IRS and AB Trust terminology?


N

nomail1983

Is there a standard for AB trust terminology? In
particular, should "Trust A" always refer to the deceased
spouse's trust, and "Trust B" always refer to the surviving
spouse's trust?

That is the terminology that the author of a Nolo Press book
uses [1], as do some online sources. However, at least two
online sources reverse the terminology [2], using "Trust A"
to refer to the surviving spouse's trust, for example.

On the other hand, the Nolo Press author states: "[T]he IRS
is familiar with the Trust A and Trust B terminology".

Does that mean that the IRS expects "Trust A" to refer to
the deceased spouse's trust, for example?

If so, can someone cite an IRS code or regulation section
where the terminology is used in that way?

I have been sifting through IRR part 20, to no avail. Sigh,
the links in the results of the CFR search engine do not
seem to work for me.

PS: If there is no nationwide standard terminology, is there
at least a standard for California? If so, on what do you
base the fact that it is standardized? For example, can you
cite a Calif code or regulation section where the
terminology is used in a particular way?

Again, I have been sifting through Calif code myself, to no
avail.


-----
[1] "Make Your Own Living Trust", Denis Clifford, 2005

[2] http://www.savewealth.com/planning/estate/livingtrusts.html

http://www.csus.edu/giving/outlookdocs/OutlookS03.pdf#search="ab trust"
 
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C

cballard

Is there a standard for AB trust terminology? In
particular, should "Trust A" always refer to the deceased
spouse's trust, and "Trust B" always refer to the surviving
spouse's trust?
At least in this part of the country (Michigan), the Trust A
and Trust B terminology is about 15 years out of date.
Almost every document using this arrangement that I see
these days uses "Marital Trust" and "Family Trust". The
added bonus is that the terms are more descriptive. You
will still hear lawyers talking about this type of a
arrangement as an "AB Trust", but no one actually uses those
terms in the trust document anymore.

--Chris Ballard
 
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S

Stuart A. Bronstein

(e-mail address removed) wrote:
At least in this part of the country (Michigan), the Trust A
and Trust B terminology is about 15 years out of date.
Almost every document using this arrangement that I see
these days uses "Marital Trust" and "Family Trust". The
added bonus is that the terms are more descriptive. You
will still hear lawyers talking about this type of a
arrangement as an "AB Trust", but no one actually uses those
terms in the trust document anymore.
I've been perparing trusts for people for more than 25
years, and I've never used the "A-B" terminology. It was
always Marital Trust, Survivor's Trust, QTIP Trust.

It was only a few years ago when I went to someone else's
seminar that I learned which is which - Trust A contains the
property of the spouse who is (A)bove ground, and Trust B
contains the property of the spouse who is (Below) ground.

Stu
 
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N

nomail1983

Previously said:
Is there a standard for AB trust terminology? In
particular, should "Trust A" always refer to the deceased
spouse's trust, and "Trust B" always refer to the surviving
spouse's trust?
Some respondents questioned the use of the terms "Trust A"
and "Trust B" altogether.

The trust was written several years ago by a Calif attorney
who has been practicing estate planning law in the state for
36 years. In a letter, he wrote: "The enclosed Trust is a
classic exemption Trust, with Trust A containing the
Surviving Spouse's share [of property] and Trust B
containing assets equal to the Deceased Spouse's exemption."

Indeed, the titles of the subtrusts are "The [names] Estate
Planning Trust A -- Survivor's Trust" and "The [names] Estate
Planning Trust B -- Decedent's Trust".

The trust was reviewed recently by a Calif attorney who has
been practicing estate planning law in the state for 42
years. In a letter, he wrote: "Upon the death of your late
husband, the Trust was divided between Trust A, which is
commonly referred to as a Survivor's Trust, and Trust B,
which is commonly referred to as an Exemption Trust".

That "common" application of the terms Trust A and Trust B
is at odds with the application of those terms in a Nolo
Press book [1], as well as in the model trust documents
therein.

One conclusion might be that there is no single standard for
the application of those terms, or that the standard (if
any) in Calif differs from some other parts of the nation.
(But Nolo Press is usually very good in pointing out such
differences and in singling out Calif in particular.)

However, the Nolo Press author wrote: "[T]he IRS is
familiar with the Trust A and Trust B terminology".

That caused me to wonder if the IRS uses the terms Trust A
and Trust B itself, and if so, if the IRS uses those terms
consistently in one particular manner or the other.

Hence my questions, which have not been addressed by
anyone so far, to wit....

Does the IRS expect "Trust A" to refer to the deceased
spouse's trust, for example, as the Nolo Press book does?

If so, can someone cite an IRS code or regulation section
where the terminology is used in that way?

And in deference to the "common" application of those terms
to the contrary by Calif attorneys, I wonder: is there any
Calif law that uses those terms consistently in one manner
or another?
 
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S

Stuart A. Bronstein

One conclusion might be that there is no single standard for
the application of those terms, or that the standard (if
any) in Calif differs from some other parts of the nation.
(But Nolo Press is usually very good in pointing out such
differences and in singling out Calif in particular.)
I think that's right. There is no legal definition of
"trust A" or "trust "B." Look at the trust and the rights
it gives, not what it is called.
However, the Nolo Press author wrote: "[T]he IRS is
familiar with the Trust A and Trust B terminology".
Everyone is familiar with the terminology. But legally it
has no specified meaning.
Does the IRS expect "Trust A" to refer to the deceased
spouse's trust, for example, as the Nolo Press book does?
They don't care what you call it, they care what it's
written to do.
If so, can someone cite an IRS code or regulation section
where the terminology is used in that way?
I am not aware that they use those terms in any technical
sense, such as regulations. In Treas. Reg. 26.2632-1 they
seem to use the terms in an example to mean the first trust
referred to and the second trust referred to. The B trust
there is a generation skippping transfer trust.

In §1.664-1 Trust B is a charitable remainder trust.
And in deference to the "common" application of those terms
to the contrary by Calif attorneys, I wonder: is there any
Calif law that uses those terms consistently in one manner
or another?
I have been unable to find any reference to these terms in
California law.

Stu
 
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