Moneyzine
Contents
/Personal Finance/Marital Trust (A-Trust)

Marital Trust (A-Trust)

Moneyzine Editor
Author: 
Moneyzine Editor
2 mins
September 25th, 2023
Advertiser Disclosure

Definition

The term marital trust refers to an agreement that allows the donor to provide for both their spouse as well as their children. Marital trusts are oftentimes used to ensure the donor's assets are inherited by children, and not claimed by another party in the event a spouse remarries.

Explanation

Also referred to as an A-trust, a marital trust is usually established at the time of the donor's death, and is used to distribute assets in excess of federal estate tax exemption thresholds. Married individuals can provide unlimited assets to each other during their lives or after their death. Marital trusts are eligible for this unlimited marital deduction if the surviving spouse is the sole beneficiary of the trust, and the trust provides the spouse with a potential source of lifetime income.

Generally, marital trusts take one of the following forms:

  • General Power of Appointment: created for the sole benefit of the surviving spouse, providing them with a source of lifetime income. This type of marital trust also allows the surviving spouse to determine how the trust's assets are distributed after their death.

  • Estate: provides the surviving spouse with a source of lifetime income, and this type of trust provides for discretionary distributions of corpus too. The assets remaining in the trust after the surviving spouse's death are passed on to children or heirs as directed by the donor.

  • Qualified Terminable Interest Property: provides the surviving spouse with a source of lifetime income, payable at least once per year. The assets remaining in the trust after the surviving spouse's death are passed on to children or heirs as directed by the donor.

If there are assets in the trust when the surviving spouse passes away, marital trusts will distribute them as directed by the donor; typically, this would be to surviving children. Since these assets were not subject to federal income taxes following the death of the donor, they are subject to taxes when the surviving spouse passes away.

Related Terms

Related Content

  • What Can Help You Meet Your Budget While Shopping for Important Items?
    Budgeting while ensuring you don't compromise on quality can seem daunting. Whether filling your pantry, updating your wardrobe, or keeping up with the latest tech, smart shopping strategies are crucial for keeping your finances in check.
    April 2nd, 2024
  • How to Make a Million Dollars in 10 Years
    Truthfully, this title should actually be “How to Make a Million Dollars in 10 Years Without Going Into Debt", but that is just getting a little too winded for my liking. It’s true though!
    November 18th, 2024
  • How to Apply Maslow’s Hierarchy to Your Money This Year
    You might vaguely remember your psychology teacher talking about Maslow. He pointed at a picture of a triangle as you nodded off in the back of the school room.
    November 18th, 2024
  • How to Tackle Multiple Savings Goals
    When there’s only so much money to go around, there are often multiple savings goals competing for your money. Think of the young professional who’d like to get a more reliable car, buy a house, and save for retirement. Or consider the young family that’s saving for college, retirement, and a bigger house.
    March 22nd, 2024
  • The Countdown to Early Retirement: 10 Expenses to Eliminate
    Dreaming of waving goodbye to the daily grind five years ahead of schedule? The road to early retirement is paved with more than good intentions; it requires a meticulously crafted strategy with surprising twists. It's not solely about what you should be doing—like diligently saving a portion of your income or investing wisely—but also about what you need to stop doing.
    March 22nd, 2024

Contributors

Moneyzine Editor
The Moneyzine editorial team consists of writers and content specialists with diverse backgrounds.
Moneyzine 2024. All Rights Reserved.