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I have an A/B trust, what needs to be done when my spouse passes away?

By October 30, 2014Estate Planning, Other

After the first spouse passes away, it is important to contact your estate planning attorney regarding the administration of the Trust. During the administration, the original Trust created by the married couple would be split into two sub-trusts. The first sub-trust is called the A Trust, or commonly referred to as the Survivor’s Trust; and the second sub-trust is called the B Trust, or commonly referred to as the Decedent’s Trust.

There are many steps involved in completing the administration of a Trust at the death of the first spouse. Here is a simplistic illustration of a few of these steps:

  • The value of each asset must be determined as of the date of death.

  • Those assets with community property status would receive a full step up in basis. The basis adjustment is very important to minimize capital gains should the surviving spouse choose to sell the asset.

  • Once all of the assets have been valued, an analysis must be completed to determine which assets should be retitled from the original Trust to either the A or B sub-trusts to ensure the maximum asset protection for the surviving spouse against creditors, divorce, and Medicaid spend-down, while at the same time, minimizing taxes.

  • Each asset would be retitled to either the A or B sub-trusts.

  • Depending upon the terms of the Trust, the surviving spouse may have access to use the assets titled to the B Trust, or the Decedent’s Trust.

The Revocable Living Trust is a very powerful estate planning tool, which requires important attention at the death of the first spouse.

Tucson Estate Planning Attorney Wendy HarnContributed by MH Tucson Estate Planning Attorney, Wendy W. Harn.

 

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At Morris Hall, we have focused our legal practice on estate planning for over 40 years.  Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects.  We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead.  Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe.  Contact us today at 888.222.1328 to schedule an appointment!

This blog should be used for informational purposes only.  It does not create an attorney-client relationship with any reader and should not be construed as legal advice.  If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.

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