Online resource center to help you explore these key issues, and others, regarding your estate.

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Mr. Miller has many years of experience in designing and implementing a comprehensive variety of Trusts, Wills, and other estate planning documents, as well as settling estates in the most expedient and appropriate method. Further, he counsels and assists clients on becoming eligible for VA benefits and Medi-Cal.

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VA Pension/Aid & Attendance/Medi-Cal

Mr. Miller has been active in the area of VA Pension and Medi-Cal for well over a decade. He uses various specialized types of Trusts as well as non-trust strategies to gain eligibility for his clients and save the family money.

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Probate & Estate Administration

Mr. Miller has been settling estates (both simple and complex) for well over 40 years. The starting point is always to create a strategy to settle the estate in the most efficient manner possible with a minimum of taxes. Often times the strategy created allows the family to bypass Probate Court proceedings.

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Should I Leave My A-B Trust in the Dust?


By merv,

  Filed under: Blog, Estate Planning

The answer to this question will depend on a lot of your particular family and estate circumstances.  A-B trusts are only useful for married couples.  If you created your A-B trust for primarily non-tax purposes, then it may still be wise to keep the structure.  For example, if you have children from prior marriages or significant separate property funded in the trust, an A-B trust may continue to serve your needs.  However, if your primary reason for the A-B structure was estate tax protection, it may be time to reconsider.

As an initial matter, changing the type of trust you have does not require that you revoke your trust.  You will not need to change your accounts or your home title and complete other funding tasks that were essential when the trust was initially created.  Instead, you can simply restate your trust which, effectively, amends the entire document.   In the amendment, the requirement for a B trust may be eliminated.

Presently, no one truly needs an A-B trust for estate tax purposes.  Contrary to the rule for probate, which is based on your gross estate (adding up the value of all your assets), estate tax is based on your net estate (your gross estate less debts and certain expenses).  If your net estate exceeds $5.25 million, then your estate may benefit from the use of an A-B trust or filing an estate tax return, but may not require both.  Both methods of preserving the estate tax exemption have timing issues and ongoing administration issues, but depending on your choice, both can be effective for estate tax purposes.

Furthermore, the administration of an A-B trust is more complex and, therefore, more costly.  Depending on the makeup of your estate and the wording of your trust, splitting the assets in an A trust and a B trust may be problematic.  The trust may require that the surviving spouse exhaust available assets before gaining access to the principal in the B trust.  If you have a relatively small number of assets comprising your estate, funding the B trust may be cumbersome or interfere with capital gain basis planning.  Additionally, tax returns will be due annually for the B Trust as an irrevocable trust.

Similarly, changes can be made within your existing A-B trust to add flexibility to the trust.  Allowing the B trust to become a disclaimer trust where the surviving spouse chooses which assets to transfer to the disclaimer trust without the burden of abiding by a funding formula could preserve many of the tax benefits of the A-B trust structure.  Another recently en vogue strategy is to use a “trust protector” clause, which allows a third party to determine whether the B trust ought to be eliminated.  Adding such flexibility may be a good option if you are concerned that the estate tax may be still be lowered during your lifetime.  If your trust has not been reviewed in several years, now may be a good time to review the structure of your trust document with the help of a qualified attorney.  As always, there are pros and cons for any path you consider.

Estate Planning: The Price of Organization, Rewards, Gifts, and Wondrous Tax Things… FREE REPORT: This complimentary report, focused on Estate Planning, is comprised of many of Mr. Miller’s articles from his long running column for the largest regional newspaper in San Diego County. This report will guide you through the questions surrounding getting your estate planning in order.

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About Living Trusts

About Living Trusts is hosted by the Law Offices of Merwyn J. Miller, as your online resource center to help you explore these key issues, and others, regarding your estate.

Merwyn J. Miller, J.D.

  • Board Certified Specialist in Estate Planning, Trust & Probate Law
  • Co-Author of legal text book and of “Don’t Go Broke in a Nursing Home
  • Teacher of law courses at public and private colleges
  • Continuing Education Instructor for attorneys
  • Columnist for largest regional newspaper in San Diego County and professional journals for 15 years, Contributing author to the book “In Your Service: The Veteran’s Friend”
  • Masters Degree in Financial Services - Estate Planning
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