A(n) ________ is the most basic type of trust, which allows a business owner to put up to $1.3 million into trust, naming his spouse as the beneficiary upon his death. The spouse receives the income from the trust throughout her life, but the principal in the trust goes to the couple's heirs, free of estate taxes, upon the spouse's death.
A) grantor-retained annuity trust
B) family limited partnership
C) bypass trust
D) estate freeze

Question

Quizplus · Accepted Answer

The described trust is a bypass trust, which is also known as a credit shelter trust. It is a basic type of trust that allows a business owner to pass up to $1.3 million to his heirs free of estate taxes. The surviving spouse receives the income from the trust throughout her life, but the principal in the trust goes to the couple's heirs upon her death. This type of trust is designed to "bypass" the surviving spouse's estate and maximize the use of both spouses' federal estate tax exemptions.

A(n) ________ Is the Most Basic Type of Trust, Which