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A/B Trust. What happens when first spouse dies and B trust isn't funded. If the name of the trust was, e.g.

Los Angeles, CA |

entitled the Jones Family Trust for the couple, doesn't that such title change, and then splits to two separate names, with one party's assets irrevocable? B trust here was not funded.
Thank you.

Attorney Answers 5

  1. Best answer

    Unfortunately this is a very common occurance. Since the trust required the diivision, failure to do so is a breach of the fiduciary duty of the trustee. It can, however, be fixed. The assets in the estate as of the date of death must be specificaly identified. The proper termnology in the trust must be analized to assure how the division is directed. There is flexibility in most circumstances in selecting assets that would go into the two trusts. The transfers are then made as soon as possible.
    You will also need to look at the fact that each subtrust may have had separate tax return requirements. An analysis is needed (based on the trust terms) to decide whether returns which were not filed should be filed now, or whether that is not necessary.
    An analyisis also needs to be done to determine the estate tax impact. As of Januari 1, 2013 the exemption goes to $1,000,000, and the rates go up to 55%. Thus this may be a big deal. The whole purpose behind the A-B split is usually to avoid paying tax at a 55% rate when the survivor dies.
    This is one you need to consult with counsel on , and get it fixed.
    Bill C

  2. Your question is not well written and doesn't have nearly enough information to respond with any particulars. The title of the trust is only that, a title, the meat of the trust is what is written IN the document itself.

    How title changes depends on the asset. In any event, trust assets are titled in the TRUSTEE's name "as trustee". Some property, such as homes, require a change to the title itself. Other property that does not have a title, can simply be listed in the trust.

    Typically both trusts are testamentary trusts. Meaning they are not in existence until the parties die - and then they are created by the executor and then funded with the targeted assets. if the trust was set up differently, such as a pour-over trust, and no assets were placed into the B trust, then the party will not receive the benefits or drawbacks of having assets in that trust. They can be placed in the trust after the death, however, if the document allows for it.

    Matthew Johnson phone# 206.747.0313 is licensed in the State of Washington and performs bankruptcy, short sale negotiations, and estate planning in Whatcom, Skagit, Snohomish, King and Pierce counties. The response does not constitute specific legal advice, which would require a full inquiry by the attorney into the complete background of the facts and circumstances surrounding this matter; rather, it is intended to be general legal information based on the limited information provided by the inquirer; it This response also does not constitute the establishment of an attorney-client relationship, which can only be established after a conflict of interest evaluation is completed, your case is accepted, and a fee agreement is signed. Johnson Legal Group, PLLC

  3. An attorney can create a JT A/B trust that splits into two parts upon the first death and funded upon the first death or create two separate A/B trusts from the start and fund them anytime after creation before death.
    Your question-was not funded-is a matter of timing.
    If separate trusts were created and never funded-it might be too late if everything was owned jointly with right of survivorship.
    If it was a JT A/B and either one passed away-it depends on the timing of death and if the survivor had use and enjoyment of the assets before trying to fund the trusts.

    The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.

  4. I agree with Mr. Pippen. You should take the trust and all documentation to an estate planning attorney who does trust administrations. I have seen subtrusts (the A Trust and B Trust are subtrusts) that were not funded until many years after the date of death. This is a common problem because the surviving spouse thinks nothing has to be done.

    However, you want to have an attorney review all the facts and circumstances.


  5. Your situation is not clear. Was the trust not funded because it did not need to be? (A/B trusts typically are necessary only if the estate is subject to Estate Tax). If that is the case, then the trust does not need to split and it can continue on as one trust. If that is not the case and the trustee messed up, then you may have some problems at this point, because division and allocation of assets normally must be done within 9 months, (when the estate tax return is filed).

    I do not see any way around your meeting with a probate attorney at this time. The sooner the better.

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.

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