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Bypass trusts could help avoid estate taxes

It is common for Arkansas residents and those across the country to worry about estate taxes. Though exemptions exist for these taxes, some individuals may need to take specific steps to work toward avoiding these taxes as much as possible. Fortunately, trusts may be able to help.

One way that married couples could work to avoid estate taxes on certain assets is to utilize a bypass trust. This trust actually works by dividing the remaining assets of the estate between two trusts. The first trust is a marital trust, and this trust remains in the possession of the surviving spouse. The marital trust is revocable. The second trust is a family trust, and it is irrevocable. 

The surviving spouse maintains control over the martial trust after his or her spouse passes away. The decedent's portion of assets goes into the family trust. The assets in the family trust are not subjected to federal estate taxes, as long as those assets do not exceed the exemption limit. Additionally, using a bypass trust can help avoid probate proceedings, which can save time and money.

For some, it can be confusing to know which type of estate planning tools to use because there are so many different types of trusts. Luckily, Arkansas residents can make informed decisions by gaining information from reliable resources. It can also be helpful to receive advice about using a bypass trust or another type of trust from a knowledgeable estate planning attorney. This legal professional can help parties weigh the pros and cons and find the right planning tools for each individual.

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