By-Pass Trust

A By-Pass Trust (also referred to as a Credit Shelter Trust or Family Trust) is established by a will or revocable living trust. Each individual may use the applicable credit to transfer a specific amount of assets, either during lifetime or at death, free of federal estate and gift taxes. Depending on the applicable credit amount, the By-Pass Trust allows an individual to transfer assets in the trust for the benefit of the surviving spouse and/or other beneficiaries while "sheltering" the assets from taxation.