ABC Trust Plan Offers Added Protection From GST Tax

• Published in: Estate Planning Vol. 41; no. 8; p. 30
• Main Authors: Hoffman, Michael J R, Lauderdale, Mitzi K, Bost, John C
• Format: Trade Publication Article
• Language: English
• Published: New York Thomson Reuters (Tax & Accounting) Inc 01.08.2014
• Subjects: Beneficiaries; Children & youth; Estate planning; Estate taxes; Flexibility; Funding; Generation skipping tax; Marital deductions; Tax returns; Transfer taxes; Trusts; United States > US
• ISSN: 0094-1794

For the better part of the 21st century, estate planners were wondering what would happen with the estate tax. After TRA 2010 delayed the day of reckoning for two years, ATRA 2012 made permanent most provisions of EGTRRA and seems to have returned some semblance of stability to the transfer tax landscape. This article examines two common estate plans from the perspective of planning for the possibility that the generation-skipping transfer (GST) tax might apply when the estate plan unwinds. The estate plans that are considered are the A/Super-B trust plan and the ABC trust plan. Both of these plans offer the executor of the first spouse's estate the opportunity to make post-mortem modifications to the plan, as circumstances dictate. This flexibility comes primarily in the form of the QTIP election. What this article makes clear is that, when consideration of the GST tax is on the table, all estate plans are not created equal.