A bypass trust is a long-term estate-planning device. It is a type of irrevocable trust and is most commonly used to pass property to heirs, from parents to children on death of the second parent. The property, which passes to someone in the form of a bypass trust that property will not be subject to estate taxes and Gift Tax when that person dies. So the children will not have to pay estate taxes on those property in excess of the current estate tax exemption.