What is AB living trust?

An AB living trust, also known as an A-B trust, is an estate planning tool commonly used by married couples to manage and distribute their assets while minimizing estate taxes. It typically consists of two separate trusts: Trust A holds the assets of the surviving spouse, while Trust B is funded with the deceased spouse’s portion, often to take advantage of the estate tax exemption. This arrangement allows for the continued management of assets and can help ensure that beneficiaries receive their inheritance according to the couple's wishes. Additionally, it helps avoid probate, making the transfer of assets smoother and more efficient.