ABC Trust Flow Chart

Estate Planning for Couples in Los Angeles

Revocable Trusts for Married Couples

Revocable Trusts can be structured to reduce or eliminate transfer taxes, especially for married couples.

Specific Trust Instruments

  • Bypass Trust
  • Credit Shelter Trusts
  • AB Trusts
  • ABC Trusts
  • Exemption Trusts
  • Disclaimer Trusts

This type of trust begins as a single Revocable Trust. When the first of the Settlors dies, the Trust is divided into sub-trusts.

For example, an AB Trust divides into the “Survivor’s Trust” and the “Decedent’s Trust” (or “Credit Shelter Trust”). The Survivor’s Trust remains revocable and contains the surviving Settlor’s property interest. The Survivor has complete control over the property and can change the ultimate beneficiaries at any time. The Decedent’s Trust contains the deceased Settlor’s assets that can pass tax free. For example, for a Settlor dying in 2008, the Decedent’s trust could contain up to $2,000,000 worth of the Decedent’s assets (including the deceased Settlor’s interest in the joint assets). The income and principal from the assets in the Decedent’s trust may be distributed to the surviving Settlor, however the surviving Settlor may not change the ultimate beneficiaries of the Decedent’s Trust, nor can the surviving Settlor revoke the Decedent’s Trust. There are two main purposes for the creation of an AB type of Trust. The first is to ensure that upon the death of both Settlors, the maximum amount of assets and property can pass tax free to the final beneficiaries.

To illustrate, assume a married couple creates a Bypass Trust. The husband dies in 2007, at which time the total value of the estate is $4,000,000 (and the exclusion amount is $2,000,000). Upon the husband’s death, the surviving wife creates the Survivor’s Trust with her $2,000,000 interest in the estate and the Decedent’s Trust with the deceased husband’s $2,000,000 interest in the estate. The wife dies in 2008. Given the $2,000,000 estate tax exemption for 2007 and 2008, the couple’s entire estate of $4,000,000 can pass estate tax free to their children. If however, the couple did not create a bypass trust, only $2,000,000 of the total estate could have passed to the couple’s children without any estate tax. The other $2,000,000 would be subject to Federal Estate Tax.

The second main purpose for the creation of an AB type of trust is for the protection of future beneficiaries, in most circumstances, children from a prior marriage. While the surviving Settlor can dispose of his or her assets however he or she wishes, the surviving Settlor can not change the ultimate beneficiaries of the deceased Settlor’s Trust. For example, the surviving step-father can not “disinherit” his deceased wife’s children or prevent them from ultimately inheriting from their mother’s share of the estate.


e-Mail Kien C. Tiet, Esq. Map to Office

I am your Los Angeles Tax Lawyer Kien C. Tiet, Esq. Every day I have the privilege to meet good people struggling with tax issues that if not handled correctly can cause stress, anxiety or over payment of unnecessary taxes. Often times we discover that with some simple planning we can significantly reduce the taxes that they as an individual or business owner will owe next year and for years to come. Yes! The tax laws are complicated and ever-changing, which is why you need someone who lives and breathes Tax Laws & Regulations 365/24/7… No matter the complexities of your financial or tax challenges, I can assure you that working with a full-time lawyer who works with tax laws will go a long way to finding a solution that makes sense…

Knowledge is Power and I will share my extensive legal and tax law knowledge with you when you have me partner with you.

Call my office to schedule an appointment with me, Los Angeles Tax Lawyer, Kien C. Tiet, Esq. My offices are open 9 am – 5 pm, Monday through Friday.

Call (626) 448-2282


e-Mail Kien C. Tiet, Esq. Map to Office
I am your Los Angeles Tax Lawyer Kien C. Tiet, Esq. Every day I have the privilege to meet good people struggling with tax issues that if not handled correctly can cause stress, anxiety or over payment of unnecessary taxes. Often times we discover that with some simple planning we can significantly reduce the taxes that they as an individual or business owner will owe next year and for years to come. Yes! The tax laws are complicated and ever-changing, which is why you need someone who lives and breathes Tax Laws & Regulations 365/24/7... No matter the complexities of your financial or tax challenges, I can assure you that working with a full-time lawyer who works with tax laws will go a long way to finding a solution that makes sense... Knowledge is Power and I will share my extensive legal and tax law knowledge with you when you have me partner with you.
Call my office to schedule an appointment with me, Los Angeles Tax Lawyer, Kien C. Tiet, Esq. My offices are open 9 am – 5 pm, Monday through Friday. Call (626) 448-2282