Probate & Trust Law Section Conference Manual ... - Minnesota CLE

standard, but saves the rest for the remainder beneficiaries, usually the children and other
descendants from the marriage. Absent a credit shelter trust, dead spouses who leave
everything to their surviving spouses risk the Fabio Effect (i.e., the surviving spouse meeting
and marrying a new, better lover who then receives the entirety of the estate despite the
furious whirring sound heard at the grave of the first spouse to die).
• Related to the last point, credit shelter trusts usually offer a degree of protection
against the creditors of the surviving spouse that outright bequests to the surviving spouse
would lack.
• Sometimes credit shelter trusts are helpful in providing for the professional
management of assets. The first spouse dies content knowing that the assets will not be
depleted too quickly.
• Credit shelter trusts will still be employed to utilize the generation‐skipping transfer
tax exemption of the first spouse to die. There is no portability of any unused GSTT exemption
to the surviving spouse.
• As explained above, there is a risk that portability may not survive to 2013 or beyond.
Even if the expiration date is extended or removed, there is always the chance the statute could
be amended to make portability less attractive. 30
Steve Akers offers additional reasons for the continued use of credit shelter trusts:
(c) the deceased spousal unused exclusion amount may decrease if the basic
estate exclusion amount is later reduced by Congress (because the DSUE
Amount to be applied at any particular time cannot exceed the basic estate tax
exclusion amount), (d) the unused exclusion from a particular predeceased
spouse will be lost if the surviving spouse remarries and survives his or her next
spouse, … [and] (g) there is no statute of limitations on values for purposes of
determining the unused exclusion amount that begins to run from the time the
first deceased spouse’s estate tax return is filed whereas the statute of
limitations does run on values if a bypass trust is funded at the first spouse’s
death…. 31
30 In fairness, this same risk faces credit shelter trusts—Congress could always change the Code in such a way that
credit shelter trusts became more disadvantageous than the portability election. But we have had credit shelter
trusts for decades and the portability election is the new kid on the block. Which one do you think Congress would
tinker with first? Aren’t rhetorical questions annoying?
31 Steve R. Akers, Estate Planning Current Developments 60 (2011) (copy on file with the author).
31