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.
A Phoenix Arizona Marital Deduction Trust, also known as Trust A, is a legal arrangement designed to provide financial security and tax benefits to married couples residing in Phoenix, Arizona. It acts as an estate planning tool, aiming to maximize the amount of assets that can be passed on to the surviving spouse, while minimizing estate taxes. Trust A is created during the lifetime of the first spouse and becomes irrevocable upon their death. Upon the death of the first spouse, a portion of their assets, up to the maximum limit set by federal tax laws, is transferred into Trust A. This portion is commonly referred to as the "marital deduction amount" and includes assets such as real estate, investments, personal property, and cash. The surviving spouse becomes the primary beneficiary of Trust A and can access the income generated by the trust's assets during their lifetime. They may also have the ability to withdraw principal from the trust if needed. This provides the surviving spouse with financial support and peace of mind. The significant advantage of Trust A is that it allows the assets transferred to it to pass to the surviving spouse without being subject to estate taxes. Instead, the property is included in the surviving spouse's estate. This deferral of estate taxes ensures that the couple can fully utilize both spouse's federal estate tax exemptions, potentially resulting in substantial tax savings. Bypass Trust B, also known as a credit shelter trust or a family trust, is another type of trust that can work in conjunction with Trust A. It is meant to preserve the amount of assets that can pass to the couple's heirs, generally their children, without being subjected to estate taxes. The bypass trust is funded with assets exceeding the federal tax exemption limit and operates independently of Trust A. Upon the death of the surviving spouse, the assets held in Trust B pass directly to the designated beneficiaries, typically the couple's children or other named individuals or charities. By using Trust B, couples can ensure that their children or chosen beneficiaries receive an inheritance while minimizing estate taxes. In summary, a Phoenix Arizona Marital Deduction Trust A, when combined with a Bypass Trust B, enables married couples to take advantage of estate planning strategies to preserve wealth, provide for the surviving spouse, and minimize estate taxes. By consulting with an experienced estate planning attorney in Phoenix, individuals can ensure that their assets are effectively protected and distributed according to their wishes.A Phoenix Arizona Marital Deduction Trust, also known as Trust A, is a legal arrangement designed to provide financial security and tax benefits to married couples residing in Phoenix, Arizona. It acts as an estate planning tool, aiming to maximize the amount of assets that can be passed on to the surviving spouse, while minimizing estate taxes. Trust A is created during the lifetime of the first spouse and becomes irrevocable upon their death. Upon the death of the first spouse, a portion of their assets, up to the maximum limit set by federal tax laws, is transferred into Trust A. This portion is commonly referred to as the "marital deduction amount" and includes assets such as real estate, investments, personal property, and cash. The surviving spouse becomes the primary beneficiary of Trust A and can access the income generated by the trust's assets during their lifetime. They may also have the ability to withdraw principal from the trust if needed. This provides the surviving spouse with financial support and peace of mind. The significant advantage of Trust A is that it allows the assets transferred to it to pass to the surviving spouse without being subject to estate taxes. Instead, the property is included in the surviving spouse's estate. This deferral of estate taxes ensures that the couple can fully utilize both spouse's federal estate tax exemptions, potentially resulting in substantial tax savings. Bypass Trust B, also known as a credit shelter trust or a family trust, is another type of trust that can work in conjunction with Trust A. It is meant to preserve the amount of assets that can pass to the couple's heirs, generally their children, without being subjected to estate taxes. The bypass trust is funded with assets exceeding the federal tax exemption limit and operates independently of Trust A. Upon the death of the surviving spouse, the assets held in Trust B pass directly to the designated beneficiaries, typically the couple's children or other named individuals or charities. By using Trust B, couples can ensure that their children or chosen beneficiaries receive an inheritance while minimizing estate taxes. In summary, a Phoenix Arizona Marital Deduction Trust A, when combined with a Bypass Trust B, enables married couples to take advantage of estate planning strategies to preserve wealth, provide for the surviving spouse, and minimize estate taxes. By consulting with an experienced estate planning attorney in Phoenix, individuals can ensure that their assets are effectively protected and distributed according to their wishes.
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.
