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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