N—Trust Will

A will creating a trust can provide for the continued management of estate assets for a surviving spouse and assure that the estate will eventually pass to children upon the death of the surviving spouse. With large estates a trust can freeze the value of property during the surviving spouse’s lifetime so that future appreciation will not be subject to federal estate taxes upon the surviving spouse’s death.

UPON THE FIRST DEATH, with the typical trust will, the estate is divided into two parts, with one part placed in a family or nonmarital trust (“B” trust in the chart). No taxes are paid on this since the amount is equal to or less than the applicable exclusion amount (i.e., the amount that each individual can pass tax-free to the next generation).