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Bypass Trust Attorney

 Orange County, CA
(949) 290-7156

Benefits of an A-B Trust

An A-B Trust also known as a credit-shelter, bypass, or family trust is a tax saving device that allow the maximum amount of property to pass to your inheritors without tax for a couple whose assets are above the estate tax exemption, which is $2 million for 2008.  An A-B Trust, Credit Shelter Trust, Bypass Trust, or Family Trust preserves the estate tax exemption for each spouse to use when leaving assets to their inheritors in effect doubling the amount of inheritance that passes free from estate tax. 

How an A-B Trust Works

A revocable A-B Trust is created a married couple and can be revoked or amended while both spouses are living.  Upon the death of the first spouse, A, the A-B trust is divided into two trusts, Trust A and Trust B.  Trust A is funded with up to the tax marital deduction, which is $2 million for 2008.  The remaining assets are transferred to Trust B tax free under the marital deduction.  Trust A becomes irrevocable upon the death of the first spouse.  During the lifetime of the surviving spouse, the property in Trust A can be used by the surviving spouse for “health, education, support, or maintenance.”  When the surviving spouses dies, the assets in Trust A pass to the inheritors designated by the first spouse tax free up to the exemption limit utilizing the first spouse’s exemption.  During the lifetime of the surviving spouse, Trust B remains revocable and amendable by the surviving spouse.  When the surviving spouse dies, Trust B is passed to the inheritors of the surviving spouse tax free up to the limit under that spouse’s exemption.

A-B Trust Attorneys

Our experience and expertise enables us to determine whether clients would benefit from an A-B trust, credit shelter trust, bypass trust, or family trust and identify the appropriate type of trust given their individualized situations.  Our Orange County estate planning firm drafts and incorporates living trust into overall estate plans to assists our clients in directing the distribution of their property with minimum tax liability and delay.

As an estate planning firm based in Orange County, Ca, we provide comprehensive estate planning services including wills, trusts, power of attorney, and advance care directives for a full range of clients from high net worth to working class.