AB TRUST 

An AB trust helps wealthy married couples to save their wealth with an unchangeable bypass trust. When one spouse passes away, the account is split into two separate trusts: one trust for the surviving spouse and one irrevocable trust for beneficiaries.




example 

In the US the estate tax exemption is $12.06 million per person. For a married couple, that means they can pass on up to $24.12 million to their heirs without having to pay federal estate taxes. let's say if the wife died then her assets are automatically going to her husband but using AB trust the wife's assets are going to the beneficiary (maybe a child, family member etc...) in name of the trust to control the asset and to be free from the tax. the husband can get income generated from the wife's assets. The funds are also exempt from estate taxes up to the exemption limit.

 

advantages:-

 

Can reduce estate taxes

Avoids probate

Assets go to beneficiaries



disadvantages:-

Often unnecessary

Complex estate planning trusts can be expensive.

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