How Bypass Trusts Differ from Survivor’s Trusts in California: Key Differences Explained

The Quick Answer: A Bypass Trust Locks in Tax Benefits for the Deceased Spouse—While the Survivor’s Trust Holds the Remaining Assets for the Surviving Spouse

In a typical joint trust created by a married couple, the trust is split into two sub-trusts after the first spouse dies: the Bypass Trust (also called the “B Trust” or “credit shelter trust”) and the Survivor’s Trust (or “A Trust”).

The Bypass Trust contains the deceased spouse’s share of the estate and is irrevocable—its terms cannot be changed. It is designed to preserve estate tax exemptions and protect the assets from being spent or redirected. The Survivor’s Trust, on the other hand, remains revocable and under the control of the surviving spouse.

At Moravec, Varga & Mooney, we help trustees, beneficiaries, and surviving spouses understand their rights and responsibilities when managing or administering A-B trust structures.

What Is a Bypass Trust?

The Bypass Trust is funded with the deceased spouse’s half of the community property and any separate property, up to the amount of the federal estate tax exemption. These assets are:

• Locked in upon the first spouse’s death

• Held in an irrevocable trust

• Often used to benefit the surviving spouse during their lifetime

• Protected from estate taxes at the second death

By bypassing the survivor’s estate, these assets avoid being taxed again when the second spouse dies.

What Is a Survivor’s Trust?

The Survivor’s Trust is funded with:

• The surviving spouse’s half of the community property

• Any jointly held assets not allocated to the Bypass Trust

• Assets that the surviving spouse receives outright

The Survivor’s Trust is:

• Revocable

• Amendable by the surviving spouse

• Subject to estate tax at the surviving spouse’s death (unless further planning is done)

The Survivor’s Trust is fully accessible and can be spent, modified, or reallocated—unlike the Bypass Trust.

Key Differences at a Glance

Feature	Bypass Trust	Survivor’s Trust
Revocability	Irrevocable	Revocable by surviving spouse
Control	Controlled by trustee (maybe spouse)	Controlled by the surviving spouse
Estate Tax Exposure	Not included in survivor’s estate	Included in the survivor’s estate
Creditor Protection	Greater protection	It may be subject to creditors
Amendment Allowed?	No	Yes

Why Does This Matter for Trustees and Beneficiaries?

If you’re administering a trust with A-B provisions, it’s essential to:

• Properly allocate assets between the two sub-trusts

• Understand that the surviving spouse’s control over the Bypass Trust is limited

• Prepare or request accountings and valuations for trust assets

• Determine whether trust terms require income or principal distributions

Improper handling of the sub-trusts can lead to litigation, IRS penalties, or disputes among heirs.

Modern Alternatives and Revisions

In many cases, A-B trusts were created in the 1990s or early 2000s, when federal estate tax exemptions were much lower. Today, many of these trusts are no longer necessary for tax reasons and may create administrative burdens for the surviving spouse.

If both spouses are still living, you may be able to:

• Amend the trust to eliminate A-B provisions

• Create a disclaimer trust instead of a rigid Bypass Trust

• Simplify the trust structure to fit your current estate size

Get Guidance from California Trust Attorneys

Whether you're administering a Bypass Trust, contesting a trust division, or seeking to modernize an outdated estate plan, we can help. At Moravec, Varga & Mooney, we assist trustees, surviving spouses, and beneficiaries in understanding their duties and protecting their inheritance.

📞 Contact us today to schedule a consultation and ensure your trust is handled properly.