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A bypass trust is a long-term planning device. It is typically created as part of an A/B Living trust estate plan after the death of the first spouse to die. During life, a married couple transfers ownership of property into a trust.
An AB trust, also known as a bypass trust, divides a married couple’s estate into two separate legal entities (trust A and trust B) when the first of the two people dies. Trust B receives assets ...
A trust can turn non-taxed accounts into taxable ones. However, you can make the trust itself the beneficiary, so that these accounts pass directly to your trustees without an IRS agent crashing ...
For example, a bypass trust is designed to meet the cash-flow needs of a surviving spouse, but it will transfer to the surviving spouse's beneficiaries, which are named in the trust, after his or ...
The trust will escape all transfer taxes when the children die and will pass tax-free to the grandchildren. The trust may be protected from the claims of creditors and, to some degree, from claims of ex-spouses. Had the trust property been left to the children outright, the property would be subject to such claims.
The aim of the law is to ensure that the intention of the trust creator or decedent is carried out, and to govern the proper distribution of assets to trust beneficiaries, heirs and devisees. [1] To be enacted into law, the Act must be adopted by the state legislature. To date, most states have adopted the Act (sometimes with modifications). [2]
A trust can turn non-taxed accounts into taxable ones. But you can make the trust itself the beneficiary so that these accounts pass directly to your trustees without some IRS agent crashing the wake.
Finally, a trust may be created for a certain non-charitable purpose without an ascertainable beneficiary for a certain period (21 years, under the default rules of the UTC.) [91] The most common example of a trust for a specific non-charitable purpose is a trust for the care of a cemetery plot.