The Colorado couple did their homework, decided that an A/B trust was the appropriate option for their circumstances and the plan was put in place. But, then life happened. One of the spouses died and the surviving spouse wants to alter beneficiaries of the trust. Due to the nature of this type of trust, there are limits as to what can be done; the individual will want to work closely with an elder law attorney to determine the appropriate course of action.
An A/B trust is generally an irrevocable trust that the couple established as one way to protect their estate from estate taxes and to avoid going through probate. The surviving spouse retains his or her interest in the trust while the deceased spouse’s portion is usually transferred to the “Bypass” trust upon death. This part of the assets is not owned by the surviving spouse, and the ability to access these assets is restricted in order to protect its tax status. However, the surviving spouse’s portion of the trust typically can still be amended.
There may be times when the surviving spouse finds it necessary to amend the trust. Perhaps one of the current beneficiaries has proven to be incapable of making sound financial decisions, has fallen victim to drug or alcohol addiction, or there are other concerns. When this happens, it may be prudent to make changes.
There are times when the surviving spouse may decide that it is necessary to alter an established trust. Due to the nature of such action, the Colorado resident will want to seek guidance in making and implementing such decisions. An experienced elder law attorney can prove invaluable in this situation.