Estate Planning Vault

A/B Marital Trusts Still a Good Option for Some

A/B trusts gained popularity in the 1990s as a means of managing federal estate taxes. At that time, the exclusion amount was $600,000. Currently, the exclusion amount is $2 million, in 2009 it will increase to $3.5 million, and in 2010 there will be no estate tax. It’s uncertain what Congress will decide regarding the estate tax, but given the current and near future exclusion amounts, tax concerns alone may not warrant the creation of an A/B trust.

There is another reason, however, to consider an A/B trust. For couples who have children from prior marriages, an A/B trust “prevent[s] the surviving spouse from disinheriting the chosen beneficiaries of the first spouse to die, while still retaining use of all of the trust property until the survivor dies.” Consequently, depending on one’s situation, an A/B trust may be an appropriate choice for ensuring one’s heirs an inheritance.

Source: Napa Valley Register, 10-13-06