The A/B trust is a special type of estate planning tool that can be used in order to avoid estate taxes. Here are the basics of the A/B trust and how it works.

A/B Trust

This is a type of trust that can be utilized by married couples. This type of trust is usually utilize in order to minimize the impact of estate taxes when passing assets onto beneficiaries. With this type of trust, the married couple can split up their assets into separate ownership. One spouse is going to own part of the assets while the other spouse owns the rest.

How it Works

This technique is used so that each spouse will be able to get an estate tax exemption. If they did not use this tool, when one of the spouses died, they will be able to pass their assets onto the other spouse without any taxes being paid. However, whenever the second spouse dies, they would have to pass the entire estate on to their beneficiaries at once. This would be more likely to trigger an estate tax than if the resources were divided into 2 different portions. This allows the beneficiaries to take full advantage of the estate without using too much of it to pay taxes.

blog comments powered by Disqus