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Using an AB trust to save on taxes

On Behalf of | Jul 21, 2022 | Trust |

There are plenty of methods that you can adopt to save on taxes. One of the best will be an AB trust. This type of trust is perfect for the needs of South Carolina married couples. You can use it to maximize your federal real estate exemptions. This will let you pass on more money to your spouse and beneficiaries by paying less on estate taxes.

First, you need to create a marital trust

Trusts of the AB variety are set up for the purpose of benefiting your surviving spouse. It will also name the parties who will benefit from the trust when your spouse passes on. The surviving spouse does not actually own the assets in this trust. Their use of the property is secured by the trust as long as they meet the conditions you have laid down.

The surviving spouse will have full control over the use of the family home. They can also spend the assets that have been included in the trust. They can also receive interest on the income that is generated from the property included in the trust.

Next, you need to create a bypass trust

You can conclude your estate planning by making provisions for the second part of an AB trust. This is known as the bypass. It comes into being when the surviving spouse passes away. All of the property in the trust will now be transferred to the parties who have been named as beneficiaries.

All of the rights that the surviving spouse had up until the time of their death will now be transferred to the beneficiaries. In most cases, these will be the children that were produced by the marriage. They can continue to enjoy the tax privileges conferred by an AB trust.