AB Trust

Business, Legal & Accounting Glossary

Definition: AB Trust



Full Definition of AB Trust


A trust that allows couples to reduce or avoid estate taxes. Each spouse puts his or her property in an AB trust. When the first spouse dies, his or her half of the property goes to the beneficiaries named in the trust — commonly, the grown children of the couple — with the crucial condition that the surviving spouse has the right to use the property for life and is entitled to any income it generates. The surviving spouse may even be allowed to spend principal in certain circumstances. When the surviving spouse dies, the property passes to the trust beneficiaries. It is not considered part of the second spouse’s estate for estate tax purposes. Using this kind of trust keeps the second spouse’s taxable estate half the size it would be if the property were left directly to the spouse. This type of trust is also known as a bypass or credit shelter trust.


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AB Trust. PayrollHeaven.com. Retrieved December 04, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/ab-trust/

Definition Sources


Definitions for AB Trust are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 22nd April, 2020 | 1 Views.