The problem this solves
Massachusetts does not allow portability between spouses. When the first spouse dies, their unused Massachusetts estate tax exemption disappears, it cannot be transferred to the surviving spouse. Without planning, a married couple with a $4M combined estate uses only one $2M exemption. The surviving spouse's estate is taxed on everything above $2M at the second death.
How the A/B trust works
The Credit Shelter Trust, also called the bypass trust, family trust, or Trust B, captures up to $2M at the first spouse's death and holds it in a separate trust that bypasses the surviving spouse's estate at the second death. The remaining estate passes to the QTIP Trust (Trust A), qualifying for the Massachusetts marital deduction and deferring tax until the second death.
Trust A: the QTIP Trust (Marital Trust)
The QTIP Trust (Qualified Terminable Interest Property) receives the balance of the estate above the credit shelter amount. All income must be distributed to the surviving spouse annually. The executor makes a QTIP election on Form 706, qualifying the trust for the estate tax marital deduction. At the second death, the QTIP assets are included in the surviving spouse's estate, but the $2M exemption applies, and the credit shelter trust has already bypassed the estate.
Trust B: the Credit Shelter Trust (Bypass Trust)
Up to $2M flows into the Credit Shelter Trust at the first death. The surviving spouse may receive income from this trust and may have limited access to principal for health, education, maintenance, and support (the HEMS standard). At the second death, the entire credit shelter trust, including any growth, bypasses the surviving spouse's estate and passes directly to heirs.
Illustrative example: an $8M Massachusetts estate
| Scenario | Result at second death |
|---|---|
| No trust planning: everything to surviving spouse outright | Full $8M in surviving spouse's estate. One $2M exemption. Tax on $6M: est. ~$291,200. |
| A/B trust plan: $2M to credit shelter trust, $6M to QTIP | Credit shelter trust bypasses the estate. QTIP uses the surviving spouse's $2M exemption. Estimated tax meaningfully reduced. |
| Credit shelter trust after 10 years at 6% growth | Trust may grow to ~$3.6M, all bypassing estate tax. Additional savings on $1.6M of growth: est. ~$128,000+. |
Illustrative only. Actual results depend on asset values, growth rates, and individual circumstances. Consult a qualified estate planning attorney and CFP® for analysis specific to your situation.
The QTIP election under IRC §2056(b)(7)
The QTIP election is made by the executor on Form 706 and is irrevocable once filed. All trust income must be distributed to the surviving spouse at least annually. The surviving spouse may not have a general power of appointment over the QTIP assets, this is what allows the first spouse to control the ultimate disposition to children or other beneficiaries.
What a CFP® does, and doesn't do
The A/B trust is a legal document drafted by a Massachusetts estate planning attorney. Michael Cammarata, CFP®, does not draft legal documents, does not provide legal advice, and does not prepare tax returns. His role is coordination: ensuring the trust is properly funded after drafting, the portfolio is positioned consistently with the estate structure, and the strategy is reviewed annually as asset values and Massachusetts law change.
Managing Partner and Owner, MSA Financial, LLC (CRD #107768), an independent RIA managing ~$1.5B as of August 12, 2026. Michael coordinates wealth, estate, tax, and retirement planning for Massachusetts families.
Michael Cammarata, CFP®, is an Investment Adviser Representative of MSA Financial, LLC (CRD #107768), a Registered Investment Adviser. This article is for educational purposes only. Not legal or tax advice.