Skip to header Skip to main content Skip to footer. Home retirement estate planning. November 20, A joint trust is easier to fund and maintain during the couple's lifetime. They don't need to think about the hassle of equalizing the value of each of their separate trusts or trying to decide what assets to title in one trust or the other, since everything goes into one trust. A joint trust requires less work at tax time. It does not become irrevocable until both spouses have passed and therefore eliminates the need to file an extra trust tax return.
A joint trust is not subject to the much higher trust tax brackets since it does not become irrevocable at the death of the first spouse.
In a joint trust, after the death of the first spouse, the surviving spouse has complete control of the assets since an irrevocable trust with its restrictions is not created. When separate trusts are used, the deceased spouses trust becomes irrevocable at their death, and the surviving spouse has limited control over these assets, typically restricted to withdrawals for health, education, maintenance and support.
It can make real estate transactions easier to deal with. If a piece of real estate, like a house, is titled in a joint trust and a surviving spouse sells the house with the intention of using the sales proceeds as a down payment for another house, any lender would be happy to loan them the money as long as they had reasonably good credit.
Generally, it is important to understand what different types of trusts can do for you when deciding whether you need one or more trusts in your estate.
For most people, estate planning is the primary method for them to provide for their loved ones and organizations important to them after their death. A living trust can be a great way to transfer property easily and quickly to loved ones and avoid probate. But consider your unique circumstances. You may also choose to ensure that a beloved pet is taken care of with a pet trust , through which you can leave money to take care of an animal.
If you would like your favorite charity to benefit from your estate, you may draw up a charitable trust , which can also benefit you and your beneficiaries through a tax break. If you own a home and would like your beneficiary to use and enjoy your home for their lifetime and then have the property pass to someone else upon their death, you might consider a personal residence trust. This type of trust may be useful in the case of a second marriage in which only one spouse owns the marital home.
In this situation, the trust could permit the surviving spouse to remain in the home during the rest of their lifetime, but then the homeowner's children could receive the property upon the spouse's death. While most estates fall under the threshold amount for estate taxes, if they are a concern, you may be able to better plan for them through the use of various trust instruments. Several types of marital trusts, including A-B trusts, can help manage estate tax obligations by shifting or delaying tax burdens until the death of the second spouse.
Wealthy estates may also be interested in generation-skipping trusts. These specially designed trusts avoid taxation in the generation between the decedent and their grandchildren.
A generation-skipping transfer tax, however, may apply, so it is imperative to receive sound advice regarding these types of trusts. The above are just some considerations when deciding on the kind of trust or trusts that would work for your estate.
Because estate planning decisions can have far-reaching effects for both you and your loved ones, you should consult with an experienced estate planner who can assist you in choosing the right framework for you. Contents 3 min read. Freelance writer and editor Michelle Kaminsky, Esq. She earned a Juris Docto… Read more. Living Trusts. Making your living trust will be easier if you think it through and gather necessary information before you sit down to do it.
Last Wills. Do I Need a Trust Quiz? Energy and Natural Resources. Phone: Family Law. Business Law. Texas Dallas Family Law. Colorado Oklahoma Texas. October 24, Estate Planning, Trusts, Oklahoma. Joint Trusts Since all marital assets are located in one trust, all assets would be at risk if a creditor obtains judgement over one spouse. Administration After a Spouse Dies Separate Trusts Separate trusts provide more flexibility in the event of a death in the marriage.
Joint Trusts Joint trusts do not work well if the spouses have different ideas about how assets will be distributed upon death. Joint Trusts A property drafted joint trust can achieve same estate tax marital deduction planning benefits as separate trusts. Circumstances Where One Trust May be Better Than the Other Separate Trusts Separate trusts are a great option for remarriages or for couples owning individual property prior to the marriage.
Separate trusts are also beneficial f or couples expecting individual inheritances they wish to keep separate, or for common law marriages or couples with a prenuptial agreement.
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