AB Trust AB trust is a trust that can be used by married couples to reduce or avoid estate taxes. Under this trust, each spouse puts his or her property in an AB trust. 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 crucial condition that the surviving spouse has the right to use the property for life and is entitled to any income it generates. Indeed, the surviving spouse may even be allowed to spend principal in certain circumstances. Upon the death of the surviving spouse, the property passes to the trust beneficiaries. The AB Trust is not considered part of the second spouse's estate for estate tax purposes. Using this kind of trust keeps the second spouse's taxable estate half the size it would be if the property were left directly to the spouse. This type of trust is also known as a bypass or credit shelter trust.
Copyright © 2010 LexRoll.com |
