Letter to Client: Drafts of Wills with Credit Shelter and QTIP Trusts with GST Tax Planning for Married Individual (Florida)

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About this template
This legal template is a letter addressed to a specific client regarding the preparation of their wills within the context of USA law, specifically in the state of Florida. The letter informs the client that drafts of wills have been prepared, incorporating two specific types of trust arrangements: Credit Shelter Trusts and QTIP (Qualified Terminable Interest Property) Trusts. Both of these trusts serve different purposes in estate planning and are tailored to the client's marital situation.

The Credit Shelter Trust (also known as a bypass or A/B trust) aims to maximize the use of federal estate tax exemptions available to married individuals. It allows the client to allocate a portion of their assets into this trust, which will subsequently pass to their beneficiaries (often children) upon their death, while minimizing the potential estate tax liability.

On the other hand, the QTIP Trust is employed when one spouse wishes to provide for their surviving spouse while maintaining control over the ultimate distribution of assets. This trust allows the spouse to receive income generated by the trust during their lifetime or for a specific period. Upon the surviving spouse's death, the remaining trust assets pass to other designated beneficiaries, usually children or grandchildren.

Moreover, the letter emphasizes that these trust arrangements also consider Generation-Skipping Transfer (GST) tax planning. GST tax is imposed on transfers made to individuals at least two generations below the transferor (e.g., grandchildren). By incorporating GST tax planning into the wills, the client can potentially reduce or eliminate any additional tax burdens that may arise when transferring assets down multiple generations.

It is worth noting that the information provided regarding each trust within the letter will largely depend on the specific details and requirements of the individual client. The purpose of this template is to inform the client about the initial drafts of their wills, highlighting the use of Credit Shelter and QTIP trusts, and emphasizing the incorporation of GST tax planning in their overall estate plan.
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