Frequently asked questions regarding marital trusts in Virginia

On Behalf of | Jun 27, 2024 | Trusts |

Marital trusts can be a valuable tool for estate planning, helping to manage and distribute assets effectively. These trusts offer a way to ensure your spouse gets taken care of while potentially reducing tax burdens.

What is a marital trust?

A marital trust, also known as an “A” trust, provides for the surviving spouse after the other spouse passes away. This type of trust holds assets for the surviving spouse’s benefit during their lifetime. Upon their death, the remaining assets typically go to other beneficiaries, like children.

What are the different types of marital trusts?

There are different types of marital trusts, each serving distinct purposes. The most common include the Qualified Terminable Interest Property (QTIP) trust. It allows the surviving spouse to receive income from the trust while maintaining control over the principal. Another type is the marital deduction trust, which defers estate taxes until the surviving spouse’s death.

What are the benefits of marital trusts?

Marital trusts offer several advantages. First and foremost, they provide financial security for the surviving spouse. They can help in managing complex family dynamics, such as children from previous marriages. Additionally, they offer tax benefits by taking advantage of the marital deduction, potentially reducing estate taxes.

How do you create a marital trust?

Creating a marital trust involves drafting a legal document that outlines the terms and conditions of the trust. It’s important to clearly state who the beneficiaries are, how the assets will be managed, and any specific instructions for the trustee. 

How do marital trusts affect taxes?

Marital trusts offer significant tax advantages. By utilizing the marital deduction, these trusts can defer estate taxes until the death of the surviving spouse. This deferral can be a strategic way to manage the overall tax burden on the estate.

Ensuring your family’s future

Choosing a marital trust can safeguard your family’s financial stability and honor your long-term wishes. With careful planning, you can provide lasting benefits and peace of mind for your loved ones.