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.
Connecticut Marital Deduction Trusts, also known as Trust A and Bypass Trust B, are estate planning tools used to minimize estate taxes for married couples in Connecticut. These trusts are designed to take full advantage of the state's marital deduction, which allows for the tax-free transfer of assets between spouses upon death. Trust A, also referred to as the "marital trust" or "A trust," is established as part of the estate plan of the first spouse to pass away. This trust ensures that the surviving spouse benefits from the income generated by the trust assets. The surviving spouse has the right to receive income distributions from the trust during their lifetime. Additionally, the surviving spouse may also have the ability to access the principal of the trust for specific needs, such as healthcare or education expenses. However, the assets in Trust A are not subject to estate taxes upon the surviving spouse's death. Trust B, commonly known as the "bypass trust" or "B trust," is also established upon the first spouse's death. This trust is designed to maximize the use of the deceased spouse's estate tax exemption, which is the amount of assets that can be transferred tax-free to non-spousal beneficiaries. Trust B typically holds the assets that are not needed by the surviving spouse for their lifetime needs. The trust generates income, which may be available to the surviving spouse, but the principal is typically preserved for the named beneficiaries, such as children or grandchildren. As Trust B bypasses the surviving spouse's estate, it provides substantial estate tax savings. In summary, Connecticut Marital Deduction Trusts, Trust A and Bypass Trust B, work together to create an estate planning strategy that minimizes estate taxes upon the death of both spouses. By utilizing the marital deduction and maximizing the use of each spouse's estate tax exemption, these trusts can help preserve wealth for future generations. It's essential to consult with an experienced estate planning attorney to craft a plan tailored to individual circumstances and to ensure compliance with Connecticut state laws.Connecticut Marital Deduction Trusts, also known as Trust A and Bypass Trust B, are estate planning tools used to minimize estate taxes for married couples in Connecticut. These trusts are designed to take full advantage of the state's marital deduction, which allows for the tax-free transfer of assets between spouses upon death. Trust A, also referred to as the "marital trust" or "A trust," is established as part of the estate plan of the first spouse to pass away. This trust ensures that the surviving spouse benefits from the income generated by the trust assets. The surviving spouse has the right to receive income distributions from the trust during their lifetime. Additionally, the surviving spouse may also have the ability to access the principal of the trust for specific needs, such as healthcare or education expenses. However, the assets in Trust A are not subject to estate taxes upon the surviving spouse's death. Trust B, commonly known as the "bypass trust" or "B trust," is also established upon the first spouse's death. This trust is designed to maximize the use of the deceased spouse's estate tax exemption, which is the amount of assets that can be transferred tax-free to non-spousal beneficiaries. Trust B typically holds the assets that are not needed by the surviving spouse for their lifetime needs. The trust generates income, which may be available to the surviving spouse, but the principal is typically preserved for the named beneficiaries, such as children or grandchildren. As Trust B bypasses the surviving spouse's estate, it provides substantial estate tax savings. In summary, Connecticut Marital Deduction Trusts, Trust A and Bypass Trust B, work together to create an estate planning strategy that minimizes estate taxes upon the death of both spouses. By utilizing the marital deduction and maximizing the use of each spouse's estate tax exemption, these trusts can help preserve wealth for future generations. It's essential to consult with an experienced estate planning attorney to craft a plan tailored to individual circumstances and to ensure compliance with Connecticut state laws.
