Which trust is created in the will into which assets from the first spouse to die are placed, thereby sheltering those assets from estate tax?

• A. Credit Shelter Trust
• B. Portable
• C. Unlimited Marital Deduction
• D. Tax-Wise Will

Answer: (A)

Credit shelter trust, also known as a bypass trust, is created in the will at the first spouse’s death. The trust is funded with assets up to the deceased spouse’s unused estate tax exemption. By placing those assets into the trust, they are kept out of the surviving spouse’s taxable estate, so they aren’t subject to estate tax when the survivor dies. The surviving spouse can receive income (and sometimes principal) from the trust during their lifetime, but the trust assets ultimately pass to the chosen beneficiaries (often the children) with the benefit of the deceased spouse’s exemption, reducing or eliminating estate tax on those assets. Portable would simply use the unused exemption for the surviving spouse without a separate trust, unlimited marital deduction shifts assets to the spouse but doesn’t create the sheltering mechanism, and a tax‑wise will is a general tax-minimization approach rather than a specific shelter trust.