Bypass Trusts in Florida
A bypass trust (credit shelter trust) preserves a deceased spouse's federal estate tax exemption by holding assets in an irrevocable trust that provides for the surviving spouse while excluding the assets from their taxable estate.
Structure
Upon the first spouse's death, assets up to the exemption amount fund the bypass trust. The surviving spouse receives income and limited principal distributions (health, education, maintenance, support). Upon the surviving spouse's death, remaining assets pass to designated beneficiaries (typically children) without additional estate tax.
Modern Relevance
Since portability (2011), bypass trusts are less essential for pure estate tax planning. However, they remain valuable for asset protection (shielding trust assets from the surviving spouse's creditors), ensuring assets reach the first spouse's intended beneficiaries in blended families, and generation-skipping transfer tax planning.
Related Terms
- Irrevocable Trust
- Revocable Trust
- Estate Tax
Barnes Walker Estate Planning
Barnes Walker designs trust-based estate plans for Florida families. Contact us for estate planning guidance.
Florida Law Reference
Fla. Stat. Ch. 736 (Florida Trust Code)
The Florida Trust Code governs the creation, modification, and administration of trusts, including trustee duties, beneficiary rights, and trust termination.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC