You may know that estate planning can help secure your family’s future, but what can married couples do to protect the assets they have acquired?
A bypass trust can be a powerful tool for spouses. Designed to minimize estate taxes and help people pass on assets efficiently, they offer a structured way to protect wealth and provide for the surviving spouse. Knowing how they work can help couples make wise estate planning decisions.
More about bypass trusts
Also known as credit shelter and AB trusts, they are legal arrangements that allow married couples to reduce estate taxes when one spouse passes away. Assets placed in the trust are shielded from taxation, ensuring that more wealth is preserved for heirs.
Benefits for Oregon couples
Oregon has its own estate tax, separate from the federal estate tax, which can impact high-net-worth families. A bypass trust can help mitigate taxes by allowing assets to transfer to heirs without being counted in the surviving spouse’s taxable estate.
How it works
When the first spouse dies, assets are split between a marital trust and a bypass trust. The surviving spouse can access income from the bypass trust but does not own the assets outright. This prevents the assets from being taxed upon their passing.
Setting up a bypass trust
Working with a legal professional is essential to help ensure compliance with Oregon laws while maximizing the potential tax benefits. Proper structuring helps safeguard assets and provide financial flexibility for the surviving spouse.
As you can see, a bypass trust can offer a strategic way to protect wealth and provide for future generations. Understanding their mechanics and benefits can help you make informed estate planning decisions.