What is the name of your state (only U.S. law)? NY
My dad passed away a couple of years ago.. He had a standard Bypass (AB) trust in effect, and I became the trustee of this trust upon his death. The trust was funded with assets designated such that the full amount of the estate tax exclusion comprised what was labeled the 'B' share, and the balance which was considerably less was held in the 'A' share.
The amount in the 'B' share was determined by the size of the estate tax exclusion in effect when the trusts were funded. Next year, of course, this $2 mil exclusion amount climbs to $3.5 mil, and in 2010, it is unlimited.. Thereafter, we have no idea what the exclusion amount will be, although, as currently stated, it reverts back to 2002-03 levels of $1 mil.
My question is this.. Lets say there is a $3 mil exclusion in effect when mom dies and when the entire estate gets settled.. Lets say the amount in Dad's trust is $3 mil, but because the estate tax exclusion was $2 mil when the assets were divided, the 'B' share has $2 mil and the 'A' share has $1 mil. According to the trust document, it appears that, at mom's death, whats in dad's share 'A' gets co mingled with mom's assets, and the sum of them both will be subject to the estate tax in effect at the time of mom's death on the entire amount; only whats in Dad's Share 'B' is sheltered from the estate tax.. So, even though the estate tax exclusion might be $3 mil at the time the surviving spouse, ie, mom dies, the only portion of Dad's Trust which is sheltered from taxes is not the entire contents of the trust, but only whats been designated as 'Share B' when the trust was set up.
Ironically, it would appear that, under these circumstances, we all would have been better off had no trusts been created at all! Does this seem to comport with your understanding of how these trusts work? Or, are these workings of the 'A' and the 'B' portions of these trusts individual to each trust and not standard enough to comment on? thanks.
My dad passed away a couple of years ago.. He had a standard Bypass (AB) trust in effect, and I became the trustee of this trust upon his death. The trust was funded with assets designated such that the full amount of the estate tax exclusion comprised what was labeled the 'B' share, and the balance which was considerably less was held in the 'A' share.
The amount in the 'B' share was determined by the size of the estate tax exclusion in effect when the trusts were funded. Next year, of course, this $2 mil exclusion amount climbs to $3.5 mil, and in 2010, it is unlimited.. Thereafter, we have no idea what the exclusion amount will be, although, as currently stated, it reverts back to 2002-03 levels of $1 mil.
My question is this.. Lets say there is a $3 mil exclusion in effect when mom dies and when the entire estate gets settled.. Lets say the amount in Dad's trust is $3 mil, but because the estate tax exclusion was $2 mil when the assets were divided, the 'B' share has $2 mil and the 'A' share has $1 mil. According to the trust document, it appears that, at mom's death, whats in dad's share 'A' gets co mingled with mom's assets, and the sum of them both will be subject to the estate tax in effect at the time of mom's death on the entire amount; only whats in Dad's Share 'B' is sheltered from the estate tax.. So, even though the estate tax exclusion might be $3 mil at the time the surviving spouse, ie, mom dies, the only portion of Dad's Trust which is sheltered from taxes is not the entire contents of the trust, but only whats been designated as 'Share B' when the trust was set up.
Ironically, it would appear that, under these circumstances, we all would have been better off had no trusts been created at all! Does this seem to comport with your understanding of how these trusts work? Or, are these workings of the 'A' and the 'B' portions of these trusts individual to each trust and not standard enough to comment on? thanks.