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College Station Estate Planning Lawyer Discusses the A/B Will

Posted by Chris Peterson | Nov 22, 2013 | 0 Comments

College Station Estate Planning Lawyer Discusses the A/B Will

ab trustThe AB will or AB trust is an important tool used by married couples to maximize their exemptions from the imposition of estate tax liability. The AB will and trust is also helpful in avoiding probate, which can increase costs and significantly lengthen the amount of time it takes to disburse and distribute assets. If your net worth is approaching or exceeds $5.25 million, or $10.5 million as a married couple, you should meet with a College Station estate planning lawyer right away to discuss your options.

Usefulness of an AB Trust Newer tax laws are beginning to phase out the need for an AB trust. However, the instrument may still be useful in certain circumstances.

Each individual person presently maintains a $5.25 million estate tax exemption. Combined with a spouse, the exemption totals $10.5 million. The IRS further exempts imposition of estate tax with regard to any transfer of assets between spouses, so most spouses left all assets to the other in their estate plans. The tax problem occurs upon the death of the second spouse, who is then taxed at a top rate of 40 percent.

One way to do this and avoid estate tax imposition is by transferring property into an irrevocable AB trust. This way, marital property is not technically “owned” (for tax purposes) by either spouse. Upon the death of the first spouse, the corpus stays in trust for the benefit of the surviving spouse. The beneficiaries named in the trust will inherit the property upon the death of the second spouse. These beneficiaries, usually the children, will pay minimal estate tax since the property was owned by the AB trust and not the surviving spouse individually.

Contact a College Station estate planning lawyer Today High net worth clients should seriously consider engaging a College Station estate planning lawyer to determine the best estate plan to avoid over-assessment of taxes. For more information, contact the Peterson Law Group today by calling 979-703-7014.

About the Author

Chris Peterson

Chris Peterson is the owner of Peterson Law Group. He practices primarily in the areas of wills, trusts and estate planning; probate and trust administration; elder law; and business law. Chris is also the owner of Brazos 1031 Exchange Company.


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