SUBSCRIBE
Enter your Name and Email address to get
the newsletter delivered to your inbox.
Please include name of person that directed you to my online newsletter so I can thank them personally.
1021223-00006-00
Evan M. Haines, RICP®
Financial Advisor
Prudential Advisors
222 Independence Street
PO Box 632
Perryopolis, PA 15473
Phone: 724-736-2130
Email: evan.haines@prudential.com
May/June 2023
Do You Need a Trust?
While trusts are often complex, they offer high net worth families and individuals tax advantages and more control over how their assets are distributed to future generations. One of the more common and effective trusts used to accomplish these twin goals is an AB trust, which is also known as a credit shelter or bypass trust. This type of trust begins as a revocable trust, when you can make changes, and ends as an irrevocable trust.
When families and individuals want to retain some control over how their assets are distributed after they’re gone while limiting the corrosive effect of estate taxes, any one of a variety of irrevocable trusts can accomplish this. Irrevocable trusts also shield assets named in these trusts from the public glare of probate court, while dictating how your estate will provide for family going forward.
AN AB TRUST IS A DUAL-PURPOSE VEHICLE THAT CAN ALLOW YOU TO PROVIDE INCOME TO A SURVIVING SPOUSE WHILE EVENTUALLY PASSING ON TAX-ADVANTAGED ASSETS TO BENEFICIARIES.
Multiple Advantages
How does this trust work? Part A of the trust provides income to the surviving spouse. When the second spouse dies, Part B kicks in for the benefit of the second spouse’s estate and becomes irrevocable.By dividing asset ownership among both spouses, the trust ensures the couple receives the maximum federal estate tax exemption, or credit, which in 2023 is $12.92 million per individual. This is key because a couple can lose part of one spouse’s exemption if they haven’t used it all.
While the estate can allow the surviving spouse to use the deceased spouse’s remaining exemption, it has some limits. The AB trust provides more control, but it doesn’t apply to the GST tax exemption and isn’t recognized by some states.
An AB Trust can offer control, maximize tax credits and help ensure that assets pass to beneficiaries as intended.
If you want to leave financial means to a spouse after your death while also ensuring other beneficiaries ultimately receive the remainder of tax-advantaged assets, the AB trust is one way to achieve this.
Consult an estate planning attorney and your tax and financial professionals to learn if this type of trust is appropriate for your situation.
1066606-00001-00
CONTACT US
Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.
Offering investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Prudential and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Prudential, the Prudential logo, and the Rock Symbol are service marks of Prudential Financial Inc., and its related entities, registered in many jurisdictions worldwide. Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
Prudential Advisors and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.