In estate planning, what instrument contains two trusts, the A trust (marital) and the B trust (credit shelter or bypass trust) designed to address estate taxes?

• A. Bypass trust
• B. QTIP trust
• C. A/B will
• D. Special needs trust (SNT)

Answer: (C)

Two-trust planning uses a document that, at the death of the first spouse, splits the estate into a marital trust for the surviving spouse and a credit-shelter (bypass) trust to use the deceased spouse’s unused estate tax exemption. This is typically done through an A/B will, which directs assets into both trusts. The A trust provides for the surviving spouse and preserves the marital deduction, while the B trust holds assets up to the exemption amount so they are sheltered from estate tax on the second death. The result is tax efficiency on the later transfer without unduly restricting the surviving spouse’s access to income or principal within limits. The bypass-trust-alone option wouldn’t create this dual structure; a QTIP is a marital trust focused on income to the surviving spouse but not a bypass structure, and a special needs trust isn’t about sheltering assets from estate taxes.