An AB trust is a trust created by a married couple to avoid probate and minimize federal estate tax. An AB trust is created by each spouse placing property into a trust and naming someone other than his or her spouse as the final beneficiary of that trust. Upon the death of the first spouse, the surviving spouse does not own the assets in that spouse's trust outright, but has a limited power over the assets in accordance with the terms of the trust. Such powers may include the right to receive interest or income earned by the trust, to use the trust property during his or her lifetime, e.g. to live in a house, and/or to use the trust principal for his or her health, education, or support. Upon the death of the second spouse, the trust passes to the final beneficiary of the trust. For estate tax purposes, the trust is included in the first, but not the second, spouse's estate and therefore, avoids double taxation.
Wake North Carolina Marital Deduction Trust (Trust A) and Bypass Trust (Trust B) are estate planning tools that are commonly used in North Carolina to provide tax benefits and protect assets for married couples. The Wake North Carolina Marital Deduction Trust, Trust A, allows a spouse to leave assets to their surviving spouse without incurring federal estate taxes. This is achieved by utilizing the unlimited marital deduction, which states that assets passed to a surviving spouse are not subjected to estate tax. The surviving spouse becomes the beneficiary of Trust A, and they have access to the income and, in some cases, principal of the trust. However, the assets in Trust A will be included in the surviving spouse's estate upon their death. On the other hand, the Bypass Trust, Trust B, helps maximize the tax benefits by utilizing the federal estate tax exemption. When the first spouse passes away, a certain portion of the estate (up to the exemption amount) is transferred to Trust B. This amount is not subjected to estate taxes. The surviving spouse can still benefit from the assets in Trust B while ensuring that those assets pass to the intended beneficiaries upon their death without further taxation. It is important to note that different types of Trust A and Trust B may exist depending on the specific estate planning goals and circumstances of the couple. These variations may include: 1. Qualified Terminable Interest Property (TIP) Trust: This type of Trust A allows the surviving spouse to exercise control over the trust assets while ensuring that the remaining assets will pass to the ultimate beneficiaries designated by the deceased spouse. 2. Credit Shelter Trust: This variation of Trust B is designed to utilize the exemption amount available under federal estate tax laws. It helps ensure that the deceased spouse's exemption is not wasted and maximizes the potential tax benefits for the surviving spouse and other beneficiaries. 3. Disclaimer Trust: This type of Trust B offers flexibility for the surviving spouse. They have the option to disclaim a certain portion of the estate, which will then pass into the Bypass Trust. This can be utilized to optimize estate tax planning based on changing circumstances or tax laws. In conclusion, the Wake North Carolina Marital Deduction Trust — Trust A and BypasThusus— - Trust B are essential estate planning tools in North Carolina that provide tax benefits and protect assets for married couples. The different variations of these trusts allow individuals to tailor their estate plans to their specific needs and goals while minimizing estate taxes and maximizing the preservation of wealth for future generations.Wake North Carolina Marital Deduction Trust (Trust A) and Bypass Trust (Trust B) are estate planning tools that are commonly used in North Carolina to provide tax benefits and protect assets for married couples. The Wake North Carolina Marital Deduction Trust, Trust A, allows a spouse to leave assets to their surviving spouse without incurring federal estate taxes. This is achieved by utilizing the unlimited marital deduction, which states that assets passed to a surviving spouse are not subjected to estate tax. The surviving spouse becomes the beneficiary of Trust A, and they have access to the income and, in some cases, principal of the trust. However, the assets in Trust A will be included in the surviving spouse's estate upon their death. On the other hand, the Bypass Trust, Trust B, helps maximize the tax benefits by utilizing the federal estate tax exemption. When the first spouse passes away, a certain portion of the estate (up to the exemption amount) is transferred to Trust B. This amount is not subjected to estate taxes. The surviving spouse can still benefit from the assets in Trust B while ensuring that those assets pass to the intended beneficiaries upon their death without further taxation. It is important to note that different types of Trust A and Trust B may exist depending on the specific estate planning goals and circumstances of the couple. These variations may include: 1. Qualified Terminable Interest Property (TIP) Trust: This type of Trust A allows the surviving spouse to exercise control over the trust assets while ensuring that the remaining assets will pass to the ultimate beneficiaries designated by the deceased spouse. 2. Credit Shelter Trust: This variation of Trust B is designed to utilize the exemption amount available under federal estate tax laws. It helps ensure that the deceased spouse's exemption is not wasted and maximizes the potential tax benefits for the surviving spouse and other beneficiaries. 3. Disclaimer Trust: This type of Trust B offers flexibility for the surviving spouse. They have the option to disclaim a certain portion of the estate, which will then pass into the Bypass Trust. This can be utilized to optimize estate tax planning based on changing circumstances or tax laws. In conclusion, the Wake North Carolina Marital Deduction Trust — Trust A and BypasThusus— - Trust B are essential estate planning tools in North Carolina that provide tax benefits and protect assets for married couples. The different variations of these trusts allow individuals to tailor their estate plans to their specific needs and goals while minimizing estate taxes and maximizing the preservation of wealth for future generations.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
