The credit trust (sometimes called a residuary by-pass trust, or a "B" trust in a marital A-B trust plan) is a common means of taking advantage of the grantor's exclusion equivalent amount at the grantor's death. Instead of using the unlimited marital deduction, the grantor transfers property equal to the exclusion equivalent amount to the credit trust, then transfers the remaining assets to the surviving spouse. Because the surviving spouse possesses no general power of appointment over this trust, this strategy ultimately reduces the assets subject to estate taxation at the surviving spouse's death.

The value of the credit trust lies in its ability to provide the surviving spouse (and other family members, if desired) with a continuing source of income and limited rights to trust principal during the spouse's lifetime. Additionally, by placing assets in the credit trust, the assets can escape taxation in the estates of both spouses. The assets in the credit trust are part of the taxable estate of the first spouse to die, but are not subject to estate taxation because of the applicable exclusion amount. Since the surviving spouse has limited control over or rights in the credit trust property, it is not includable in the survivor's gross estate and can pass estate-tax-free to the beneficiary.

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