An AB trust is a trust created by a married couple to avoid probate and minimize federal estate tax. An AB trust is created by each spouse placing property into a trust and naming someone other than his or her spouse as the final beneficiary of that trust. Upon the death of the first spouse, the surviving spouse does not own the assets in that spouse's trust outright, but has a limited power over the assets in accordance with the terms of the trust. Such powers may include the right to receive interest or income earned by the trust, to use the trust property during his or her lifetime, e.g. to live in a house, and/or to use the trust principal for his or her health, education, or support. Upon the death of the second spouse, the trust passes to the final beneficiary of the trust. For estate tax purposes, the trust is included in the first, but not the second, spouse's estate and therefore, avoids double taxation.
A Jacksonville Florida Marital Deduction Trust, also known as Trust A, is a type of trust created by married individuals in the state of Florida as a part of their estate planning. This trust is designed to take advantage of the marital deduction provided in the Internal Revenue Code, allowing for the deferral of estate taxes upon the death of the first spouse. The purpose of a Marital Deduction Trust is to provide for the surviving spouse while also ensuring that the assets transferred into the trust are not included in the estate of the surviving spouse upon their death, thereby reducing the potential estate tax liability. This trust is revocable during the lifetime of the granter, meaning that the granter can make changes to the trust or revoke it altogether. There are different variations of Trust A within a Marital Deduction Trust, depending on the specific needs and goals of the individuals creating the trust. Some common types include: 1. Qualified Terminable Interest Property Trust (TIP Trust): This type of Trust A provides income to the surviving spouse for their lifetime, but allows the granter to designate beneficiaries who will receive the remaining assets upon the death of the surviving spouse. This trust is often used when the granter wants to provide for their current spouse while also ensuring that the assets are ultimately distributed to children from a previous marriage or other intended beneficiaries. 2. General Power of Appointment Trust: In this type of Trust A, the surviving spouse has the power to appoint the assets or income to themselves or other designated beneficiaries. This provides flexibility for the surviving spouse to control the distribution of assets while still taking advantage of the marital deduction. On the other hand, the Bypass Trust B, also known as a credit shelter trust, is another component of the Jacksonville Florida Marital Deduction Trust. This trust is irrevocable and is created to maximize the available federal estate tax exemption. The primary purpose of a Bypass Trust is to shelter a portion of the deceased spouse's assets from estate taxes upon the surviving spouse's death. The assets transferred to the Bypass Trust are not included in the surviving spouse's estate, meaning they can pass to beneficiaries, typically children or other intended heirs, without incurring additional estate taxes. This trust allows the granter to utilize the estate tax exemption of the first spouse to die, which may not be fully utilized if the assets pass directly to the surviving spouse. Overall, a Jacksonville Florida Marital Deduction Trust involves the creation of Trust A (such as a TIP Trust or General Power of Appointment Trust) to take advantage of the marital deduction and provide for the surviving spouse, along with Trust B (Bypass Trust) to maximize the use of the federal estate tax exemption. These trusts are tailored to each individual's specific circumstances and goals, and it is advisable to consult with an estate planning attorney for the proper creation and implementation of these trusts.A Jacksonville Florida Marital Deduction Trust, also known as Trust A, is a type of trust created by married individuals in the state of Florida as a part of their estate planning. This trust is designed to take advantage of the marital deduction provided in the Internal Revenue Code, allowing for the deferral of estate taxes upon the death of the first spouse. The purpose of a Marital Deduction Trust is to provide for the surviving spouse while also ensuring that the assets transferred into the trust are not included in the estate of the surviving spouse upon their death, thereby reducing the potential estate tax liability. This trust is revocable during the lifetime of the granter, meaning that the granter can make changes to the trust or revoke it altogether. There are different variations of Trust A within a Marital Deduction Trust, depending on the specific needs and goals of the individuals creating the trust. Some common types include: 1. Qualified Terminable Interest Property Trust (TIP Trust): This type of Trust A provides income to the surviving spouse for their lifetime, but allows the granter to designate beneficiaries who will receive the remaining assets upon the death of the surviving spouse. This trust is often used when the granter wants to provide for their current spouse while also ensuring that the assets are ultimately distributed to children from a previous marriage or other intended beneficiaries. 2. General Power of Appointment Trust: In this type of Trust A, the surviving spouse has the power to appoint the assets or income to themselves or other designated beneficiaries. This provides flexibility for the surviving spouse to control the distribution of assets while still taking advantage of the marital deduction. On the other hand, the Bypass Trust B, also known as a credit shelter trust, is another component of the Jacksonville Florida Marital Deduction Trust. This trust is irrevocable and is created to maximize the available federal estate tax exemption. The primary purpose of a Bypass Trust is to shelter a portion of the deceased spouse's assets from estate taxes upon the surviving spouse's death. The assets transferred to the Bypass Trust are not included in the surviving spouse's estate, meaning they can pass to beneficiaries, typically children or other intended heirs, without incurring additional estate taxes. This trust allows the granter to utilize the estate tax exemption of the first spouse to die, which may not be fully utilized if the assets pass directly to the surviving spouse. Overall, a Jacksonville Florida Marital Deduction Trust involves the creation of Trust A (such as a TIP Trust or General Power of Appointment Trust) to take advantage of the marital deduction and provide for the surviving spouse, along with Trust B (Bypass Trust) to maximize the use of the federal estate tax exemption. These trusts are tailored to each individual's specific circumstances and goals, and it is advisable to consult with an estate planning attorney for the proper creation and implementation of these trusts.
