The Credit Shelter Trust

As Managing Director/Investments of Stifel’s New York branch, Chuck Roberts serves high net worth and ultra-high net worth clients. Chuck Roberts works closely with his clients’ lawyers to incorporate credit shelter trusts (CSTs) into their current trust agreements in an effort to limit estate taxes when a client’s surviving spouse passes away.

As of 2016 in the United States, an estate valued at less than $5.45 million is not subject to federal taxation after the estate holder’s death. This maximum effectively doubles when a person is married, as one spouse can choose to use the other’s exemption if that person did not use it prior to passing.

However, if the surviving spouse’s estate exceeds the combined exemption, then that estate would owe taxes on any amount over the applicable threshold. The CST serves to preserve the wealth of these individuals so that the exemption of the first spouse to pass away is not forfeited when the surviving spouse ultimately passes.

A CST allows the couple to place the amount over the exemption into a special trust so that the amount below the limit can transfer directly to the surviving spouse. The trust creator may then specify his or her spouse as the trustee so that he or she has access to the funds without making them a part of his or her estate. When the surviving spouse dies, children or other specified heirs become the beneficiaries and receive the funds tax free.

Investing involves risk, including the possible loss of principal invested.

Stifel, Nicolaus & Company, Incorporated | Member SIPC & NYSE

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New York, NY 10036

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