Revocable Trusts
Reciprocal Revocable Inter Vivos A&B Trust (with or without Q-Tip) with Pour Over Wills for Client and Spouse
Each revocable inter vivos A&B trust is a trust establishing two trust shares, the Marital (“A”) Share and the Family (“B”) Share. The Marital Share is intended to benefit the surviving spouse and is designed typically to be funded to the maximum amount possible so as to eliminate federal and state estate taxes at the first spouse’s death. The Marital Share can limited to a Q-Tip trust, or the surviving spouse can be given a power to withdraw the entire Marital Share, depending upon how flexible (or not) the clients wish to be.
The Family Share (often called a “by-pass” trust) is funded with the remainder of the estate. Typically the Family Share will provide a lifetime income interest for the surviving spouse (including discretionary distributions of principal), with an ultimate disposition to the client’s children or other beneficiaries.
The pour over wills complement these trusts by providing that all the clients’ assets are to be distributed to their respective revocable trusts, to be disposed of according to its provisions. An exception is made for personal property (jewelry, furnishings, etc.) which is typically given outright to the surviving spouse, if living, otherwise to the client’s children or other designated persons.
As with all revocable trusts, the revocable inter vivos A&B trusts can be funded with the clients’ assets during their lifetimes, thereby avoiding probate at death.
Dual Grantor Revocable Trust
This trust is a revocable trust where both husband and wife are usually treated as making equal contributions to the trust. (The contribution percentage can be adjusted to reflect the actual contributions, or, the trust can designate which assets are contributed by which spouse.) The estate of the first spouse to die will include only the stated assets or stated percentage of the trust property.
Typically, this trust is used when the combined estates of the husband and wife are not large enough to warrant the use of reciprocal marital deduction trusts or when absolutely no restraint is to be placed on the surviving spouse’s control over the trust, regardless of the tax implications. This trust is often ideal for the working husband and wife who have both made significant contributions to the total “family” assets and who wish to avoid unnecessary probate proceedings and/or provide management for the couple’s assets for the benefit of themselves, their children and/or other designated beneficiaries.
The surviving spouse has the option of electing (by disclaimers) to effectively make the trust into an A&B type marital deduction trust, thereby avoiding inclusion in the surviving spouse’s estate of the assets so disclaimed. The assets so disclaimed will remain in a Marital Share for the exclusive benefit of the surviving spouse, allowing the surviving spouse to continue to enjoy the benefit of the disclaimed property.
Ultimately, upon the death of the surviving spouse, the trust provides for an ultimate disposition to the clients’ children or other beneficiaries.
Pour over wills for both husband and wife accompany this trust.
Revocable Trust with Pour Over Will for Client without Spouse
This trust is designed primarily to provide management for the client’s assets for the benefit of the client’s children and their issue (or for other persons). It is often used to provide for the benefit of minor children, but can also be designed in a variety of ways, such as to provide for children who are not able to handle their own finances, etc.