Can a trust have a Subtrust?
Regardless of the attributes of the instrument creating the trust, different sub-trusts may be created under the trust. If the assets start in the Will, the Will could name the revocable trust as the beneficiary, this is a “pourover” Will.
What does a trustee do for a sub trust?
As trustee, you may have to determine which assets should be placed into a credit shelter sub-trust and follow through with funding the sub-trusts with those assets. Funding the Sub-trusts may be used to protect trust assets from creditors or during divorce or bankruptcy proceedings of one or more beneficiaries.
How are bypass trusts taxed?
A bypass trust’s undistributed income (not distributed out to beneficiaries) is taxed at compressed trust income tax rates which subject any undistributed income over $12,750 (2021) to be subject to the top marginal income tax rate of 37% and potentially subject to the additional 3.8% Medicare surtax on net investment …
Can a trust be split on a first death?
The short answer: if your combined estate is well under the $5.43 million threshold for estate taxes (in 2015), there is probably no tax reason for splitting the trust on the first death. If your combined estate is less than two times that figure, the answer is probably the same.
Can a trust be separated from a survivor’s Trust?
But when the process is completed — however you and the financial institution get there — the Decedent’s Trust should be physically separated from the Survivor’s Trust, it will have its own EIN, and it will need to file tax returns.
When to split a trust into two shares?
Here are some circumstances in which you might still want to split your trust — not necessarily in half, but into two shares — on the first spouse’s death: You might worry about what will happen with the surviving spouse after one spouse dies. Will he or she remarry? Become infirm and susceptible to influence from people outside the family?
Can a sub trust be named in a will?
Regardless of the attributes of the instrument creating the trust, different sub-trusts may be created under the trust. If the assets start in the Will, the Will could name the revocable trust as the beneficiary, this is a “pourover” Will.
Can a trust be split when the first spouse dies?
With the new law, not only is the split unnecessary, but it also complicates administration of an estate. The simple solution is to amend the trust so that upon the death of the first spouse to die, the trust continues intact, without division, for the sole benefit of the surviving spouse.
But when the process is completed — however you and the financial institution get there — the Decedent’s Trust should be physically separated from the Survivor’s Trust, it will have its own EIN, and it will need to file tax returns.
Can a Surivor trust share be transferred into a new account?
If you long for clarity, we would certainly support a transfer of the Surivor’s Trust share into a new account, titled as part of that sub-trust, and bearing the wife’s Social Security number — even if it is not required. Recall, please, that there are lots of variations on this basic scenario.