What is an A/B Trust and how can it help your blended family?
Authored by: Collin D. Dickey
About 40-50% of first marriages in the United States end in divorce. The divorce rate for subsequent marriages is even higher. It is easy to see how this high divorce rate makes blended families extremely common. But it may not be apparent that Estate Planning can be somewhat tricky for blended families when weighing the various concerns.
A reoccurring concern we encounter with blended families is essentially this – If I die before my spouse, will my spouse change our Estate Plan to exclude my children? This concern can easily be addressed with an Estate Planning tool known as an A/B Trust.
What is an A/B Trust? It is actually two different trusts for one married couple. This tool allows for each spouse to have their separate Trust dictating their own separate intents. This way, couples with blended families do not necessarily have to be in agreement as to where and how they want their assets to pass upon their death.
Each trust in the A/B Trust can be funded separately and hold different assets. But assets can also be held concurrently by both trusts. For example, your home can be held by both trusts, with a one-half interest in each spouse’s Trust. This allows each spouse to hold half interest in the home and, if something were to happen to one spouse, their share would be distributed in the way they have intended pursuant to their trust. These trusts can contain as specific language as each spouse prefers, addressing terms such as allowing the surviving spouse to continue living in the home until he or she passes away.
Having an A/B Trust is one of the most convenient and mutually beneficial ways in which to carry out the various wishes and intentions present in a blended family. If you would like to speak to an attorney about Estate Planning for your blended family, please contact our office today to set up an initial consultation.