Question

a non marital trust is

Answer 1

Non-marital trust:

It is a trust created by an individual either during his lifetime or in his last will and testament where such trust allow the individual granting it (called as "GRANTOR") to provide income to the surviving spouse and latter to the children of such grantor. While the trust created during the lifetime of the grantor becomes irrevocable after the death of the grantor or in case of the trust created through last will and testament.

The trust is usually funded with an amount equal to the annual exclusion applicable in the year of grantor's death. The surviving spouse will get the interest income from the trust and also the principal amount. However, while the spouse can have unrestricted access to the interest income, the said amount of principal can be applied by the spouse for specified purposes such as health, maintenance, lifestyle support, and education purpose. After the demise of the surviving spouse, the property and income will automatically get transferred to the children (of original grantor) tax-free. The main aim of such trusts is to ensure optimal estate-tax planning (or) avoidance. The non-marital trust is also called as "Credit Shelter Trust" or "By-pass Trust". The advantage of this trust is that while the surviving spouse will enjoy the income generated by the trust, he/she will never have control over trust's asset during his / her lifetime thereby increasing the chances of making the assets available to the original off-springs of the grantor after the demise of the surviving spouse.