Why AB Trusts Are Beneficial in Estate Planning

We started discussing AB trusts in our last post, but there’s more that you may need to know when considering this type of fund. After the trust is established and one spouse passes away, the surviving spouse must understand certain rights and restrictions.

An AB trust is created with the intention that it will still benefit the surviving spouse. The particulars of how this benefit occurs are somewhat flexible. A couple can draft provisions for the trust but must make sure that any stipulations follow state and federal rules. One might need an estate planning attorney in St. Louis when creating the trust. The A trust with the deceased’s share is now irrevocable while the surviving spouse has full access to their share of the assets in the B trust.

How can a surviving spouse use the A trust?

If assets in the irrevocable trust generate interest or income, the surviving spouse can collect and use this money. The beneficiaries of an AB trust own the assets of the person who passes away first, but the surviving spouse can still use property from this trust. The person may also be able to spend the principal in the trust if it’s needed for this person’s health, education or standard of living.

What can’t the spouse do?

The surviving spouse cannot sell property in trust A. They also can’t change the trust after their spouse passes away, so all the terms and stipulations included are final. Transitioning from having full access to an estate to restricted access for half the estate could be challenging for some people.

When considering your estate planning options, contact us today.

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