1. AB Trusts and ABC Trusts are irrevocable.The A, B and C Trusts are irrevocable and so any assets owned by them will be protected from creditors and lawsuits. Aside from this, any assets owned by the A, B and C Trusts will be protected from a divorce settlement if your spouse remarries and later divorces.
2. The B Trust can be preserved for your children or other beneficiaries.The B Trust can be drafted to take care of your spouse during his or her remaining lifetime but also to protect the principal for the benefit of your children or other beneficiaries. This is particularly important if you and your spouse have a blended family and you each have a different set of final beneficiaries.
3. The B Trust helps to reduce your estate tax bill.
What is left in the B Trust will not be subjected to estate taxes when your spouse later dies. This could be important if the federal estate tax is significantly reduced in the future since if this happens, then there will not be any possibility that federal estate taxes will be due on what is left in the B Trust even if your spouse's separate estate ends up being taxable for federal purposes when he or she later dies. In addition, AB Trust or ABC Trust planning is necessary in states that collect an estate tax in order to minimize state estate taxes.