Will a living trust reduce estate taxes?
A. Some can. A simple living trust does not affect taxes, whatsoever. However, more complicated living trusts, which include numerous valuable assets, can substantially reduce estate taxes.
An AB trust (also referred to as "credit shelter trust", "exemption trust", "marital life estate trust", and "marital bypass trust") is designed specifically for married couples with children. Each spouse leaves the other spouse property in trust, for life, and then to the children. For example, if Husband and Wife create an AB trust, and Husband dies, Wife receives all of the property of the trust. Then, when Wife dies, her interest in all of that property passes to their children. This AB trust can potentially save up to hundreds of thousands of dollars in estate taxes.
Although, creating a living trust may require more paperwork than just allowing your assets to go through probate, living trusts can save your estate substantial money and time at your death. Aside from saving time and money, living trusts and wills will ensure that your property is distributed the way that you want it, after you are gone. For more living trust information see your local government or consult an attorney.
