A-B Trust

An arrangement used by spouses to take advantage of the marital deduction estate tax by creating a marital trust, or A trust, at the first spouse’s death. This creates a benefit to the surviving spouse for life and a bypass, or B, trust qualing the assets from the deceased spouse’s remaining unified credit-exclusion amount. The B trust can be referred to as a credit shelter trust and is usually help for the lifetime of the surviving spouse, benefiting the surviving spouse and the couple’s descendants. Upon the death of the surviving spouse, the beneficiaries typically take the assets free from estate tax, regardless of the value of the B trust.