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Julie Garber

Asset Protection Planning for Same Sex and Unwed Couples - Are AB Trusts Only for Married Couples?

By June 27, 2009

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This week I've already written about asset protection for you, asset protection for your spouse, and asset protection for your other beneficiaries. But what if your family situation doesn't fit into that of a "traditional family?" Can same sex and unwed couples still provide asset protection and other benefits for each other through traditional AB Trusts? Absolutely, but with a twist - there won't be any need for the A Trust of the AB Trust system.

Yes, same sex and unwed couples can still take advantage of all of the asset protection and other benefits of AB Trust planning, but with one caveat - when the first partner dies, if the deceased partner's estate exceeds $3.5 million, then a federal estate tax will have to be paid on the excess instead of being funded into the A Trust. Of course, a federal estate tax bill would also be the result if the deceased partner's assets are left outright to the surviving partner.

So instead of leaving assets outright to your partner, consider the asset protection benefits of a lifetime trust (shielding the trust assets from lawsuits and creditors), as well as the tax benefits (shielding what's left in the trust when the surviving partner dies from federal estate taxes), and the planning benefits (preserving what's left in the trust when the surviving partner dies for the family of the predeceased partner). These benefits should be more than enough to convince you that lifetime trusts are the way to go for you and your partner.

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