Example 2 – Effective Use Of The "Credit Equivalent" – Without Trusts Here is an example of how the federal estate tax credit equivalent can be "captured" in both estates, without using trusts: In this example both husband and wife have estates of $1,000,000. Instead of leaving the money to the wife, the husband leaves everything to their children on his passing. The wife also leaves everything directly to the children. The federal credit equivalent is completely used in both estates. Result – no federal taxes:  Husband's Estate -- $1,500,000
($1,500,000) no federal taxes due Wife's Estate -- $1,500,000 ($1,500,000) no federal taxes due
Children receive $3,000,000 federal estate tax free Need To Balance Larger Estates So Credit Equivalent Not Lost  In order to be able to utilize effectively the credit equivalent that each person's estate enjoys, it is necessary in constructing the estate plan that a certain amount of "balancing" be done with the assets owned by the husband and wife. In this regard, it is necessary that both husband and wife have in their individual names an amount of money adequate to use up the federal estate tax credit equivalent amount.
Otherwise it would be lost! Back
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