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.
Bronx New York Marital Deduction Trust — Trust A and Bypass Trust B are specific types of trusts used in estate planning and tax management. These trusts provide a way for married couples to maximize their estate tax savings and ensure that their assets are passed on efficiently to their beneficiaries. Trust A, also known as the Bronx New York Marital Deduction Trust A, is created for the benefit of the surviving spouse. It allows the assets of the deceased spouse to be transferred into the trust, without incurring any estate taxes at the death of the first spouse. The surviving spouse is entitled to receive income or distributions from Trust A during their lifetime, while also benefiting from a step-up in the cost basis of the assets. This means that any appreciation in the value of the assets during the surviving spouse's lifetime will not be subject to capital gains tax upon their subsequent sale. Bypass Trust B, on the other hand, is designed to utilize the estate tax exemption of the first spouse to die, ultimately minimizing or eliminating estate taxes on the value of the assets placed in this trust. The Bypass Trust B is typically funded with an amount equal to the estate tax exemption available. Since this trust falls outside the surviving spouse's estate and also includes a provision for the distribution of income or principal to the surviving spouse, it provides financial support while sheltering the trust assets from unnecessary taxation. By incorporating both Trust A and Bypass Trust B within an estate plan, married couples in Bronx New York can take advantage of the marital deduction and exemption available under the tax laws. This strategic approach allows them to minimize estate taxes, maximize asset preservation, and ensure a smooth transfer of wealth to future generations.Bronx New York Marital Deduction Trust — Trust A and Bypass Trust B are specific types of trusts used in estate planning and tax management. These trusts provide a way for married couples to maximize their estate tax savings and ensure that their assets are passed on efficiently to their beneficiaries. Trust A, also known as the Bronx New York Marital Deduction Trust A, is created for the benefit of the surviving spouse. It allows the assets of the deceased spouse to be transferred into the trust, without incurring any estate taxes at the death of the first spouse. The surviving spouse is entitled to receive income or distributions from Trust A during their lifetime, while also benefiting from a step-up in the cost basis of the assets. This means that any appreciation in the value of the assets during the surviving spouse's lifetime will not be subject to capital gains tax upon their subsequent sale. Bypass Trust B, on the other hand, is designed to utilize the estate tax exemption of the first spouse to die, ultimately minimizing or eliminating estate taxes on the value of the assets placed in this trust. The Bypass Trust B is typically funded with an amount equal to the estate tax exemption available. Since this trust falls outside the surviving spouse's estate and also includes a provision for the distribution of income or principal to the surviving spouse, it provides financial support while sheltering the trust assets from unnecessary taxation. By incorporating both Trust A and Bypass Trust B within an estate plan, married couples in Bronx New York can take advantage of the marital deduction and exemption available under the tax laws. This strategic approach allows them to minimize estate taxes, maximize asset preservation, and ensure a smooth transfer of wealth to future generations.
