There are various types of trusts that can be used for estate planning. ABC Trusts are one available for the benefit of surviving spouses and accounts for differences in all tax exemptions. Below is an overview of Burlington MA ABC trusts to better explain this option.

Advantages of ABC Trusts

ABC Trusts are a form of irrevocable trusts. They are helpful in states where the estate tax exemption allowed is less than the federal one and the estate value exceeds both exemption levels. It permits an estate to take full advantage of federal exemptions while deferring a specific amount of state taxes until after the surviving spouse dies.

Examples of How They Work

ABC trusts separate assets into 3 trusts. The B trust holds the exact amount exempted by the state. The remainder of assets up to the federal exemption level are entered into the C trust. Anything above the federal level go into an A trust. For example, assume that you have an estate with 7 million dollars and live in a state with an tax exemption of 1 million dollars (compared to the federal 5 million exemption). The following may take place:

  • B Trust of 1 Million
  • C Trust of 4 Million
  • A Trust of 2 Million

The B and C trusts benefit from the federal tax exemption. The B trust is exempt from state taxes. The C trust postpones state taxes until the surviving spouse passes away. The A trust does not benefit from any exemptions.

Help With ABC Trusts for Burlington MA

This overview of Burlington MA ABC trusts includes only a basic explanation. There are other considerations when it comes to planning an estate. For expert advice, it is important to speak with a local Burlington MA estate planning attorney. Your attorney can review your personal situation, explain all of the options, analyze tax implications, and create a plan that best fits your needs. Feel free to contact Peter DaMore at Law Offices of Peter T. DaMore Jr. by calling 781-229-7900 for information.