I consulted with a man who had a document similar to the one you describe (trust agreement was written by annuity company, but that's another story). I thought that they should go to court and see if court would allow Bypass to be set up because survivor remembered discussing it and some of the agreement implied that it would be done.

So, your first step is to see if something can be done with the trust agreement.

Joe Stemach (just before he left the IRS) said that he had seen second-to-die Forms 706, where the still unfunded Bypass Trust was shown as a liability. He also said that often this was allowed if the amount of the trust was determined in a logical way.

I'd like to see what one of the attorneys that post here recommends.