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.
Wisconsin Marital Deduction Trust, also known as Trust A, is a type of trust established under Wisconsin law that allows married couples to maximize the use of the marital deduction for estate tax purposes. The marital deduction allows one spouse to transfer assets to the other spouse without incurring any estate tax liability upon the first spouse's death. Trust A is designed to hold the decedent's assets for the surviving spouse's benefit, maintaining the assets' tax-free status. The surviving spouse is entitled to receive income from the trust and may have access to the principal under certain circumstances. However, the assets in Trust A are considered part of the surviving spouse's taxable estate upon their death. Bypass Trust, also referred to as Trust B or Credit Shelter Trust, is another type of trust that complements the Wisconsin Marital Deduction Trust. It is established to utilize the deceased spouse's estate tax exemption amount, which might otherwise go unused due to the unlimited marital deduction. The Bypass Trust is funded with the decedent's remaining assets, up to the exempted amount, and assets placed in this trust bypass the surviving spouse's taxable estate. As a result, the trust assets and any future appreciation are protected from estate taxes when the surviving spouse passes away. The two trusts, Trust A and Bypass Trust B, are often used together in Wisconsin estate planning to ensure the maximum utilization of estate tax exemptions while providing for the surviving spouse's financial security. Other types of Wisconsin Marital Deduction Trusts include: 1. Qualified Terminable Interest Property (TIP) Trust: These trusts provide income to the surviving spouse for their lifetime while preserving the assets for the ultimate beneficiaries, such as children from a previous marriage. 2. Charitable Marital Deduction Trust: This type of trust allows a portion of the assets to qualify for the charitable deduction while still providing an income stream for the surviving spouse. 3. Qualified Personnel Residence Trust (PRT): Parts enable the transfer of a primary residence or vacation home into a trust, removing it from the taxable estate and potentially reducing estate tax liability. 4. Revocable Living Trust: Although not specifically a Wisconsin Marital Deduction Trust, this type of trust is often used as part of estate planning to allow for the seamless transfer of assets, including the marital deduction, upon death. In conclusion, Wisconsin Marital Deduction Trust — Trust A and Bypass Trust B are crucial estate planning tools utilized in Wisconsin to maximize tax benefits while ensuring the financial stability of the surviving spouse. Different variations of these trusts, such as TIP Trusts, Charitable Marital Deduction Trusts, Parts, and Revocable Living Trusts, can be utilized depending on specific estate planning needs.Wisconsin Marital Deduction Trust, also known as Trust A, is a type of trust established under Wisconsin law that allows married couples to maximize the use of the marital deduction for estate tax purposes. The marital deduction allows one spouse to transfer assets to the other spouse without incurring any estate tax liability upon the first spouse's death. Trust A is designed to hold the decedent's assets for the surviving spouse's benefit, maintaining the assets' tax-free status. The surviving spouse is entitled to receive income from the trust and may have access to the principal under certain circumstances. However, the assets in Trust A are considered part of the surviving spouse's taxable estate upon their death. Bypass Trust, also referred to as Trust B or Credit Shelter Trust, is another type of trust that complements the Wisconsin Marital Deduction Trust. It is established to utilize the deceased spouse's estate tax exemption amount, which might otherwise go unused due to the unlimited marital deduction. The Bypass Trust is funded with the decedent's remaining assets, up to the exempted amount, and assets placed in this trust bypass the surviving spouse's taxable estate. As a result, the trust assets and any future appreciation are protected from estate taxes when the surviving spouse passes away. The two trusts, Trust A and Bypass Trust B, are often used together in Wisconsin estate planning to ensure the maximum utilization of estate tax exemptions while providing for the surviving spouse's financial security. Other types of Wisconsin Marital Deduction Trusts include: 1. Qualified Terminable Interest Property (TIP) Trust: These trusts provide income to the surviving spouse for their lifetime while preserving the assets for the ultimate beneficiaries, such as children from a previous marriage. 2. Charitable Marital Deduction Trust: This type of trust allows a portion of the assets to qualify for the charitable deduction while still providing an income stream for the surviving spouse. 3. Qualified Personnel Residence Trust (PRT): Parts enable the transfer of a primary residence or vacation home into a trust, removing it from the taxable estate and potentially reducing estate tax liability. 4. Revocable Living Trust: Although not specifically a Wisconsin Marital Deduction Trust, this type of trust is often used as part of estate planning to allow for the seamless transfer of assets, including the marital deduction, upon death. In conclusion, Wisconsin Marital Deduction Trust — Trust A and Bypass Trust B are crucial estate planning tools utilized in Wisconsin to maximize tax benefits while ensuring the financial stability of the surviving spouse. Different variations of these trusts, such as TIP Trusts, Charitable Marital Deduction Trusts, Parts, and Revocable Living Trusts, can be utilized depending on specific estate planning needs.
