A commonly used estate planning technique for married couples is a Family Trust. Family trusts, also known as credit shelter trusts, generally are funded with the maximum amount that may be excluded from federal estate taxes.
These trusts, funded at the death of the first spouse, can pay a discretionary income to the surviving spouse for life, with the proceeds passing to the beneficiaries (typically children) at the second spouse’s death.
Sometimes this is more income than the surviving spouse needs. Purchasing life insurance on the surviving spouse inside an existing family trust can help increase the size of the legacy for heirs.