Using A-B Disclaimer Trusts to Minimize Income Tax: Restating Existing Bypass Trusts

This program has been cancelled

A live 90-minute CLE/CPE webinar with interactive Q&A

Monday, December 31, 2018

1:00pm-2:30pm EST, 10:00am-11:30am PST

This CLE/CPE webinar will provide estate planning counsel with a practical and detailed guide to structuring A-B Disclaimer Trusts. The panel will offer useful tools to use A-B Disclaimers to increase flexibility for surviving spouses to engage in post-mortem planning as opposed to a non-dividing trust or typical A-B trust. The program will discuss traps to avoid in structuring A-B Disclaimers, and describe client circumstances where an A-B Disclaimer Trust increases income tax efficiency.


AB trusts have traditionally been effective estate planning techniques for married couples seeking to maximize the federal estate tax exemption. However, due to the increase in the estate exemption amount in the tax reform law, along with spousal portability rules, traditional A-B Bypass Trusts are often inefficient and costly from an income tax standpoint. Clients with existing A-B trusts may reduce income tax exposure on the second or “B” trust by restating the trust as an A-B Disclaimer Trust.

Unlike the traditional A-B trust which converts to an irrevocable trust on the death of the first spouse and generally limits the surviving spouse to the income of the A trust but not the principle, an A-B Disclaimer Trust allows the surviving spouse to have control over all trust assets. Critically, this control includes the option for the surviving spouse not to fund the “B” trust.

Appropriately structured, an A-B Disclaimer Trust allows a surviving spouse to determine the optimal income tax result between funding the “B” trust or utilizing the deceased spouse’s unused exemption (DSUE) by filing a disclaimer. Because the current estate tax exemption amount is scheduled to sunset at the end of 2025, an A-B Disclaimer offers spouses flexibility in the event the estate tax threshold reverts to pre-2018 levels.

Listen as our experienced panel provides a practical guide to the benefits and potential hazards of amending existing bypass trusts to A-B Disclaimer Trusts to achieve income tax minimization and asset protection goals.



  1. Traditional A-B Trust/Bypass Trust structures
  2. Potential income tax issues with A-B trusts
  3. A-B Disclaimer Trusts
  4. Structuring changes to existing A-B Trust documents required to convert to a disclaimer
  5. Potential risks and client scenarios where an A-B Disclaimer may not be optimal structure


The panel will review these and other relevant topics:

  • How an A-B Disclaimer Trust can remedy potential income tax consequences arising from the inability to claim a step-up in basis on the surviving spouse’s assets at death
  • How does an A-B Disclaimer Trust burden the surviving spouse?
  • When would an A-B Disclaimer Trust not be the optimal wealth transfer strategy?
  • Specific provisions and drafting language an A-B Disclaimer Trust should include


Schlesier, Edward
Edward P. Schlesier

Board Certified Specialist in Estate Planning, Trust and Probate Law
Blanchard Krasner & French

Mr. Schlesier has a broad legal and business background. His areas of practice include taxation, estate...  |  Read More

Steiner, Bruce
Bruce D. Steiner

Of Counsel
Kleinberg Kaplan Wolff & Cohen

Mr. Steiner has over 35 years of experience in the areas of taxation, estate planning, business succession planning and...  |  Read More