What term refers to a will that creates two trusts to address estate tax issues?

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

Answer: (B)

An A/B will refers to a will that, on the first death, creates two separate trusts to handle estate tax planning. One trust (the marital trust) benefits the surviving spouse and often takes advantage of the unlimited marital deduction, while the other trust (the bypass or credit shelter trust) is funded up to the deceased spouse’s unused estate tax exemption to shield assets from estate tax at the second death. By dividing the estate this way, both spouses’ exemptions can be utilized, reducing the overall estate tax burden. The other options describe different uses or types of trusts that don’t specify the two-trust structure created by the will, which is the hallmark of the AB trust concept.