Most trusts established for married couples over the past several years in San Diego County and southern California are known as “A-B” trusts, and there are ample reasons to review your existing trust to make sure it offers the best flexibility and security for you and your family. A-B trusts can limit the ability of the surviving spouse to access needed funds and assets down the road, where a “Disclaimer Trust” may provide more flexibility and options. Recent developments in federal estate tax exemptions have opened new opportunities for most California couples to update their trust to provide more flexibility and access without exposing the underlying assets to probate or additional tax liabilities. A-B trusts will usually freeze half of the couple’s assets, locking them in place until the passing of the second spouse. The original intent of an A-B trust was to divide the assets upon the death of the first spouse (placing them in the “B” trust) in order to reduce or shelter the overall size of the taxable estate. While the surviving spouse usually has access to the income from the “B” portion of the trust, there are often limitations placed upon the principle in the B trust, and this can limit the options of the surviving spouse in many circumstances.
This area of law is constantly evolving and changing, and it is important to review existing trusts every 3 years or so. Our experienced trust, estate planning and tax attorneys will review your existing documents to ensure that the trusts are properly constructed and funded, and make modifications as necessary to accomplish your goals and needs. If you have not reviewed your trust in the past 3 years, or have not made time to establish a trust to protect your assets we invite you to call us at 866-631-3470 for a free consultation. We will review your unique circumstances, and help you to put a plan in place or update your existing trust to provide the best combination of flexibility and peace of mind.