Miscellaneous
GST Credit Shelter Trust
Say you have a couple with $32 million dollars divided between their two trusts, when the Illinois state estate tax exemption is $4 million and the federal exemptions are $13 million. They want to leave income to each other, then as much as possible tax-free their grandkids, then the remainder to their children. Assume he then dies. Three trusts are needed:
Then outright to kids
Marital Trust
Above all exemptions
Uses marital deduction for his death and subjects it to estate taxes on both her and the kids' deaths
Then income to kids
Then outright to grandkids
Reverse QTIP Trust
Wholly subject to IL estate tax
Pays no other taxes
Uses marital deduction
Uses her federal estate tax exemption (with $9 million of his added on)
Requires reverse QTIP election on his Form 706
Uses his GST tax exemption
Then income to kids
Then outright to grandkids
Family Trust
Does not use marital deduction
Uses all three of his exemptions.
Subject to no tax