How an AB LIVING TRUST works?
You create an living trust that takes effect at your death (up until your death, you are free to amend or revoke the living trust). You name your spouse as your beneficiary, who has certain rights to the living trust property during his/her life. Your surviving spouse is called the “life beneficiary” of the living trust. The property you put into the living trust is part of your taxable estate. However, when you use an AB living trust, no estate tax will be due at your death – regardless of the value of your estate or the year you die (due to the unlimited spousal exemption). The main benefit of an AB living trust comes when the life beneficiary (i.e., the surviving spouse) dies. The tax-avoidance key to an AB LIVING TRUST is that the life beneficiary never legally owns the trust property; therefore when the surviving spouse dies, the property held in the living trust will not be considered part of his/her estate. This is true even if the life beneficiary had the rights to receive all
