Recipient types and associated estate tax treatment

Luminary calculates estimated estate taxes based on the recipient type selected

Surviving spouse (credit shelter)

• Common uses include funding a federal & state exempt Bypass Trust, Family Trust, or Credit Share Trust

• Should only be transferred to entities outside of the surviving spouse's estate

• Uses the decedent spouse's federal, state, and GST exemptions

• Will not be taxable at the decedent spouse's death, unless an amount greater than the decedent's remaining lifetime exemptions (federal and state) is transferred

Surviving spouse (credit shelter, marital exclusion - state)

• Common uses include funding a federal exempt, but state taxable trust

• Should only be transferred to entities outside of the surviving spouse's federal estate, but in their state-level estate

• Uses the decedent spouse's federal & GST exemption, but does not use the state level exemption

• Will not be taxable at the decedent spouse's death, unless an amount greater than the decedent's remaining lifetime exemption is transferred

Surviving spouse (marital exclusion - federal and state)

• Common uses include funding a Marital Trust, an inherited IRA, or transferring property outright to the surviving spouse

• Should only be transferred to entities in the surviving spouse's estate

• Does not use the decedent spouse's federal and state estate tax exemption

• Non-taxable at the death of the first spouse

Generation 2 or other individual

• Common uses include transferring assets directly to children, to siblings, or to non-related individuals that are at least 37.5 years older than the decedent

• Any amount over the remaining estate tax exemption will be subject to estate tax at death of the grantor

• Uses the decedent's estate tax exemption

Generation 2, then Generation 3

• Common uses include funding a trust that lists both children and grandchildren as beneficiaries

• Any amount over the remaining estate tax exemption will be subject to estate tax at death of the grantor

• Uses the decedent's estate tax and GST exemptions

• Any amount over the remaining GST exemption will be GST taxable at the death of the second generation

Generation 3

• Common uses include transferring assets directly to grandchildren, a trust that only benefits G3, or to non-related individuals that are at least 37.5 years younger than the decedent

• Any amount over the remaining GST exemption will be subject to estate & GST tax at death of the grantor

• Uses the decedent's lifetime and GST exemption

Charitable

• Common uses include charitable donations, or funding charitable trusts

• Non-taxable