(Note: (1) assume state law allows what's posited below -- this is a question about federal estate tax. (2) My desire to use a CST is to give my wife the option to preserve my estate tax exemption and not require it. If she thinks it is in her best interest to not do it, I'd like her to be able to not do it if such a thing can legally be done.)
and from friends willing to share, they are typically funded via a pour-over provision in the will and from a pre-death revocable living trust specifying what is to go into the CST at death, with the total amount going to the CST being set as an amount equal to the amount of assets which would be shielded from tax by the estate tax exemption in effect at the time of death.
My problem with this is that by necessity a CST has restrictions on the surviving spouse's ability to demand distributions from the CST. That, coupled with an estate less than or only slightly above the amount shielded by the exemption will result in all or almost all of the estate ending up in the CST which while creating the maximum estate tax savings down the road may well be a major undesired inconvenience for the surviving spouse.
For example, say the probate estate is $3,100,000 at a time the estate tax exemption shields $3,000,000 from tax. Only $100,000 of "unrestricted" monies will go to the spouse as the rest will end up in the CST.
Or say the estate is only around $1,200,000 at a time the exemption shields $3,000,000. At those levels there's a good chance that even with no CST at all there won't be any estate tax when the surviving spouse dies, meaning all the restrictions the surviving spouse would have to cope with are pointless.
So, from a federal estate tax law point of view is it possible for the documents that fund the CST (the will and revocable living trust) have language that give the surviving spouse the option to choose how much goes into the CST? So perhaps language that leaves it all to the surviving spouse outright but structured so that anything disclaimed by the surviving spouse would go into into the CST? Or language that gives the surviving spouse N weeks to specify what does not go into the CST and with everything going to the CST if the spouse does not make a designation?
Or would such language be considered to bring all the assets into the dominion and control of the surviving spouse and so blow the whole plan up?
-- Rich Carreiro snipped-for-privacy@rlcarr.com