Ive Heard of an AB Trust, What Does That Do?
An AB trust allows couples to reduce or avoid estate taxes. Each spouse puts his or her property in an AB trust, and when the first spouse dies, his or her half of the property goes to the beneficiaries named in the trust — commonly, the grown children of the couple — with the condition that the surviving spouse has the right to utilize the income as well as use the trust to provide for their health, maintain their standard of living, pay for education, and provide various other benefits. When the surviving spouse dies, the property passes to the trust beneficiaries. It is not considered part of the second spouse’s estate for estate tax purposes. This allows the trust to use both spouses lifetime exemption to “shelter” a large amount of assets. This AB trust, allows a married couple to pass a significant amount of property to their children or other beneficiaries after both spouses die, while at the same time ensuring the surviving spouse is financially comfortable during his or her
