A Family Bank Trust, or Lifetime Bypass Trust, is a type of irrevocable trust that provides complete asset protection for your spouse and descendants, and removes the trust assets from your estate and the estates of your spouse and descendants for estate tax purposes. This type of trust is very similar to a "bypass" trust (one that bypasses federal estate tax) at death.
With a Family Bank Trust, you irrevocably transfer assets (typically up to $240,000, but no more than $5.12 Million for 2012 or $1 million for 2013) to a trust of which your spouse is trustee (or co-trustee) and beneficiary. Your children and other descendants can also be beneficiaries during your spouse's lifetime, or they can be remainder beneficiaries after the death of your spouse. You can also give your spouse the power to appoint, at death, the trust assets for your benefit during your lifetime if your spouse predeceases you.
Both spouses can create similar trusts for each other's benefit, and thereby obtain the asset protection and estate tax benefits, but the trusts cannot be identical in all respects.