from federal estate tax. These assets will remain in the trust and are not part of the estate of the spouse who has died.

If you’re the surviving spouse, the IRS will tax your estate when you die if the value exceeds your personal federal estate tax exemption. In addition, the assets placed in the exempt trust are not included in the estate. After you die, the assets in the trust remain in the trust or are transferred to your beneficiaries, depending on the terms of the trust.

Tax advantages of an exempt trust

Having your assets in an exempt trust can make them exempt from federal estate tax. If you have a large estate, using an exempt trust can reduce the risk of not meeting the criteria required to enjoy federal estate tax exemption.

Knowing the nuances of an exempt trust and how it works may be beneficial for your whole family. It may let you pass on more of your wealth to your heirs.

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