Allocating assets in an A-B Trust is a crucial aspect of estate planning for clients with taxable estates, designed to optimize tax benefits and ensure a seamless transfer of wealth to beneficiaries.

Allocating assets in an A-B Trust is a crucial aspect of estate planning for clients with taxable estates, designed to optimize tax benefits and ensure a seamless transfer of wealth to beneficiaries. In this strategy, a married couple establishes a Trust that splits into two upon the death of the first spouse to die - the "Survivor's Trust" (Trust A) and the "Decedent's Trust" (Trust B). Careful consideration must be given to the allocation of assets between these Trusts, as it directly impacts tax implications. Typically, the surviving spouse's Trust (Trust A) may include marital assets and be eligible for the unlimited marital deduction, while the decedent's Trust (Trust B) could house assets up to the available estate tax exemption amount. Striking the right balance requires a thorough understanding of the couple's financial situation, current tax laws, and the long-term goals for wealth preservation, emphasizing the importance of seeking professional advice for optimal asset allocation within an A-B Trust.

If you have questions about estate planning to save federal and state estate taxes, give us a call at 253.858.5434 to set up an appointment.