No Estate Tax Could Mean No Survivor Trust Benefits
If there were ever a more compelling reason to see your estate planning attorney to update your estate plan, it would be hard to find, according to a recent column at Forbes.com that says couples who use A-B Trusts could be leaving a surviving spouse with no assets if one of them dies in 2010, the year (thus far) of no estate taxes.
The A-B trust is a common estate planning tool for married couples that splits a trust into two components – the “A” trust is assigned to the first spouse to die, and is funded with the greatest value of assets, which will suffer no federal estate tax on the first to die. The “B” trust is for the surviving spouse, and is funded with the remainder of the couple’s assets.
Upon the death of the surviving spouse, the assets in the “A” Trust go to the heirs with no estate taxes due.
However, according to the Forbes.com column, if one spouse dies in 2010 and the A-B Trust has been created using the traditional language -- "the largest taxable estate on which no federal estate tax is payable"—the “A” trust will contain all of the couple's assets and the survivor's trust will have no assets.
If you are concerned about how the evolving estate tax law could affect your estate this year or in the future, you should consult with an estate planning attorney.
