Which of the following statements about bypass trusts is true?

Bypass trusts, also known as credit shelter trusts or AB trusts, are designed to help couples manage their estate planning in a way that minimizes estate taxes. The key point about bypass trusts is that they are not included in the surviving spouse's estate upon their death, which is why they do not qualify for the estate tax marital deduction.

The estate tax marital deduction allows spouses to transfer an unlimited amount of property to each other at death without incurring estate taxes. However, because the bypass trust is structured to benefit the surviving spouse while also preserving the exemption for estate tax, it operates outside of this deduction. By removing assets from the surviving spouse's estate, bypass trusts effectively reduce the overall taxable estate, enabling couples to utilize the estate tax exemption for both individuals.

In conclusion, the correct statement regarding bypass trusts is that they do not qualify for the estate tax marital deduction, as the assets held in these trusts are not included in the surviving spouse's estate for estate tax purposes.