When it comes to securing your family’s financial future, estate planning is a key component as a Katy, TX revocable living trust lawyer can share. For married couples in Texas, A/B Trust planning is an effective strategy to minimize estate taxes and ensure smooth asset distribution. With the guidance of Attorney Stuart Green, who serves clients across Texas since starting his own firm in 2021, you can understand why this approach is particularly vital in 2024.
Why A/B Trusts Are Essential In 2024
In 2024, the federal estate tax exemption is set at $13.61 million per individual. This means each person can pass on up to $13.61 million without incurring federal estate taxes. For married couples, this amount doubles to $27.22 million. However, the Tax Cuts and Jobs Act (TCJA) of 2017, which temporarily increased these exemptions, will sunset in 2026. At that point, the exemptions are expected to revert to lower amounts, making it crucial to consider A/B Trust planning now.
Understanding A/B Trusts
A/B Trust planning involves splitting the estate into two separate trusts upon the death of the first spouse:
• Trust A, also known as the survivor’s trust, is controlled by the surviving spouse. They can use the assets in this trust as they wish.
• Trust B, or the bypass trust, holds the deceased spouse’s share. The surviving spouse can benefit from the income generated by Trust B but does not have control over the principal assets. These assets eventually pass to the beneficiaries, typically the children, upon the death of the surviving spouse.
Benefits For Texas Residents
Texas residents can particularly benefit from A/B Trust planning. Here’s how:
• Maximizing Estate Tax Exemptions: By dividing the estate, each spouse can fully utilize their individual exemption. Trust B makes use of the deceased spouse’s exemption, reducing the taxable estate for the surviving spouse.
• Protecting Assets: Trust B provides a layer of protection from creditors and ensures that the assets are managed according to the deceased spouse’s wishes, safeguarding the inheritance for the beneficiaries.
• Flexibility And Security: While Trust B is irrevocable, the surviving spouse can still benefit from its income, ensuring financial stability without compromising the protection of the principal assets.
Taking Action In 2024
With the potential reduction in estate tax exemptions looming in 2026, 2024 is an opportune time for Texas couples to consider A/B Trust planning. Attorney Stuart Green, based in Houston, specializes in guiding clients through this process, ensuring that their estate plans are optimized to minimize future tax liabilities.
Steps To Implement A/B Trust Planning
To effectively utilize A/B Trusts, it is essential to:
• Consult with an experienced estate planning attorney, like Stuart Green, who can tailor the plan to your specific needs and circumstances.
• Understand the structure and function of Trusts A and B, including the limitations and benefits for the surviving spouse and eventual beneficiaries.
• Prepare the necessary legal documents to establish the trusts, ensuring compliance with Texas laws and federal tax regulations.
Ensuring A Secure Future
Estate planning is about more than just minimizing taxes; it’s about providing for your family’s future. A/B Trusts offer a strategic way to protect your assets and ensure they are distributed according to your wishes. With the estate tax exemption currently at $13.61 million and the anticipated changes in 2026, now is the time for Texas residents to act.
Attorney Stuart Green in Houston, Texas, is dedicated to helping clients across the state navigate the complexities of estate planning. By considering A/B Trust planning in 2024, you can take advantage of the current estate tax laws and safeguard your family’s financial future. Reach out to Stuart Green Law, PLLC to learn more about how A/B Trusts can benefit you and your loved ones in Texas; he is licensed in Texas, Kentucky, Pennsylvania, and South Dakota.