Revocable Trust for Married Individual: Credit Shelter and QTIP Trusts with GST Tax Planning (Pennsylvania)

This legal template refers to a Revocable Trust designed specifically for a married individual residing in Pennsylvania. The trust includes provisions for both a Credit Shelter Trust and a Qualified Terminable Interest Property (QTIP) Trust, both of which are commonly used in estate planning to minimize taxes and protect assets.

The Credit Shelter Trust, also known as a bypass or family trust, allows the grantor (the person creating the trust) to leave a portion of their estate to their beneficiaries free of estate tax. This trust ensures that the amount gifted to beneficiaries is exempt from federal and state estate taxes, ultimately reducing the overall tax liability.

On the other hand, the QTIP Trust is established to provide the surviving spouse with income while preserving the principal for the grantor's chosen beneficiaries, typically the couple's children. This trust ensures that the surviving spouse receives income from the trust assets while also maintaining control over the ultimate distribution of the assets. It is important to note that the assets in the QTIP Trust are subject to estate tax upon the surviving spouse's death.

GST (Generation-Skipping Transfer) tax planning is also incorporated into this legal template. GST tax is applied when assets are transferred to individuals who are more than one generation younger than the grantor. By implementing GST tax planning, the grantor can minimize tax liabilities and potentially transfer wealth directly to grandchildren or future generations with reduced tax consequences.

Overall, this legal template provides a comprehensive framework for married individuals in Pennsylvania to establish a Revocable Trust that incorporates the benefits of both a Credit Shelter Trust and a QTIP Trust, while also considering GST tax planning strategies. It empowers individuals to structure their assets in a way that minimizes tax liabilities and ensures the efficient transfer of wealth to their chosen beneficiaries.