Ohio National Financial Services, Estate Planning

The credit trust is generally created with three prime objectives in mind:

Making use of the available applicable exclusion amount in the estate of the first spouse to die.

Avoiding the inclusion of trust assets in the estate of the surviving spouse on his or her death.

Meeting the current and long-term needs of intended beneficiaries.

The credit trust has great freedom and flexibility, particularly when contrasted to the fixed requirements of a QTIP trust (reviewed shortly). The trustee may be authorized to accumulate income, and use it for specific purposes spelled out in the trust. Typically, the credit trust will pay the surviving spouse income for life and permit use of the principal for the survivor's defined and ascertainable needs.

In addition to being entitled to income for life, the life beneficiary of a credit trust, typically the surviving spouse, may also be entitled to part of the principal. There are two different rules governing the surviving spouse's ability to invade the principal, namely an ascertainable standard and the five-and-five power.

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