Some individuals may not know where to start when it comes to drafting a plan for their future. However, there are a number of estate planning tools at one's disposal. Most people are familiar with the broad terms of wills and trusts, but each category is filled with intricacies which, depending on how they are addressed, can help an individual create the customized estate plan that meets his or her needs. This is especially true with trusts, as there are a variety of trust options available for individuals to utilize.
One of these trust options is the AB trust. Put in its simplest terms, the AB trust allows one spouse's assets to pass to the other spouse upon death without taxation. When assets are left to beneficiaries via a will, the estate's assets can be heavily taxed. The AB trust, however, may allow an individual to avoid these taxes. Of course, estate taxes usually only kick in when large estates are in play, but even those with relatively smaller estates may want to speak with their attorney about this option.
One thing to keep in mind about the AB trust is that it is irrevocable. This means that once it has been created and the testator dies, it cannot be modified. The beneficiary, usually the testator's spouse, also cannot access the principal of the trust, and is instead limited to the principal earned from the trust and use of the trust's property. When the beneficiary spouse dies, then these trust assets often pass to the couple's children.
As we mentioned above, this is just one of the many trust options available to Illinois and Indiana residents. Creating a comprehensive estate plan requires looking at all of these options and pursuing those that further one's best interests, which may include avoiding taxation and dispersing assets according to one's wishes. By speaking to a competent estate planning attorney, these individuals may be able to learn more about the steps they can take to create a plan that is right for them.