AB Trust
Definition: AB Trusts are used by married couples to maximize the federal estate tax exemptions of both spouses. When the first spouse dies, that spouse’s estate plan (e.g., a Revocable Living Trust or Will) directs the division of their assets into two Trusts. The first Trust (Trust B) contains the amount of assets exempt from federal estate taxes (currently $3.5 million). The second Trust (Trust A) contains anything over the federal estate tax exemption. A married couple can effectively pass on two times the exemption amount to their heirs free from estate taxes.