AB TRUST Meaning and
Definition
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An AB trust, also known as a marital bypass trust or a credit shelter trust, is a legal arrangement commonly used in estate planning. It is designed to minimize estate taxes and ensure the efficient transfer of assets between spouses after one spouse passes away.
An AB trust is typically established by a married couple to take advantage of the federal estate tax exemption. Upon the death of the first spouse, the trust is split into two separate trusts: the A trust (also known as the survivor's trust or marital trust) and the B trust (also known as the bypass trust or family trust). The A trust holds the surviving spouse's share of the estate and remains available for their use during their lifetime. The B trust, on the other hand, holds the deceased spouse's share of the estate and is shielded from estate taxes.
The main purpose of an AB trust is to utilize the estate tax exemption available to each individual. By splitting the assets into two trusts, the couple can effectively double their estate tax exemption and potentially reduce the overall estate tax liability upon the death of the surviving spouse. The B trust, which bypasses the surviving spouse's estate, is not included in their taxable estate, ultimately preserving a significant portion of the couple's wealth for future generations.
AB trusts are complex legal entities that require careful planning and the assistance of qualified professionals such as attorneys and financial advisors to set up properly. It is crucial to understand the specific laws and regulations surrounding AB trusts as they may vary between jurisdictions.
Common Misspellings for AB TRUST
- zb trust
- sb trust
- wb trust
- qb trust
- av trust
- an trust
- ah trust
- ag trust
- ab rrust
- ab frust
- ab grust
- ab yrust
- ab 6rust
- ab 5rust
- ab teust
- ab tdust
- ab tfust
- ab ttust
- ab t5ust
- ab t4ust
Etymology of AB TRUST
The term "AB trust" is not derived from a specific word with etymology. Instead, it is an acronym that stands for "A" and "B", which represent the separate trusts created within the larger arrangement. The "A" trust is often referred to as the "marital trust" or "survivor's trust", while the "B" trust is called the "bypass trust" or "family trust". The name "AB trust" comes from the combination of these two individual trusts to form a cohesive estate planning tool.
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