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

2) The surviving spouse must not benefit from any of the disclaimed assets prior
to disclaiming them.
3) It is essential to carefully follow the requirements of I.R.C. § 2518 or the
exemption amount may be lost.
g. Notes: This plan will allow for a credit shelter trust, which may never be funded. The
share to the spouse does not necessarily have to be outright.
4. Optimum marital planning.
a. Although there are several ways to implement this plan, as discussed further below,
the basic concept is to shelter from estate tax the maximum amount which is available to pass
estate tax free in the estate of the first spouse to die. Most commonly this is accomplished by
funding a credit shelter trust, whereby the surviving spouse can still have access to the assets
for health, education, maintenance and support.
b. When to use: Consider this plan when estate tax planning is necessary.
c. Funding methods: Typical funding methods include using any of the following:
1) The marital deduction pecuniary amount,
2) The credit shelter pecuniary amount, or
3) Fractionally dividing the residuary estate into the credit shelter and the marital
deduction shares.
d. Details on Funding Methods:
1) Pecuniary amount: An amount which remains constant throughout
administration. Usually, in optimum marital planning, this amount is determined by a
formula.
a) Marital deduction pecuniary amount: The amount which remains
constant is that of the marital share. In other words, this funding method uses
a formula to define the marital share as a specific amount, which will not
fluctuate before distribution.
(i)
Examples:
(a) If my spouse shall survive me, “my Executor shall
distribute to my spouse, an amount from the assets
composing my estate equal to the minimum amount
necessary to reduce the federal estate tax payable as a result
of my death to the least amount possible, assuming for
purposes of determining such minimum amount that such
minimum amount qualifies for the marital deduction
allowable in computing such tax, taking into account my gifts
(including gifts treated as made by me) and all deductions,
exclusions and reductions in value allowed in computing such
tax, and using allowable credits against such tax only to the
extent that such use does not increase any estate tax payable
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