Should my husband have separate trusts?
Separate trusts provide more flexibility in the event of a death in the marriage. Since the trust property is already divided, separate trusts preserve the surviving spouse’s ability to amend or revoke assets held within their own trust, while ensuring that the deceased spouse’s trust cannot be amended after death.
What is the reason for a marital trust?
A marital trust allows the couple’s heirs to avoid probate and take less of a hit from estate taxes by taking full advantage of the unlimited marital deduction—a provision that enables spouses to pass assets to each other without tax consequences.
Why do married couples need a separate trust?
As is particularly common for second marriages, not all couples share the same legacy goals. If spouses have differing views on who receives what, separate trusts help ensure each person’s assets pass according to their wishes. It also simplifies the asset distribution process after death, meaning beneficiaries could receive their share faster.
When to use a joint or separate trust?
Separate trusts can be set up so both spouses are co-trustees on each trust, or just one. If one spouse has kids from a previous marriage and would like to leave them an inheritance either at their death or the death of their surviving spouse, different revocable trusts keeps the distribution of your assets transparent and controllable.
What are the advantages of a shared trust?
Advantages of a shared trust. With separate trusts, after the first spouse dies, there can be a fairly lengthy legal process to move property to the surviving spouse’s trust. Property left to the survivor must usually go first from the trust to the survivor, and then to the survivor’s living trust.
Can a spouse transfer property to a trust?
Even if the two spouses have some separate property, they can transfer it all to the trust, and still name separate beneficiaries for specific items held by the trust. Either spouse may revoke the trust at any time. Once the trust is revoked, the ownership status of the property reverts to the way it was before the trust was created.
What are the benefits of a separate trust?
Separate trusts offer more benefits for married couples. For example, if you were sued after injuring someone in a car accident in which you were at fault, with a joint trust or joint accounts, the full value of those assets would be at risk. Your entire marital estate could be lost by a large personal injury judgment.
Can a married couple have two separate trusts?
If a married couple wanted to hold their house in two separate trusts, for instance, they would have to sign a deed transferring a half interest in the house to each spouse as trustee. With separate trusts, after the first spouse dies, there can be a fairly lengthy legal process to move property to the surviving spouse’s trust.
What happens to assets in a separate trust after a spouse dies?
Creditor protection after a spouse’s death. However, in such case, although the survivor still has full access to the assets in the deceased spouse’s separate trust for any needs, the survivor’s creditors cannot touch any of those assets in the deceased spouse’s separate trust.
Is it better to set up a joint or separate trust?
Married couples utilizing trusts in their estate plan need to consider if it’s best to set up joint or separate living trusts. There are different tradeoffs which may make either a joint or separate trust a better option.