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The Continued Viability of Using Bypass Trusts After the American Taxpayer Relief Act of 2012

ATRA’s taxpayer benefits add—complexity and pitfalls—to estate planning

THIS ARTICLE will look at the benefits of continuing to use a bypass trust as part of a married couple’s estate plan after the passage of The America Taxpayer Relief Act of 2012 (“Act”). As part of the Act, Congress created portability of the estate tax exemption between spouses with the intention of simplifying the estate planning process for married couples by eliminating the need for a bypass trust. There are many reasons, however, both tax and non-tax, to continue to use a bypass trust in a married couple’s estate plan, as well as certain disadvantages. The portability analysis, therefore, has simply added another layer of complexity to the estate planning process.

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