AB Disclaimer Trust:
Is It For You?
The Law Firm of RICHARD O. BARNDT; E-Mail: RichardBarndt@TrustAdvice.com; Website: www.TrustAdvice.com
San Diego County:
6265 Greenwich Drive, Suite 100-C, San Diego, CA 92122 (858) 554-1712; fax (858) 455-6260
1206 North Broadway, Santa Ana, CA 92701
(714) 939-1810; fax (714) 550-7234
Due to changes in federal estate tax laws, married couples with AB or ABC Trusts
(containing mandatory sub-trust funding provisions) should consider amending and
restating their trust to an AB Disclaimer Trust to avoid unnecessary complexity and
administration expense at the death of the first spouse. This only applies to married
couples who agree that the survivor may have the power to change everything.
Amend and restate your living trust (have a new complete living trust drafted with new
date to replace your existing one) to an AB Disclaimer ($895). You will NOT need to
re-title your assets that are already titled in the name of your trust. When needed, it
must be completed before the death of the first spouse.
DO I NEED IT?
That depends on you. AB and ABC Trusts still work as designed. But after you
understand the pros and cons of the different trust types, and if you agree that the
survivor may have the power to change everything, then you may prefer the
characteristics of an AB Disclaimer Trust. In that case, you should make the change.
The AB Trust type is the favored Revocable Living Trust among estate planners for married couples and
is the foundation estate planning document for most. I specify AB Trust “type” because there are several types of
AB Trusts. Regardless of type, these trusts have two major functions: to keep your estate out of probate during your
lifetime and at death, and to guarantee the use of both spouse’s federal estate tax exemptions (hereafter
“exemption”), if needed, thereby reducing or eliminating federal estate tax.
During 2001, President Bush signed tax legislation that will phase out the federal esta