Bypass Trust (AB Trust): Definition and How It Works in California

By Eric Ridley, attorney, Ridley Law. Updated September 2026.

A bypass trust, also called the B trust in an AB trust plan, holds the first spouse’s share of the estate at death so it stays out of the surviving spouse’s own taxable estate. Portability has made it unnecessary for many married couples, though older trusts still use the structure.

How it works in California

No California statute defines or requires a bypass trust; it’s a drafting technique built into a trust instrument, not a creature of the Probate Code. See is your AB trust obsolete for how these plans were typically written. At the first spouse’s death, the trust splits into an A trust, the survivor’s own share, and a B trust, the deceased spouse’s share, which becomes irrevocable and is generally kept out of the survivor’s taxable estate.

Federal portability, under 26 U.S.C. § 2010(c), lets a surviving spouse carry over the deceased spouse’s unused federal estate tax exclusion, but only if the deceased spouse’s estate files a timely federal estate tax return electing it. Before portability existed, a bypass trust was the main way a married couple used both spouses’ exclusions instead of just one. Now that a surviving spouse can inherit the unused exclusion directly, many couples no longer need the bypass trust structure to reach the same tax result.

Why it matters

For example, a couple signed an AB trust years ago specifically to shelter the first spouse’s exclusion from estate tax. If they update their plan today and portability applies, the same tax outcome may be available without splitting the trust into an irrevocable B share, which means fewer separate tax returns and less ongoing administration for the survivor. See do I still need my old A/B (bypass) trust in California for how to evaluate an existing plan.

Common mistakes

Assuming an old AB trust should simply be left alone because it was drafted by an attorney. Not realizing that once the first spouse dies and the B trust becomes irrevocable, its terms generally can’t be changed even if portability would now produce a better result. Overlooking that a bypass trust can still make sense for reasons other than the federal exclusion, such as asset protection or providing for children from a prior marriage.

Related terms

• Survivor’s Trust: the A trust, the surviving spouse’s own share, that pairs with the bypass trust in an AB plan.
• Portability: the federal rule that lets a surviving spouse use a deceased spouse’s unused exclusion without a bypass trust.
• Marital Deduction: the separate federal rule that lets property pass to a spouse free of estate tax.
• QTIP Trust: another marital trust structure, often used alongside or instead of a bypass trust.

Part of the California estate planning glossary. For the full treatment, see Do I Still Need My Old A/B (Bypass) Trust in California?