Exemption Trust

AAA

DEFINITION of 'Exemption Trust'

A trust whose purpose is to drastically reduce or eliminate federal estate taxes for a married couple's estate. This type of estate plan sets up an irrevocable trust that will hold the assets of the first spouse to die.

INVESTOPEDIA EXPLAINS 'Exemption Trust'

The amount will not be taxed for federal estate tax purposes when the second spouse dies.

RELATED TERMS
  1. Irrevocable Trust

    A trust that can't be modified or terminated without the permission ...
  2. Unit Trust - UT

    An unincorporated mutual fund structure that allows funds to ...
  3. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  4. Estate Tax

    A tax levied on an heir's inherited portion of an estate if the ...
  5. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  6. Guarantee Company

    A form of corporation designed to protect members from liability, ...
Related Articles
  1. The Seasons Of An Investor's Life
    Investing Basics

    The Seasons Of An Investor's Life

  2. Deciphering Deferred Annuity Designations
    Options & Futures

    Deciphering Deferred Annuity Designations

  3. Getting Started On Your Estate Plan
    Options & Futures

    Getting Started On Your Estate Plan

  4. Three Documents You Shouldn't Do Without ...
    Options & Futures

    Three Documents You Shouldn't Do Without ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center