An A-B trust is a revocable living trust which divides into two trusts upon the death of the first spouse. This type of trust makes use of both the estate tax exemption ($3.5 million per person in 2009) and the marital deduction to make it so that no estate taxes are due upon the death of the first spouse. The B Trust is also known as the Bypass trust and it contains the amount of that years applicable exclusion amount. The A trust is the marital deduction trust which will typically contain both the surviving spouse's separate property and one half community property interests but also the residue of the deceased spouse's estate after the estate tax exemption has been utilized by the B trust. The use of an A-B trust ensures that both spouse's applicable exclusion amounts are effectively used, thereby doubling the amount of property which can pass to heirs free of Federal Estate Taxes.
Orange California Marital Deduction Trust — Trust A and Bypass Trust B are two types of trusts commonly used in estate planning to maximize tax benefits for married couples in Orange, California. These trusts aim to minimize estate taxes upon the death of one spouse while ensuring the surviving spouse's financial security. Trust A, also known as the Marital Deduction Trust, is established as an irrevocable trust upon the death of the first spouse. It allows the deceased spouse's assets to be transferred to the trust, which qualifies for a full marital deduction from the federal estate tax. This deduction ensures that the assets transferred to the trust are not subject to estate taxes upon the first spouse's death. The surviving spouse becomes the primary beneficiary of Trust A, receiving income generated by the trust and possible principal distributions as needed. On the other hand, Bypass Trust B, also referred to as the Credit Shelter Trust or the Family Trust, activates upon the death of the first spouse as well. This trust is designed to hold the deceased spouse's assets up to the estate tax exemption limit, thereby effectively utilizing the tax benefits. These assets are not subject to estate tax upon the first spouse's death due to the trust's structure. The surviving spouse and other beneficiaries, such as children or grandchildren, may receive distributions from the Bypass Trust B, but the deceased spouse's intention is usually to preserve the trust's assets for future generations. There are different variations of Orange California Marital Deduction Trusts — Trust A and Bypass Trust B, each tailored to the specific needs and circumstances of the married couple. Some variations may include the Qualified Terminable Interest Property (TIP) Trust, which provides greater flexibility for blended families, or the Supplemental Needs Trust, which safeguards assets for a surviving spouse with special needs. It is crucial for couples in Orange, California, to consult with an experienced estate planning attorney to determine the most suitable type of Marital Deduction Trust — Trust A and Bypass Trust B for their unique situation. Proper establishment and management of these trusts can help minimize estate taxes, protect assets, and provide for the financial well-being of the surviving spouse and beneficiaries.Orange California Marital Deduction Trust — Trust A and Bypass Trust B are two types of trusts commonly used in estate planning to maximize tax benefits for married couples in Orange, California. These trusts aim to minimize estate taxes upon the death of one spouse while ensuring the surviving spouse's financial security. Trust A, also known as the Marital Deduction Trust, is established as an irrevocable trust upon the death of the first spouse. It allows the deceased spouse's assets to be transferred to the trust, which qualifies for a full marital deduction from the federal estate tax. This deduction ensures that the assets transferred to the trust are not subject to estate taxes upon the first spouse's death. The surviving spouse becomes the primary beneficiary of Trust A, receiving income generated by the trust and possible principal distributions as needed. On the other hand, Bypass Trust B, also referred to as the Credit Shelter Trust or the Family Trust, activates upon the death of the first spouse as well. This trust is designed to hold the deceased spouse's assets up to the estate tax exemption limit, thereby effectively utilizing the tax benefits. These assets are not subject to estate tax upon the first spouse's death due to the trust's structure. The surviving spouse and other beneficiaries, such as children or grandchildren, may receive distributions from the Bypass Trust B, but the deceased spouse's intention is usually to preserve the trust's assets for future generations. There are different variations of Orange California Marital Deduction Trusts — Trust A and Bypass Trust B, each tailored to the specific needs and circumstances of the married couple. Some variations may include the Qualified Terminable Interest Property (TIP) Trust, which provides greater flexibility for blended families, or the Supplemental Needs Trust, which safeguards assets for a surviving spouse with special needs. It is crucial for couples in Orange, California, to consult with an experienced estate planning attorney to determine the most suitable type of Marital Deduction Trust — Trust A and Bypass Trust B for their unique situation. Proper establishment and management of these trusts can help minimize estate taxes, protect assets, and provide for the financial well-being of the surviving spouse and beneficiaries.
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.
