Exemption Trust


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.

BREAKING DOWN 'Exemption Trust'

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

  1. Irrevocable Trust

    A trust that can't be modified or terminated without the permission ...
  2. Exempt Income

    Certain types or amounts of income not subject to federal income ...
  3. Trust

    A fiduciary relationship in which one party, known as a trustor, ...
  4. Unit Trust - UT

    An unincorporated mutual fund structure that allows funds to ...
  5. Estate Tax

    A tax levied on an heir's inherited portion of an estate if the ...
  6. Letter of Intent - LOI

    A document outlining the terms of an agreement before it is finalized. ...
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  1. Do financial advisors prepare tax returns for clients?

    Financial advisors engage in a wide variety of financial areas, including tax return preparation and tax planning for their ... Read Full Answer >>
  2. Can I put my IRA in a trust?

    You cannot put your IRA in a trust while you are living. You can, however, name a trust as the beneficiary of your IRA and ... Read Full Answer >>
  3. How is cost basis calculated on an inherited asset?

    Typically, the cost basis on inherited assets is the fair market value as of the time of the decedent's death or actual transfer ... Read Full Answer >>
  4. How does the trust maker transfer funds into a revocable trust?

    Once a revocable trust is created, a trust maker transfers funds or property into the trust by including them in a list with ... Read Full Answer >>
  5. What is the difference between comprehensive income and gross income?

    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
  6. What is the difference between a revocable trust and a living trust?

    A revocable trust and living trust are separate terms that describe the same thing: a trust in which the terms can be changed ... Read Full Answer >>

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