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.

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RELATED FAQS
  1. How can a trust lower federal transfer tax liability?

    A trust is an arrangement in which an individual or entity controls property or funds on behalf of someone else without actually ... Read Answer >>
  2. What percentage of withdrawals from a trust fund is taxed?

    I have an inherited a trust fund. This is the first time I have considered pulling money from the account.  ... Read Answer >>
  3. Are life insurance trust proceeds taxable?

    I am due 1/3 of a $1 million irrevocable trust from my mom. I want to close out the trust and wonder what taxes may be involved ... Read Answer >>
  4. What is the difference between revocable and irrevocable intervivos trusts?

    Learn what an inter-vivos trust is, the difference between an irrevocable and a revocable inter-vivos trust, and why it is ... Read Answer >>
  5. What is the difference between a revocable trust and a living trust?

    Learn how a revocable trust and living trust are two terms used to describe the same thing and what the key provisions are ... Read Answer >>
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