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.
San Bernardino California Marital Deduction Trust, also known as Trust A, and the Bypass Trust B are estate planning tools used to maximize the available federal estate tax exemption and provide financial protection for married couples in the event of one spouse's death. These trusts allow married couples to transfer assets to their surviving spouse and ultimately to their beneficiaries while minimizing tax liabilities. Trust A, or the San Bernardino California Marital Deduction Trust, is created upon the death of the first spouse. It is designed to take advantage of the unlimited marital deduction, which allows for the tax-free transfer of assets between spouses. Trust A holds the deceased spouse's share of the assets while ensuring that the surviving spouse has access to the income generated by those assets and the ability to use them for their benefit during their lifetime. On the other hand, Bypass Trust B, also known as a credit shelter trust or a family trust, is established upon the death of the first spouse. It is designed to utilize the deceased spouse's federal estate tax exemption, which is the amount that can be transferred tax-free to beneficiaries. This trust shelters assets up to the exemption amount from estate taxes. The surviving spouse typically has access to income generated by the assets in Trust B during their lifetime, with the remaining assets passing on to the beneficiaries upon the surviving spouse's death. There are also different types of San Bernardino California Marital Deduction Trusts and Bypass Trusts, depending on the specific needs and goals of the couple: 1. Qualified Terminable Interest Property (TIP) Trust: This type of Trust A is commonly used when there are children from a previous marriage or if the couple wishes to control the ultimate distribution of assets. It provides control and flexibility for the surviving spouse while ensuring that the deceased spouse's assets ultimately pass to the chosen beneficiaries. 2. A/B Marital Trusts: In this scenario, two trusts are created upon the death of the first spouse. Trust A (Marital Trust) holds the assets eligible for the unlimited marital deduction, while Trust B (Bypass Trust) holds the assets eligible for the estate tax exemption. This strategy allows for the optimum utilization of the available tax exemptions and provides for both the surviving spouse's needs and the desires of the couple regarding beneficiaries and asset distribution. In summary, the San Bernardino California Marital Deduction Trust, also referred to as Trust A, and Bypass Trust B are estate planning instruments that assist married couples in minimizing estate taxes and protecting their assets. Implementing these trusts can provide financial security for the surviving spouse while ensuring that their legacy is passed on to intended beneficiaries in accordance with their wishes.San Bernardino California Marital Deduction Trust, also known as Trust A, and the Bypass Trust B are estate planning tools used to maximize the available federal estate tax exemption and provide financial protection for married couples in the event of one spouse's death. These trusts allow married couples to transfer assets to their surviving spouse and ultimately to their beneficiaries while minimizing tax liabilities. Trust A, or the San Bernardino California Marital Deduction Trust, is created upon the death of the first spouse. It is designed to take advantage of the unlimited marital deduction, which allows for the tax-free transfer of assets between spouses. Trust A holds the deceased spouse's share of the assets while ensuring that the surviving spouse has access to the income generated by those assets and the ability to use them for their benefit during their lifetime. On the other hand, Bypass Trust B, also known as a credit shelter trust or a family trust, is established upon the death of the first spouse. It is designed to utilize the deceased spouse's federal estate tax exemption, which is the amount that can be transferred tax-free to beneficiaries. This trust shelters assets up to the exemption amount from estate taxes. The surviving spouse typically has access to income generated by the assets in Trust B during their lifetime, with the remaining assets passing on to the beneficiaries upon the surviving spouse's death. There are also different types of San Bernardino California Marital Deduction Trusts and Bypass Trusts, depending on the specific needs and goals of the couple: 1. Qualified Terminable Interest Property (TIP) Trust: This type of Trust A is commonly used when there are children from a previous marriage or if the couple wishes to control the ultimate distribution of assets. It provides control and flexibility for the surviving spouse while ensuring that the deceased spouse's assets ultimately pass to the chosen beneficiaries. 2. A/B Marital Trusts: In this scenario, two trusts are created upon the death of the first spouse. Trust A (Marital Trust) holds the assets eligible for the unlimited marital deduction, while Trust B (Bypass Trust) holds the assets eligible for the estate tax exemption. This strategy allows for the optimum utilization of the available tax exemptions and provides for both the surviving spouse's needs and the desires of the couple regarding beneficiaries and asset distribution. In summary, the San Bernardino California Marital Deduction Trust, also referred to as Trust A, and Bypass Trust B are estate planning instruments that assist married couples in minimizing estate taxes and protecting their assets. Implementing these trusts can provide financial security for the surviving spouse while ensuring that their legacy is passed on to intended beneficiaries in accordance with their wishes.
