Bypass Trust

A bypass trust is typically created as part of an A/B Living trust estate plan after the death of the first spouse to die.The bypass trust receives property as specified in the trust document - the bypass trust may receive all of the property of the decedent spouse, or half of the spouses' co-owned property, or it may receive enough property to fully utilize the decedent's estate tax exclusion. The bypass trust is typically created to achieve one or more of the following goals:To maximize the use of the decedent's estate tax exclusion amount, in order to minimize estate tax upon the death of the surviving spouseTo ensure that the decedent spouse's property will be disposed of in accordance with the decedent's wishes, even if the surviving spouse remarries or chooses to adopt a different estate plan for the surviving spouse's assets.
See more at Wikipedia.org...

An agreement allowing parents to pass assets on to their children to reduce estate taxes. The trust must be made irrevocable, meaning that the terms can never be changed.

TRUST, BYPASS - Also called a marital life estate or an A-B trust. A trust designed to help couples with combined assets over $600,000 save money on estate taxes. A bypass trust allows each member of a couple to use the $600,000 estate tax exemption.