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.
Maricopa, Arizona: An Introduction to Marital Deduction Trust — Trust A and Bypass Trust B Maricopa, Arizona is a vibrant city located in Pinal County. Situated just 20 miles south of Phoenix, Maricopa offers a diverse range of attractions, a booming real estate market, and a strong community spirit. Amidst this backdrop, it becomes important to understand the intricacies of estate planning and trusts, particularly the Marital Deduction Trust — Trust A and Bypass Trust B. Let's delve into the details and explore different types of these trusts. Marital Deduction Trust — Trust A: The Marital Deduction Trust, commonly referred to as Trust A, is a type of trust set up by married couples to minimize or eliminate estate taxes upon the death of the first spouse. The primary purpose of Trust A is to provide financial security to the surviving spouse while taking advantage of the estate tax exemption. This trust typically holds assets, including the deceased spouse's share, and provides income and sometimes principal to the surviving spouse. After the passing of the surviving spouse, the assets remaining in Trust A are distributed according to the couple's wishes or state laws. Bypass Trust — Trust B: Also known as a Family Trust or a Credit Shelter Trust, the Bypass Trust, or Trust B, is another form of trust frequently utilized in estate planning. It works in conjunction with Trust A to maximize estate tax exemptions. Trust B is created upon the death of the first spouse and allows a certain portion of the deceased spouse's estate to bypass the surviving spouse's estate, hence the name "Bypass Trust." The assets in Trust B are managed for the benefit of beneficiaries, which can include children or other loved ones. This trust protects the assets from estate taxes and ensures their eventual distribution as intended. Different Types of Maricopa, Arizona Marital Deduction Trusts: 1. Qualified Terminable Interest Property (TIP) Trust: This type of Trust A is commonly used when there are blended families involved. It allows the deceased spouse to set aside specific assets for the benefit of the surviving spouse during their lifetime, while ensuring that the assets ultimately go to the intended beneficiaries, such as children from a prior marriage, after the surviving spouse's passing. 2. General Power of Appointment Trust (GPA): When flexibility is desired in Trust A, a GPA Trust is established. This trust gives the surviving spouse the power to redirect trust assets after the first spouse's death, allowing them to alter beneficiaries and allocations based on changing circumstances. 3. Unfunded Marital Deduction Trust: In some cases, couples may choose not to fund Trust A at the time of the first spouse's death. This option is typically used when the couple's assets are jointly owned or when they have a simple estate plan. However, it's important to consult with an estate planning attorney to ensure all legal requirements are met. In Maricopa, Arizona, the Marital Deduction Trust — Trust A and Bypass Trust B play pivotal roles in estate planning for married couples. These trusts are crucial tools to minimize estate taxes, protect assets, and ensure that the couple's wishes are carried out. Whether opting for a TIP Trust, GPA Trust, or an unfunded trust, seeking guidance from an experienced estate planning professional is highly recommended ensuring compliance with Arizona laws and to personalize the plan according to individual needs.Maricopa, Arizona: An Introduction to Marital Deduction Trust — Trust A and Bypass Trust B Maricopa, Arizona is a vibrant city located in Pinal County. Situated just 20 miles south of Phoenix, Maricopa offers a diverse range of attractions, a booming real estate market, and a strong community spirit. Amidst this backdrop, it becomes important to understand the intricacies of estate planning and trusts, particularly the Marital Deduction Trust — Trust A and Bypass Trust B. Let's delve into the details and explore different types of these trusts. Marital Deduction Trust — Trust A: The Marital Deduction Trust, commonly referred to as Trust A, is a type of trust set up by married couples to minimize or eliminate estate taxes upon the death of the first spouse. The primary purpose of Trust A is to provide financial security to the surviving spouse while taking advantage of the estate tax exemption. This trust typically holds assets, including the deceased spouse's share, and provides income and sometimes principal to the surviving spouse. After the passing of the surviving spouse, the assets remaining in Trust A are distributed according to the couple's wishes or state laws. Bypass Trust — Trust B: Also known as a Family Trust or a Credit Shelter Trust, the Bypass Trust, or Trust B, is another form of trust frequently utilized in estate planning. It works in conjunction with Trust A to maximize estate tax exemptions. Trust B is created upon the death of the first spouse and allows a certain portion of the deceased spouse's estate to bypass the surviving spouse's estate, hence the name "Bypass Trust." The assets in Trust B are managed for the benefit of beneficiaries, which can include children or other loved ones. This trust protects the assets from estate taxes and ensures their eventual distribution as intended. Different Types of Maricopa, Arizona Marital Deduction Trusts: 1. Qualified Terminable Interest Property (TIP) Trust: This type of Trust A is commonly used when there are blended families involved. It allows the deceased spouse to set aside specific assets for the benefit of the surviving spouse during their lifetime, while ensuring that the assets ultimately go to the intended beneficiaries, such as children from a prior marriage, after the surviving spouse's passing. 2. General Power of Appointment Trust (GPA): When flexibility is desired in Trust A, a GPA Trust is established. This trust gives the surviving spouse the power to redirect trust assets after the first spouse's death, allowing them to alter beneficiaries and allocations based on changing circumstances. 3. Unfunded Marital Deduction Trust: In some cases, couples may choose not to fund Trust A at the time of the first spouse's death. This option is typically used when the couple's assets are jointly owned or when they have a simple estate plan. However, it's important to consult with an estate planning attorney to ensure all legal requirements are met. In Maricopa, Arizona, the Marital Deduction Trust — Trust A and Bypass Trust B play pivotal roles in estate planning for married couples. These trusts are crucial tools to minimize estate taxes, protect assets, and ensure that the couple's wishes are carried out. Whether opting for a TIP Trust, GPA Trust, or an unfunded trust, seeking guidance from an experienced estate planning professional is highly recommended ensuring compliance with Arizona laws and to personalize the plan according to individual needs.
