Skip to Content

We are a Veteran Owned Business, providing 20% discounts for Veterans, First Responders, Elementary and High School teachers. Please contact us to set up a phone or Zoom meeting. Taking care of you and your family, It's What We Do!

AB Trusts

What is an AB Trust?

An AB Trust is two different trusts used as part of their Estate Plan to minimize estate taxes. The married couple creates these trusts in Wills or Revocable Living Trusts. The “A Trust” often called the “Marital Trust“, “Marital Deduction Trust” or “QTIP” Trust holds and amount that the deceased spouse’s exemption cannot shelter from tax and the “B Trust” or “Credit Shelter Trust,” “Family Trust,” or “Bypass Trust” holds the amount that the deceased spouse’s exemption can shelter.

What is the Purpose of an AB Trust?

The AB Trust allows a spouse to provide for the care of the surviving spouse while preserving all death tax exemptions and providing shelter from the surviving spouse’s creditors and future spouses. The AB Trust can also be crafted to ensure that the assets pass to the deceased spouse’s children or family at the surviving spouse’s death, keeping them out of the hands of the second husband/wife.

How an AB Estate Plan Works:

  1. The couple has their Estate Planning Lawyer incorporate the necessary technical language into their Will or Revocable Living Trust.
  2. Assets are arranged to comply with the AB Trust plan.
  3. At the first spouse’s death, an amount that can be sheltered from estate tax pours into the Bypass or “B” Trust. The remainder pours into the Marital or “A” Trust.
  4. During the surviving spouse’s life, the assets in both trusts are sheltered from creditors and subsequent marriages.
  5. The “A” Trust is included in the surviving spouse’s estate, utilizing his or her estate tax exemption.
  6. The assets can continue in protective trusts for their children, sheltered from their divorces and creditors.

Typical Estate Questions About AB Trusts:

Here are some questions clients, beneficiaries, and Trustees ask:

Can I have more than one beneficiary in the AB Trust?

The B Trust can include beneficiaries other than the surviving spouse. For example, children are often included as beneficiaries.

How is the AB Trust different from the Marital Trust?

The “Marital Trust” is another term for the “A” Trust. The Marital Trust is a part of an AB Trust Estate Plan.

What are the Pros of AB Trust Planning?

Asset protection, estate tax avoidance and maintaining assets within the family.

What are the Cons to the AB Trust?

At the first spouse’s death, careful planning is required to follow the steps necessary to preserve the tax exemptions. Each trust is assigned a tax ID and must file a separate annual income tax return.

Is the AB Trust better than the Marital Trust?

The “Marital Trust” is another term for the “A” Trust. The Marital Trust is a part of an AB Trust Estate Plan. 

Reasonable Prices | Years of Experience | We Make Trusts and Estate Planning Easier

If you have any questions about AB Trusts or any other estate planning topics, please contact us to schedule a free consultation. For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex estate law and planning techniques clearly and concisely. We make it easy for you to understand AB Trusts so you can make the best decisions for yourself and your family.

What Our clients are saying

Klenk Law Logo
Stars

A Google User

Peter Klenk was great in leading us in the estate planning process.He was clear in describing the various steps and what they would accomplish. We were well satisfied and pleased that we had Peter to guide us.

Klenk Law Logo
Stars

Peter J. Gutekunst, CFP®

I've worked with and known Peter Klenk and his associates for years. They are highly professional, diligent and truly experts in their field. By focusing on just wills, trusts, and estates, Klenk law has experienced every angle of estate planning and applied that knowledge to help prepare our clients with thorough and comprehensive documents.

Klenk Law Logo
Stars

Chris B.

AWESOME LAWYER! Peter Klenk is an exceptional attorney and a very nice person! Today I spoke with Peter about estate planning and was impressed with by his professionalism, cordiality, and attention to detail. I highly recommend Klenk Law for probates, wills, trusts, and other issues germane to estate planning!

Klenk Law Logo
Stars

Rocco D.

I have worked with Peter Klenk & his associates for some time now and I have found them to be ultra-qualified, knowledgeable and diligent about their work. I highly recommend them.

Klenk Law Logo
Stars

Rachel Roney

Peter has done a great job with the estate planning for my father. He is very thorough and patient as we, the family need to make decisions.

Let us put our expertise to work for you.

Free consultation within 24 hours.