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

This legal template is a letter intended to be sent to a client who is a married individual residing in New York, USA. The purpose of the letter is to provide drafts of wills that incorporate two specific types of trusts: Credit Shelter Trust and Qualified Terminable Interest Property (QTIP) Trust. The primary aim of these trusts is to minimize the potential impact of the Generation-Skipping Transfer (GST) tax on the client's estate.

A Credit Shelter Trust, also known as a bypass or family trust, is designed to maximize the use of the estate tax exemption for both spouses. By placing a portion of the assets into this trust upon the death of the first spouse, those assets can be excluded from the surviving spouse's estate, thus reducing potential estate tax liability.

A Qualified Terminable Interest Property (QTIP) Trust, on the other hand, allows the client to provide for the surviving spouse while still maintaining control over the ultimate distribution of assets. This trust ensures that the surviving spouse will have access to income generated by the trust assets during their lifetime. However, upon the surviving spouse's death, the remaining assets will pass according to the client's specified beneficiaries, providing them with the intended inheritance.

Additionally, the letter emphasizes the importance of GST tax planning, which is crucial in reducing or eliminating taxes on the transfer of wealth to future generations, such as grandchildren or great-grandchildren. This planning strategy helps ensure that the client's assets can be passed down to the intended beneficiaries with minimal tax consequences.

It is important to note that this legal template is specific to the laws and regulations governing estate planning in New York, USA, and may not be applicable or suitable for use in other jurisdictions.