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 Travis Texas Marital Deduction Trust is a type of trust established by married couples residing in Travis County, Texas, to take advantage of the marital deduction available under federal estate tax laws. This deduction allows the assets of the deceased spouse to pass to the surviving spouse without incurring any estate tax liability. Trust A, also known as the "Marital Trust," is a component of the Travis Texas Marital Deduction Trust. It is created to hold the assets that qualify for the marital deduction upon the death of the first spouse. The surviving spouse becomes the beneficiary of Trust A, and they have access to the income generated by the trust assets during their lifetime. The principal of the trust is preserved for the benefit of the surviving spouse and other named beneficiaries, such as children or other family members. Trust A is subject to estate tax upon the death of the surviving spouse. Bypass Trust B, also referred to as "Family Trust" or "Credit Shelter Trust," is another element of the Travis Texas Marital Deduction Trust. This trust is designed to utilize the deceased spouse's available estate tax exemption to shelter assets from estate taxation. Upon the death of the first spouse, a portion of the estate assets equal to the estate tax exemption is transferred into Trust B. The surviving spouse may receive income generated by the trust assets but does not have direct access to the trust principal. Upon the death of the surviving spouse, the remaining assets in Trust B pass to the named beneficiaries, typically children or other family members, free of estate tax. There may be different types of Travis Texas Marital Deduction Trusts, customized according to the specific needs and circumstances of the couple. Some variations may include Irrevocable Life Insurance Trusts (Slits) or Charitable Remainder Trusts (CRTs) incorporated into the overall estate plan. These trusts can provide additional benefits such as liquidity for estate tax payments or charitable giving, respectively. Establishing a Travis Texas Marital Deduction Trust, including Trust A and Bypass Trust B, can be a valuable estate planning tool for couples wishing to minimize estate taxes and protect their assets for the benefit of their loved ones. It is essential to consult with an experienced attorney or estate planning professional to ensure the trust structure meets the unique goals and objectives of the couple while complying with relevant laws and regulations in Travis County, Texas.
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.
