Backdating allocation of marital assets into survivor trust
If one spouse dies, the unused portion of his or her estate tax exemption can be transferred and added to the estate tax exemption of the surviving spouse.
Upon the death of the surviving spouse, the property in the decedent's trust passes tax-free to the beneficiaries named in this trust.
When a couple has a joint living trust with a typical A-B arrangement, the joint trust usually holds all of the couple’s community property, i.e. When one of the spouses dies, what is “theirs” is separated into two shares, which may be thought of as “his” and “hers”.
After the death of an individual, his estate is taxed heavily before his beneficiaries receive it.If “he”is the deceased spouse, then “his” share is distributed to the Bypass Trust and “her” share is distributed to the Survivor’s Trust.The Survivor’s Trust holds all of the Surviving Spouse’s separate property and the one half of the community property of the couple which belongs to the Surviving Spouse.The A trust contains the surviving spouse’s property interests, but s/he has limited control over the assets in the deceased spouse's trust.However, this limited control over the B trust will still enable the surviving spouse to live in the couple's house and draw income from the trust, provided these terms are stipulated in the trust.
For example, a married couple has an estate worth $3 million by the time one of the spouses die.