Supercharged Credit Shelter Trust

MitchellM. Gans, JonathanG. Blattmachr, and Diana S. C. Zeydelhave published their article, Supercharged Credit Shelter Trust, in the July/August2007 issue of Probate and Property.

Here are their summaries and conclusions:

Given the additional wealth theSupercharged Credit Shelter Trust provides for descendants, as compared to theamount of wealth provided under a conventional credit shelter trust, itprobably should be considered in all cases in which the spouses have sufficientnet worth. Although the reciprocal trust doctrine may be perceived as posing athreat to the viability of the strategy, with proper drafting it does notcreate any additional estate or gift tax risk, it poses no downside risk forincome tax purposes, but, most important, the application of the doctrine maybe effectively avoided by varying the timing and provisions of the twotrusts. Thus, the strategy provides asound means significantly to enhance the effectiveness of the federal estatetax exemption of the spouse dying first and, through reverse QTIP elections foreach lifetime QTIP truest at the time each is created, the GST exemptions ofboth spouses.