Funding Bypass Trusts with Retirement Assets
Probate and Property, May/June 2004, Volume 18, Number 3
By Christopher R. Hoyt
Christopher R. Hoyt is a professor of law at the University of Missouri– Kansas City School of Law and chair of the D-1 Lifetime & Testamentary Charitable Gift Planning Committee.
Estate planners often find that to fund a married decedent’s maximum credit shelter amount to a bypass trust (aka credit shelter trust or nonmarital trust), it is necessary to use some retirement assets. The situation will occur even more frequently with the increase in the credit shelter thresholds from $1 million in 2003 to $1.5 million in 2004 and to $2 million in 2006. Although it is generally preferable to fund these trusts with nonretirement assets, many individuals simply do not have this amount of wealth outside their retirement plans.