Understanding Joint and Separate Trusts for Married Couples

When planning your estate, it's essential to understand the differences between Joint Trusts and Separate Trusts to make an informed decision that best suits your needs and circumstances. 

Understanding Joint and Separate Trusts

Separate Trusts

Separate Trusts involve creating two distinct Trusts, one for each spouse. These are characterized by:

  • Ease of Creation: They can be established with relative simplicity.
  • Flexibility: Separate Trusts offer more control over individual assets over time.
  • Tax Efficiency: They can mitigate potential negative tax consequences.
  • Administrative Simplicity: Managing these Trusts can be less complex after a spouse's death.

Joint Trusts

A Joint Trust is a unified document that encompasses both spouses, with provisions for the occurrence of each other's death. Its advantages include:

  • Simplified Funding: Funding a Joint Trust is generally more straightforward than funding Separate Trusts.
  • Reduced Administration: It entails less administrative effort following the death of a spouse.

Learn more about Joint Trusts in our Learn Center: A Complete Guide to Joint Trusts

Decision Factors: Community vs. Separate Property States

The trusts options that we offer for married couples depends on whether you reside in a Community Property state or a Separate Property state.

Learn more about the difference: Understanding Community Property vs Separate Property

Trusts in Community Property States

In community property states, Trust & Will offers only the Joint Trust option for married couples because of:

  • Legal and Tax Benefits: Joint Trusts provide significant tax advantages and are in harmony with the legal frameworks of these states.
  • Simplified Estate Planning: Joint Trusts align closely with the estate laws in community property states, offering a streamlined approach to estate planning.

If your marital status in Trust & Will is legally married and you live in a Community property state, our system will automatically make your Trust a Joint Trust.

Trusts Separate Property States

For those in separate property states, the choices expand to include both Separate and Joint Trusts:

  • Individual Trusts: These are recommended for their flexibility, tax benefits, and simpler administration.
  • Joint Trust Option: While less common, a Joint Trust can still be established, offering a unified approach to estate planning.

In separate property states, couples can opt for 'mirror-image' Trusts, naming each other as Successor Trustees. This arrangement mimics the outcomes of Joint Trusts but retains the benefits of Separate Trusts.

 

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