A trust will often simply direct that the assets be distributed outright to the various beneficiaries. However, it is quite common that the trust will dictate that assets for certain beneficiaries be held in trust for those beneficiaries. This requires that you establish sub-trusts for those beneficiaries. Examples of common sub-trusts are a separate share trust for a minor, a bypass trust
and survivor’s trust (for a married couple) or even a pet trust so that a beloved pet can be cared for. As successor trustee, you will need to identify any sub-trusts that are required under the trust document and ensure that those sub-trusts are properly funded.SubtrustsSub-trusts are especially common in administrations of trusts established by married couples. Married couples who have done proper tax planning through a living trust
have what is known as an AB or ABC trust. This ensures that when the first spouse dies, the deceased spouse’s assets remain available for use by the surviving spouse, but in trust. By keeping the assets in trust, the assets remain out of the surviving spouse’s estate
, sheltered from future estate taxes.While the couple is alive, their assets are held in a Joint Trust, owned equally by both parties (except for IRA and retirement funds, which must be in the owner’s name).After the first death, the trust is split into two or three parts: the Survivor’s Trust, the Family Trust, and, potentially, the Marital Trust
. The Survivor’s Trust is generally designed to hold the Surviving Spouse’s assets. The deceased spouse’s assets are generally split between the Family and Marital Trust. The Family Trust, a separate entity, is not counted as part of the surviving spouse’s estate upon death. This trust can pay income to the survivor, and the survivor can also have access to the principal under certain circumstances. I hope that helped. Please ask any follow-up questions. Please rate my answer so that I may be credited for my time. I thank you in advance for your cooperation.