I correspond with my students all the time.  Here’s the exchange to a recent question on AB Trusts and Revocable Living Trust Documents.

Dear Lee,

I purchased your course last December and we have spent a lot of time studying your course and trying to determine applications for our situation. It has been very helpful to my husband and me. Thank you.

Question:

We already have a living revocable trust. As a result of your information, we have been updating and funding our trust. We do not think our trust has provided the A and B parts where each of us owns stuff in a her and his side, thus allowing the tax savings to our heirs.

Response:

You called it a double whack. The AB trust trick is for the estate taxes.  The trust trick of owning property for husband and wife in separate trusts for asset protection is different than the AB trust.  You probably don’t need the AB trust, at least not for the next 2 years with a total estate tax limit at $10 million for a couple, even without an AB trust. The AB trust is the double whack.  The his and her trust is a totally different concept.  If you are in a community property state the his and her trust won’t do you any good anyway.  So the his trust and her trust trick for asst protection depends on which state you live in.

Comment:

The attorney who set up our trust has not responded to our phone calls. Then I heard you say that one does not want to work with an attorney who will not return phone calls. .  (In fairness to this lawyer, the assistant did respond to us initially by sending us documents that allow us to fund the trust.)

Response:

Absolutely not.  They should have given you all that paperwork in the first place and taught you how to use it.

Comment:

We would like to call you later today.  One of the questions we will ask is, “Can we take your Revocable Living Trust document, change the names to our names and file it in our trust and throw out the old trust document?

Response:

No you have to rewrite the trust as an “amendment and restatement,” because your old trust owns assets and you want ownership of those assets to just carry over and simply have the assets be controlled by new rules (new trust) and not have a totally new trust where the assets have to be transferred into that trust. Tending to the little details will save you lots of frustration down the road.