Utility indeed, especially with added flexibility of the Clayton election and other precautionary provisions.
Many of our married clients have structured their estate plans to apply the federal estate tax exclusion amount to create a trust for the benefit of their surviving spouse and children or other heirs. This is generally called a bypass trust, sometimes known as a credit shelter trust, an exemption equivalent trust or a trust of the applicable exclusion amount. Its basic purpose is to create a fund for the benefit of the decedent’s surviving spouse and, in certain instances, children or other heirs. The Trust would generally last for the lifetime of the surviving spouse but not be part of his or her estate for estate tax purposes, thereby optimizing the amount of assets passing to the next generation. Some would conclude that bypass trusts no longer have a purpose, thanks both to the availability of portability and to a 2017 federal estate tax exemption amount of $5.49 million per person, or nearly $11 million for a couple. In light of this, some people prefer to leave all of their assets to their surviving spouse outright and free of trust. But as we shall discuss, a bypass trust may still have utility.
Source: How do recent updates to estate tax laws impact your future? | Dentons – JDSupra