{"id":2610,"date":"2017-02-24T16:25:35","date_gmt":"2017-02-25T00:25:35","guid":{"rendered":"http:\/\/afadmin.ahrenstech.com\/?p=764"},"modified":"2019-04-19T05:38:32","modified_gmt":"2019-04-19T13:38:32","slug":"ab-trusts-you-need-get-rid-yours","status":"publish","type":"post","link":"https:\/\/rains-law.com\/ab-trusts-you-need-get-rid-yours\/","title":{"rendered":"AB Trusts \u2013 Do You Need to Get Rid of Yours?"},"content":{"rendered":"<p><a href=\"http:\/\/rains-law.com\/wp-content\/uploads\/2017\/03\/33291947_m.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-medium wp-image-2730\" style=\"margin-right: 20px;\" src=\"http:\/\/rains-law.com\/wp-content\/uploads\/2017\/03\/33291947_m-300x169.jpg\" alt=\"AB Trusts\" width=\"355\" height=\"200\" \/><\/a>Are you married and the last time you updated your trust was before 2011?\u00a0 If so, your estate plan is probably of the old &#8220;AB Trust&#8221; variety.\u00a0 Before 2011, that was the only kind of trust that allowed married couples to double their federal estate tax exemption value.\u00a0 After 2011, the legal principle of &#8220;portability&#8221; came into existence.\u00a0 AB Trusts often are also called &#8220;Marital and Family Trusts,&#8221; &#8220;QTIP,&#8221;\u00a0or &#8220;Bypass Trusts.&#8221;<!--more--><\/p>\n<h2>What is Portability?<\/h2>\n<p>Basically, portability means that whatever amount of an individual&#8217;s federal estate tax exemption is not used before they die, their surviving spouse can claim that amount and use it themselves.\u00a0 Portability is now a permanent part of the tax code, but the old kind of AB Trusts may actually hurt you more than help.<\/p>\n<p>For example, Frank and Jane have been married for four decades.\u00a0 If Frank dies this year, this federal estate tax exemption is $5.49 million.\u00a0 If he used none of his exemption, Jane can take Frank&#8217;s unused amount and add it to her own, in effect making her exemption total $11.98 million.\u00a0 Upon both Frank&#8217;s and Jane&#8217;s death, all their property received an adjustment of basis.\u00a0 This means that their descendants&#8217; income tax and capital gains tax liabilities is lowered.<\/p>\n<h2>How Old AB Trusts Can Hurt You<\/h2>\n<p>Now, let&#8217;s say that Frank and Jane had a normal pre-2011 estate plan that they did not update.\u00a0 Not only would June be stuck with an old estate plan, but Frank and Jane&#8217;s descendants would not get an adjustment of basis after Jane dies.\u00a0 This ultimately means that their descendants will have a higher tax bill than they could have.<\/p>\n<p>This is just one scenario of old AB Trusts that may require a second look at your estate plan to see if it requires a change.\u00a0 However, there are still good reasons to use AB Trusts in today&#8217;s environment.\u00a0 These considerations must be weighed so you can make an informed decisions of what is best for you and your family.\u00a0 <a title=\"Contact Us\" href=\"http:\/\/rains-law.com\/contact\/\">Contact The Rains Law Firm<\/a> or <a title=\"Schedule a Meeting\" href=\"http:\/\/rains-law.com\/contact\/schedule-meeting\/\">schedule a complimentary initial meeting<\/a> to discuss what kind of estate plan, including AB Trusts, is right for you.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are you married and the last time you updated your trust was before 2011?\u00a0 If so, your estate plan is probably of the old &#8220;AB Trust&#8221; variety.\u00a0 Before 2011, that [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[29],"tags":[19],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>AB Trusts \u2013 Do You Need to Get Rid of Yours? - The Rains Law Firm<\/title>\n<meta name=\"description\" content=\"AB Trusts are a time-honored estate planning strategy, but legal changes have made them not as desirable as they used to be. 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