Personal Finance (Not Investing) • Father Has Passed; Do we need an Appraisal?

I'm not sure you understand what a B trust is. It's short for bypass. It was common in the 90's, but today, most couples opt for the disclaimer trust. The survivor's trust is what a joint trust becomes without the bypass trust being funded. It has other names too. But the second basis adjustment relies upon mom having the general power to appoint.

Am I correct in that assets in a B trust do not receive an additional step up in basis at the death of the surviving spouse?

Most of the time, but if the lawyer was good, they could have given an independent trustee the discretion to give the spouse a general testamentary power of appointment over the assets allowing a second adjustment. But that's fairly rare IME. I haven't seen one outside of my own documents.

And if he/she was average, the trustees could decant the trust to add the general power, or could distribute the trust assets to the spouse; and if he/she was average minus, in a Uniform Trust Code state the trustees could ask the court to modify the trust to add the general power.

The term B, which is archaic, refers to the credit shelter (bypass) (family) trust, to distinguish it from the A trust, which is an archaic term for a marital trust.

While all to the spouse or a marital trust, with a disclaimer trust as backup, is more common given the current level of the estate tax exclusion amount and portability, a mandatory credit shelter trust sometimes make sense, to take advantage of both spouses' GST exemptions (since there's no portability for the GST exemption), to take advantage of both spouses' state exempt amounts, or where control is important.

Statistics: Posted by Sandi_k — Thu Mar 28, 2024 12:12 am — Replies 24 — Views 2415