What is a Spousal Bypass Protection Trust?

A Spousal Bypass Protection Trust, also known as a "Credit Shelter Trust" or "Family Trust," is a type of trust that is used to protect assets from estate taxes. The trust is typically set up so that upon the death of the first spouse, assets are transferred into the trust and held for the benefit of the surviving spouse, while also providing a credit against estate taxes for the portion of the assets transferred into the trust. This can help to reduce or eliminate estate taxes on the assets held in the trust, allowing them to pass to the intended beneficiaries without being significantly reduced by taxes.