Tax Planning Considerations A/B Planning For Living Trust
A/B Planning, also known as Credit Shelter Trust or Bypass Trust planning, is sometimes used in conjunction with a Living Trust for married couples, especially those with a high net worth. It allows each spouse to maximize their individual estate exemption, reducing the tax burden on their combined assets. By creating separate trusts for each spouse, A/B Planning ensures that both spouses can take advantage of their estate tax exemption and pass on more of their wealth to their beneficiaries tax-efficiently. Irrevocable Trust With Lifetime Protection Subtrust For high-net-worth clients who may be concerned about federal and estate taxes, an Irrevocable Trust with a Lifetime Protection Subtrust can offer significant tax benefits and asset protection. The benefits of an irrevocable trust can include the following: • Estate tax reduction
• Lifetime gifting options • Protection from creditors • Protection from divorce • Control and flexibility
By consulting with an estate planning attorney, clients can customize their Irrevocable Trust to align with specific needs and financial objectives, optimizing all available tax benefits. However, due to the long-term implications of such a trust, it’s crucial to seek professional guidance and careful planning to ensure your plan meets overall estate planning goals.
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