F—Credit Shelter Trust and Marital Trust
The unlimited marital deduction is superficially attractive. The wealthier spouse doesn't have to worry about estate tax erosion of assets transferred to a surviving, less wealthy spouse. But what about the second death? If everything is left to the surviving spouse at the first death, the survivor will have no unlimited marital deduction to use at the second death (absent remarriage). The unified credit may be sufficient in some cases to shelter the estate, but not always. Therefore, affluent families benefit from the split-estate (A-B Trust) concept in marital deduction planning.
While the marital deduction provides a tremendous tax benefit at the first death, it largely postpones the estate tax on the qualified property until the second spouse dies. Since every client is anxious to conserve as much of the estate as possible for succeeding generations, proper estate planning considers the effects of the combined estate tax on both spouses' estates and takes steps to keep death taxes at a minimum in the survivor's estate as well as at the first death.