Can I Benefit from an A-B Trust?
An A-B trust can be an effective way to help reduce estate taxes and preserve family assets for heirs.
An A-B trust can be an effective way to help reduce estate taxes and preserve family assets for heirs.
An A-B trust, sometimes called a marital and bypass trust arrangement, can help married couples preserve estate tax exclusions and direct assets for heirs.
When the first spouse dies, assets may be divided into separate trusts. The surviving spouse can benefit from trust assets while the bypass portion may remain outside the survivor's taxable estate.
This structure may also help protect appreciation, preserve assets for children from a previous marriage, and provide creditor protection depending on state law and trust design.
Because federal and state estate tax rules change over time, A-B trusts should be reviewed in context with current law, portability, and the couple's total estate.
Important Considerations
- Review estate documents after major life changes.
- Coordinate beneficiary designations with wills and trusts.
- Consider tax, legal, and investment implications before making changes.
This article is for educational purposes only and should not be relied upon as tax, legal, investment, or retirement advice. Consult qualified tax and legal professionals before implementing estate planning strategies.
Keep Reading
How Can I Benefit from a Charitable Remainder Trust?
A designated income beneficiary could receive payment of a specified amount from a charitable remainder trust.
Read articleHow Will I Pay Estate Taxes?
If you believe your estate will be subject to estate taxes, consider how your heirs will pay the bill.
Read article