Page 73 - BusinessWest April 27, 2026

How It Works
Upon the passing of the first spouse to die, a sub-
trust will hold the $2 million exemption amount for
Massachusetts purposes. With respect to the assets
held in this trust, the income (money earned on trust
assets) would automatically be distributed to the sur-
viving spouse.
The surviving spouse may also be given an annual
‘5 and 5’ power that allows them to demand a distri-
bution of 5% of the principal or $5,000, whichever
is greater. In addition, should the surviving spouse
require more monies to live in the manner they were
accustomed to living when their spouse was alive,
principal (trust assets) may be distributed at the trust-
ee’s discretion.
A second subtrust, for Massachusetts purposes,
will include the remainder of the estate, meaning any
assets over and above $2 million. This trust will also
provide the surviving spouse with all income and with
principal distributed at the trustee’s discretion — and,
again, the surviving spouse may be given the option
to exercise a ‘5 and 5’ power as described above.
When the second spouse passes away, any mon-
ies in the first subtrust ($2 million), as well as any
growth, will not be taxed in their estate. Thus, the
trust has made these monies available to the surviv-
ing spouse for their needs without giving that spouse
the direct ownership that would cause inclusion in
their estate for estate tax purposes when they pass
away.
As the surviving spouse will interact extensively
with the trustee of the trust following the death of
the first spouse, it is very important to choose a suc-
cessor trustee that will get along with the surviving
spouse. The successor trustee may be the surviving
spouse, but it is highly recommended that there be a
co-trustee serving along with them, such that the sur-
viving spouse can be insulated from participating in
making discretionary distributions of principal.
Very often, married couples choose to name their
children as successor trustees to serve with or with-
out the surviving spouse. When both spouses have
died, the balance of the trust property would be dis-
tributed as set forth in the trust, usually outright to
the married couple’s children or held in a continuing
trust for their benefit.
Bottom Line
A credit shelter trust can also help to reduce
or eliminate federal estate tax; however, for 2026
deaths, federal estate tax only impacts estates greater
than $15 million. Couples with assets valued at $15
million or more would also want to explore additional
planning opportunities that are beyond the scope of
this article.
Any married couple wishing to take advantage
of estate tax planning is encouraged to schedule an
appointment with an attorney who works primarily in
the area of estate planning. It is imperative that you
plan now to avoid estate taxes later. BW
Gina M. Barry is a shareholder with the law
firm Bacon Wilson, P.C. She is a member of
the National Academy of Elder Law Attorneys,
the Estate Planning Council, and the Western
Massachusetts Elder Care Professionals Assoc.
She concentrates her practice in the areas of
estate and asset protection planning, probate
administration, guardianships, conservatorships,
and residential real estate; (413) 781-0560;
[email protected]
As the surviving
spouse will
interact
extensively with
the trustee of the
trust following
the death of the
first spouse, it is
very important
to choose a
successor trustee
that will get along
with the surviving
spouse.”
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