Can a trust reduce estate taxes?
A. A trust can eliminate estate taxes on certain assets and defer estate taxes on others. For example, in a “credit shelter” or “bypass” trust, one spouse can leave property to the other in trust for life, and then to children or others. This property passes completely free of tax and can potentially save hundreds of thousands of dollars in estate taxes. Another type of trust is a “Qualified Terminable Interest Property” or “QTIP” trust. In this type of trust, assets are passed in trust from one spouse to the other free of tax. Taxes are deferred until the death of the second spouse.
