bsmith@yourtrustdr.com
**(949) 833-8891**
!
Open Menu
  + 
* (949) 833-8891
###
# IS YOUR TRUST A TICKING TIME BOMB?
, 
These days very few families need a complicated tax avoidance trust also known as an A-B Trust. Many trusts were set up over the years to help protect wealth from death taxes. The old A-B Trust allowed you to double the tax savings by creating 2 trusts. However, the federal death tax exemption has risen steadily in recent years from $600,000. Congress has made the death tax exemption permanent until 2026 and indexed it for inflation. As a result, very few people need estate tax planning, and many A-B Trusts that were created years ago are no longer necessary.
But what if you set up an A-B Trust years ago? You may want to act now to get rid of it and avoid unnecessary expense and hassle for your family. The current laws make A-B Trusts less desirable than it was in the past when the exemption amount was $600,000.
How does an A-B Trust work? When one spouse dies, the Trust is split into two (2) trusts, Trust A, for the surviving spouse, and Trust B, for the deceased spouse. Trust B is irrevocable, the surviving spouse cannot change its terms. When one spouse dies the survivor must hire a lawyer or an accountant to determine how to best divide the couple’s assets between the deceased spouse’s irrevocable trust and the surviving spouse’s revocable trust. This decision can have important tax consequences.
The irrevocable “B” Trust is a separate tax paying entity. The surviving spouse must get an employer identification number issued by the IRS for the trust, and file annual trust tax returns (both a 1041 and a 541). These returns are in addition to the 1040 and 540 returns required for Trust A. Therefore, the surviving spouse will need to file four (4) separate income tax returns for the rest of their life! The surviving spouse must keep separate records or the irrevocable trust property.
The surviving spouse would need two bank accounts: one for Trust A and another separate bank account for Trust B. The A-B Trust becomes complicated after the death of the first spouse, and most surviving spouses are upset about these complications. The children are upset with the A-B Trust because the assets in the B Trust are subject to income taxes that could have been avoided if their parents had busted the A-B Trust.
As long as both spouses are alive, you can revoke your old A-B Trust and avoid the expense and hassle that will come after one spouse dies. To do it correctly, you should restate your old A-B Trust and update it to a simple probate avoidance trust with disclaimer provisions. You will also want to update your wills, health care directives, and powers of attorney for property. The title and date originally used for the trust will stay the same, so you don’t have to worry about changing title to any of your assets.
***Update your trust today! Call W. Bailey Smith, the “Trust Doctor” at (949) 833 – 8891. He has created over 8,000 trusts.***
Share Post:
### Leave a Reply 
Save my name, email, and website in this browser for the next time I comment.
Δ
## ASK A QUESTION
Name Email
PhoneMessage
### Recent Posts
### Newsletter
Email address:
Leave this field empty if you're human:
### About Us
W. Bailey Smith is a Certified Specialist in Estate Planning, Trust Administration and Probate. He has served as an Agent in Counter-Intelligence in the U.S. Army. He graduated from Stanford University and the University of California, Hastings College of the Law.
### Recent News
### Our Office
Address:
2601 Main St, Suite 1200
Irvine, CA 92614 
 (949)  833-8891
*bsmith@yourtrustdr.com*
The information on this website is for general information purposes only. Nothing on this website should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.
SERVING COMMUNITIES THROUGHOUT THE ENTIRE STATE OF CALIFORNIA
LOS ANGELES COUNTY
Agoura Hills, Alhambra, Arcadia, Artesia, Avalon, Azusa, Baldwin Park, Bell, Bell Gardens, Bellflower, Beverly Hills, Bradbury, Burbank, Calabasas, Carson, Cerritos, Claremont, Commerce, Compton, Covina, Cudahy, Culver City, Diamond Bar, Downey, Duarte, El Monte, El Segundo, Gardena, Glendale, Glendora, Hawaiian Gardens, Hawthorne, Hermosa Beach, Hidden Hills, Huntington Park, Industry, Inglewood, Irwindale, La Cañada Flintridge, La Habra Heights, La Mirada, La Puente, La Verne, Lakewood, Lancaster, Lawndale, Lomita, Long Beach, Los Angeles, Lynwood, Malibu, Manhattan Beach, Maywood, Monrovia, Montebello, Monterey Park, Norwalk, Palmdale, Palos Verdes Estates, Paramount, Pasadena, Pico Rivera, Pomona, Rancho Palos Verdes, Redondo Beach, Rolling Hills, Rolling Hills Estates, Rosemead, San Dimas, San Fernando, San Gabriel, San Marino, Santa Clarita, Santa Fe Springs, Santa Monica, Sierra Madre, Signal Hill, South El Monte, South Gate, South Pasadena, Temple City, Torrance, Vernon, Walnut, West Covina, West Hollywood, Westlake Village, Whittier
ORANGE COUNTY
Aliso Viejo, Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Irvine, La Habra, La Palma, Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Los Alamitos, Mission Viejo, Newport Beach, Orange, Placentia, Rancho Santa Margarita, San Clemente, San Juan Capistrano, Santa Ana, Seal Beach, Stanton, Tustin, Villa Park, Westminster, Yorba Linda
RIVERSIDE COUNTY
Banning, Beaumont, Blythe, Calimesa, Canyon Lake, Cathedral City, Coachella, Corona, Desert Hot Springs, Eastvale, Hemet, Indian Wells, Indio, Jurupa Valley, La Quinta, Lake Elsinore, Menifee, Moreno Valley, Murrieta, Norco, Palm Desert, Palm Springs, Perris, Rancho Mirage, Riverside, San Jacinto, Temecula, Wildomar
SAN BERNARDINO COUNTY
Adelanto, Apple Valley, Barstow, Big Bear Lake, Chino Hills, Chino, Colton, Fontana, Grand Terrace, Hesperia, Highland, Loma Linda, Montclair, Needles, Ontario, Rancho Cucamonga, Redlands, Rialto, San Bernardino, Twentynine Palms, Upland, Victorville, Yucaipa, Yucca Valley
SAN DIEGO COUNTY
Carlsbad, Chula Vista, Coronado, Del Mar, El Cajon, Encinitas, Escondido, Imperial Beach, La Mesa, Lemon Grove, National City, Oceanside, Poway, San Diego, San Marcos, Santee, Solana Beach, Vista
Copyright @ yourtrustdr.com 2024 - All Rights Reserved
Developed and Hosted by
# Merry Christmas 2024
Wishing you a joyous holiday season filled with peace, love and happiness. May the spirit of Christmas bring warmth to your home and hear. Merry Christmas! – W. Bailey and Lenda Smith
# Best Lawyers 2024
I am honored to be recognized as one of the Best Lawyers in the United States in the area of Trusts and Estates – W. Bailey Smith
xml version="1.0" encoding="UTF-8"?
Comments on: Homepage
The Trust Doctor
Wed, 28 Aug 2024 16:37:05 +0000
hourly
1