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.
Riverside California Marital Deduction Trust — Trust A and Bypass Trust B are two types of trusts commonly used in estate planning to take advantage of the marital deduction. These trusts serve as important tools to minimize estate taxes and ensure the smooth transfer of assets between spouses in Riverside, California. Trust A, also known as the Marital Deduction Trust, is created to maximize the benefit of the marital deduction available under federal tax laws. The marital deduction allows a decedent to pass an unlimited amount of assets to their surviving spouse tax-free. By establishing Trust A, the decedent can leave assets to their spouse while ensuring that they qualify for the marital deduction benefits. Bypass Trust B, also referred to as the Credit Shelter Trust or the Family Trust, is designed to maximize the use of the decedent's applicable exclusion amount (known as the estate tax exemption). It allows the decedent's estate to take advantage of the estate tax exemption by placing assets in a trust for the benefit of the surviving spouse and other beneficiaries, such as children or grandchildren. This trust shelters assets from estate taxes upon the surviving spouse's death, as those assets are not considered part of their taxable estate. By utilizing Trust A and Bypass Trust B, individuals can effectively manage their estate and potentially reduce estate taxes for their heirs. The specific terms and conditions of these trusts vary depending on each individual's unique circumstances and estate planning goals. If you are considering establishing a Riverside California Marital Deduction Trust, it is essential to consult with a knowledgeable estate planning attorney to ensure that your assets are protected and your goals are achieved. They can provide guidance on the different types of trusts available and help tailor a plan that suits your specific needs, whether it involves Trust A, Bypass Trust B, or a combination of these trusts to achieve optimal estate planning outcomes.
