What is an A/B for an Irrevocable Trust?

A/B Trust

Great question! An A/B trust setup, even within the context of an irrevocable trust, is a type of estate planning structure used to help minimize estate taxes and preserve assets—especially for married couples.

🔤 What is an A/B Trust?

An A/B trust splits into two parts when one spouse dies:

  1. Trust A – The Survivor’s Trust

    • Holds the surviving spouse’s share of the assets.

    • The surviving spouse retains control over this portion.

  2. Trust B – The Decedent’s Trust (also called the Bypass Trust or Credit Shelter Trust)

    • Holds the deceased spouse’s share.

    • Becomes irrevocable at the first death.

    • Used to “bypass” the surviving spouse’s estate, preserving estate tax exemptions.

🧾 What Makes It Irrevocable?

When the first spouse dies:

  • Trust B becomes irrevocable.

  • The surviving spouse can typically receive income and sometimes use principal, but they can’t change the terms, beneficiaries, or trustees.

🧠 Purpose of the A/B Trust Structure:

  • Avoid or reduce federal estate tax (especially relevant before the higher exemption limits we have today).

  • Preserve the deceased spouse’s assets for children or other heirs.

  • Protect assets from creditors or remarriage complications.

🛑 Important Notes:

  • These setups are less common today due to high estate tax exemptions (over $13 million per person in 2025), but they still make sense for:

    • High-net-worth individuals

    • Blended families

    • Asset protection goals

📘 A/B Trust in Irrevocable Form:

If the whole trust is irrevocable from the start (say, due to advanced planning or death of the grantor), the A/B structure can still apply to:

  • Lock down one half of the trust (B) for future beneficiaries

  • Give limited control or income access to the surviving spouse (A)