Since Latonya gross estate ($6,800,000) exceeds the "applicable estate credit equivalency amount of $5,450,000 (2016), the …show more content…
First of all, by Latonya creating a bypass trust (B Trust) equal to the estate tax credit equivalency amount, there is no estate tax liability at the time of Latonya's death and, if Jean Paul is not the trustee, this property will not be included in Jean Paul's gross estate. Consequently, Jean Paul will receive income for health, education, maintenance, and support while potentially avoiding taxes at his death. Furthermore, "the surviving spouse can be given a right to demand the greater of (1) $5,000 or (2) five percent of the trust corpus on an annual basis (Dalton & Langdon, 2016, p. 419). Additionally, their children can be designated as the remainder beneficiaries. Secondly, the remaining portion of LaTonya's gross estate ($1,350,000) can be divided between the A Trust and the C Trust. The A Trust, known as the