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.
Hawaii Marital Deduction Trust — Trust A and Bypass Trust B are two types of trust structures that are commonly used in estate planning in the state of Hawaii. These trusts are designed to minimize estate taxes and provide for the financial security of a surviving spouse after the death of the first spouse. Trust A, also known as the Hawaii Marital Deduction Trust, is a trust that is established to take advantage of the marital deduction. The marital deduction allows an unlimited amount of assets to be transferred between spouses without incurring any estate tax liability. By creating Trust A, a portion of the deceased spouse's estate can be transferred to the surviving spouse tax-free, reducing the overall estate tax liability. Bypass Trust B, on the other hand, is a trust that is created as part of the estate plan to maximize the use of the deceased spouse's estate tax exemption. The estate tax exemption is the amount of assets that can be transferred upon death without incurring any estate tax. By utilizing the bypass trust, the deceased spouse can make use of their estate tax exemption, which would otherwise go unused if all assets were transferred to the surviving spouse through Trust A. The assets placed in the bypass trust can grow and be distributed to beneficiaries, such as children or other family members, without incurring any additional estate tax liability. There are variations of Trust A and Bypass Trust B that can be tailored to specific needs and circumstances. For example, some individuals may choose to create a Qualified Terminable Interest Property (TIP) trust as their Trust A. A TIP trust provides income for the surviving spouse while preserving the principal for other beneficiaries, such as children from a previous marriage. In conclusion, the Hawaii Marital Deduction Trust — Trust A and Bypass Trust B are trust structures used in estate planning in Hawaii. Trust A allows for tax-free transfers to the surviving spouse, while Bypass Trust B maximizes the use of the deceased spouse's estate tax exemption. Different variations and strategies can be employed within these trusts to meet the unique needs and goals of individuals and families.Hawaii Marital Deduction Trust — Trust A and Bypass Trust B are two types of trust structures that are commonly used in estate planning in the state of Hawaii. These trusts are designed to minimize estate taxes and provide for the financial security of a surviving spouse after the death of the first spouse. Trust A, also known as the Hawaii Marital Deduction Trust, is a trust that is established to take advantage of the marital deduction. The marital deduction allows an unlimited amount of assets to be transferred between spouses without incurring any estate tax liability. By creating Trust A, a portion of the deceased spouse's estate can be transferred to the surviving spouse tax-free, reducing the overall estate tax liability. Bypass Trust B, on the other hand, is a trust that is created as part of the estate plan to maximize the use of the deceased spouse's estate tax exemption. The estate tax exemption is the amount of assets that can be transferred upon death without incurring any estate tax. By utilizing the bypass trust, the deceased spouse can make use of their estate tax exemption, which would otherwise go unused if all assets were transferred to the surviving spouse through Trust A. The assets placed in the bypass trust can grow and be distributed to beneficiaries, such as children or other family members, without incurring any additional estate tax liability. There are variations of Trust A and Bypass Trust B that can be tailored to specific needs and circumstances. For example, some individuals may choose to create a Qualified Terminable Interest Property (TIP) trust as their Trust A. A TIP trust provides income for the surviving spouse while preserving the principal for other beneficiaries, such as children from a previous marriage. In conclusion, the Hawaii Marital Deduction Trust — Trust A and Bypass Trust B are trust structures used in estate planning in Hawaii. Trust A allows for tax-free transfers to the surviving spouse, while Bypass Trust B maximizes the use of the deceased spouse's estate tax exemption. Different variations and strategies can be employed within these trusts to meet the unique needs and goals of individuals and families.
