Using a bypass trust could benefit your estate plan.
You need an estate plan.
There is no way around this fact.
Even though everyone should have an estate plan, not all plans will look the same.
According to a recent KAKE.com article titled “How a Bypass Trust Works in an Estate Plan,” there are a variety of tools to use.
What is a bypass trust?
Also known as the "B" trust, it can protect assets from estate taxation for couples who are married.
How does it work?
Assets are divided between two trusts.
The first is a revocable marital trust, known as the "A" trust.
The surviving spouse gets this trust.
The second trust is the family trust or the "B" Trust, which is irrevocable.
Because it is irrevocable, the terms are unchangeable.
Commonly, the family trust will receive the share of the estate belonging to the first spouse when he or she dies.
The rest of the estate will pass to the marital "A" trust.
Oftentimes, but not always, the surviving spouse has full control of the marital trust and its assets.
At a minimum, the surviving spouse must receive all of the net income from the marital trust and the power to compel the trustee to convert non-income producing assets in the trust to income-producing assets.
The surviving spouse may benefit from the family trust.
He or she also could serve as the trustee or designate a trustee.
What does a trustee do?
The trustee manages assets and follows the instructions within the trust.
This tool is especially useful if you have a "blended family" and want to control the ultimate disposition of your respective assets or have an estate otherwise exceeding the federal estate tax limit of $11.4 million per spouse or $22.8 million as a couple.
Work with an experienced estate planning attorney to determine whether AB trust planning is the right choice for your family.
Reference: KAKE.com (August 13, 2019) “How a Bypass Trust Works in an Estate Plan”