An A-B trust is a revocable living trust which divides into two trusts upon the death of the first spouse. This type of trust makes use of both the estate tax exemption ($3.5 million per person in 2009) and the marital deduction to make it so that no estate taxes are due upon the death of the first spouse. The B Trust is also known as the Bypass trust and it contains the amount of that years applicable exclusion amount. The A trust is the marital deduction trust which will typically contain both the surviving spouse's separate property and one half community property interests but also the residue of the deceased spouse's estate after the estate tax exemption has been utilized by the B trust. The use of an A-B trust ensures that both spouse's applicable exclusion amounts are effectively used, thereby doubling the amount of property which can pass to heirs free of Federal Estate Taxes.
Oklahoma Marital Deduction Trust, commonly referred to as Trust A and Bypass Trust B, are specific types of estate planning tools designed to minimize estate tax liabilities and protect assets for married couples in the state of Oklahoma. Here is a detailed description of both trusts along with some relevant keywords: 1. Trust A — Oklahoma Marital Deduction Trust: Trust A, often known as the "Marital Deduction Trust," is established to take advantage of the unlimited marital deduction provided by the Internal Revenue Code (IRC). It allows the transfer of assets, upon the death of one spouse, to the surviving spouse tax-free. Keywords: Trust A, Marital Deduction Trust, unlimited marital deduction, transfer of assets, surviving spouse. There are several subtypes of Trust A in Oklahoma that cater to specific needs and circumstances, such as: — General Power of Appointment Trust: This type of Trust A provides the surviving spouse with the power to distribute trust assets during their lifetime, while still ensuring estate tax savings. — Income Only Trust: In this variant, the surviving spouse receives only income generated by the trust assets, with the principal protected for other beneficiaries, typically the couple's children or grandchildren. TIPIP Trust: Qualified Terminable Interest Property Trust ensures control over how trust assets are distributed after the surviving spouse's death while enjoying the marital deduction now. 2. Bypass Trust B — Oklahoma: Bypass Trust B, also known as the "credit shelter trust" or "family trust," operates parallel to Trust A, aiming to leverage each spouse's individual estate tax exemption. Upon the death of the first spouse, a predetermined amount, up to the estate tax exemption limit, is transferred to Bypass Trust B, thereby avoiding estate taxes on that amount. Keywords: Bypass Trust B, credit shelter trust, family trust, estate tax exemption. Variations of Bypass Trust B in Oklahoma include: TIPIP Marital Trust: Similar to the QTIP Trust in Trust A, the surviving spouse receives income generated by the trust assets during their lifetime, and control of the principal is preserved for the final beneficiaries. — Irrevocable Life InsurancTrustiestIT): In this type of Bypass Trust B, the trust owns a life insurance policy on the deceased spouse, with the insurance proceeds passing tax-free to the beneficiaries, outside the taxable estate. In conclusion, Oklahoma Marital Deduction Trusts — Trust A and Bypass Trust — - are key estate planning instruments utilized by married couples to optimize estate tax savings, protect assets, and ensure the smooth transfer of wealth from one generation to the next. Understanding the different types of Trust A and Bypass Trust B is crucial in tailoring these trusts to meet individual family objectives, wealth preservation goals, and tax planning strategies.
