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

• The principal assets of the deceased spouse’s estate are those for which a credit
shelter trust is suboptimal, like a retirement plan and/or a personal residence.
• One expects the surviving spouse to make one or more substantial gifts after the
death of the first spouse, such that the added DSUE Amount will be helpful in allowing
the surviving spouse to avoid the imposition of gift tax liability.
• The surviving spouse is more likely to be spending down assets instead of
accumulating more wealth.
In other cases, of course, the credit shelter trust may be the preferred option:
* The surviving spouse is more likely to accumulate wealth than to spend down the
assets.
* Regardless of the surviving spouse’s expected consumption, the clients expect
substantial appreciation in the value of the assets between the deaths of the first
spouse and the surviving spouse.
* The deceased spouse wants to direct where assets will pass after the surviving
spouse’s death.
* There is a concern that the surviving spouse could be subject to undue influence.
* A credit shelter trust may be necessary for state estate tax purposes.
In many cases, clients will want to enact a plan that offers the surviving spouse and the
executor 11 the opportunity to choose the best option (credit shelter trust or portability
election) following the death of the first spouse, as this gives them flexibility to make the best
decision at the proper time. A flexible plan might contemplate a disclaimer whereby the
surviving spouse can disclaim assets to a credit shelter trust. Alternatively, assets can be left to
a “Clayton QTIP” whereby everything nominally passes to a trust for which a QTIP election can
be made, with any non‐elected assets pouring over into a standard credit shelter trust.
COUPLES WITH ESTATES ABOVE $10.5 MILLION
Little changes for the clients in this category, as the full quiver of planning strategies
remains viable. As before, these clients will want to consider leveraged transfers in order to
shift a substantial amount of wealth (and subsequent appreciation) out of the couple’s estates.
Almost all couples in this category will want to employ two strategies as part of their plan.
11 Assuming the surviving spouse is not the executor, of course.
12