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.
King Washington Marital Deduction Trust, also known as Trust A and Bypass Trust B, is a legal estate planning tool that allows married couples to maximize the transfer of wealth to their heirs by taking advantage of the marital deduction and bypassing potential estate tax liabilities. This trust is often utilized by high net worth individuals who want to protect their assets and minimize tax obligations upon their passing. Trust A, within the King Washington Marital Deduction Trust, refers to the portion of the trust that is eligible for the marital deduction. The marital deduction allows for an unlimited transfer of assets between spouses during their lifetimes or at the time of death, without incurring any estate or gift taxes. This means that upon the death of the first spouse, the assets in Trust A can be passed to the surviving spouse without any tax consequences. Bypass Trust B, on the other hand, refers to the portion of the King Washington Marital Deduction Trust that is structured to bypass the surviving spouse's estate. It is sometimes referred to as a "credit shelter" or "family" trust. The purpose of Bypass Trust B is to preserve the deceased spouse's estate tax exemption, which is the amount of assets that can be transferred tax-free at death. By utilizing this trust, the transferred assets can continue to grow tax-free, benefiting the surviving spouse and future generations. There are different types of King Washington Marital Deduction Trusts, depending on the specific needs and goals of the individuals establishing them. Some common variations include Qualified Terminable Interest Property (TIP) Trusts, which provide income for the surviving spouse while ensuring ultimate distribution to specific beneficiaries, and Generation-Skipping Trusts (GST), which allow for assets to be passed down to grandchildren or more remote descendants while minimizing estate taxes. In summary, the King Washington Marital Deduction Trust, comprising Trust A and Bypass Trust B, offers married couples a strategic way to protect their assets, reduce estate taxes, and ensure the smooth transfer of wealth to their chosen beneficiaries. By utilizing these trusts, individuals can take advantage of the marital deduction while preserving the deceased spouse's estate tax exemption, ultimately maximizing the wealth that is passed down to future generations.King Washington Marital Deduction Trust, also known as Trust A and Bypass Trust B, is a legal estate planning tool that allows married couples to maximize the transfer of wealth to their heirs by taking advantage of the marital deduction and bypassing potential estate tax liabilities. This trust is often utilized by high net worth individuals who want to protect their assets and minimize tax obligations upon their passing. Trust A, within the King Washington Marital Deduction Trust, refers to the portion of the trust that is eligible for the marital deduction. The marital deduction allows for an unlimited transfer of assets between spouses during their lifetimes or at the time of death, without incurring any estate or gift taxes. This means that upon the death of the first spouse, the assets in Trust A can be passed to the surviving spouse without any tax consequences. Bypass Trust B, on the other hand, refers to the portion of the King Washington Marital Deduction Trust that is structured to bypass the surviving spouse's estate. It is sometimes referred to as a "credit shelter" or "family" trust. The purpose of Bypass Trust B is to preserve the deceased spouse's estate tax exemption, which is the amount of assets that can be transferred tax-free at death. By utilizing this trust, the transferred assets can continue to grow tax-free, benefiting the surviving spouse and future generations. There are different types of King Washington Marital Deduction Trusts, depending on the specific needs and goals of the individuals establishing them. Some common variations include Qualified Terminable Interest Property (TIP) Trusts, which provide income for the surviving spouse while ensuring ultimate distribution to specific beneficiaries, and Generation-Skipping Trusts (GST), which allow for assets to be passed down to grandchildren or more remote descendants while minimizing estate taxes. In summary, the King Washington Marital Deduction Trust, comprising Trust A and Bypass Trust B, offers married couples a strategic way to protect their assets, reduce estate taxes, and ensure the smooth transfer of wealth to their chosen beneficiaries. By utilizing these trusts, individuals can take advantage of the marital deduction while preserving the deceased spouse's estate tax exemption, ultimately maximizing the wealth that is passed down to future generations.
