Trusts are often a good idea if you want to devise a comprehensive, complete, concrete estate plan that provides your family maximum protection. However, when you are married, you sometimes need to look at things differently to ensure you set up the right plan for your family and legacy. If you and your spouse are considering establishing Trusts, consider whether you want to do one Joint Trust or if you will each create Separate Trusts. Your Millman Law Group attorney can help you further understand the differences between the purposes of Joint and Separate Trusts. Some of the pros and cons are outlined below.
Asset protection is a primary goal for couples who create an estate plan. Whether spouses use Joint or Separate Trusts can determine how much protection you create.
- Joint Trusts: Marital assets are together in a single trust. This means there is less asset protection because if there is a judgment over one of the spouses, all assets may be at risk.
- Separate Trusts: When Trusts are individual, assets inside one Trust can be better protected if spouses take on any financial risks. However, many factors may influence how insulated assets are, including prenuptial agreements, how assets are titled, and state laws.
After the Death of a Spouse
There are differences in how Trusts are handled after the death of one spouse. The surviving spouse may have different responsibilities, control, and access depending on whether Joint or Separate Trusts are used.
- Joint Trust: In the best scenario, couples will agree on how assets should be distributed after one dies. In some cases, however, a Joint Trust may need to be Separated into two Trusts after a spouse’s death to divide assets.
- Separate Trust: Because there are already two Trusts, there is often more flexibility and a more straightforward process to navigate after the first spouse’s death. The most significant difference is that the surviving spouse could not amend or revoke any portion of the deceased’s Trust. After they pass, the Trust becomes irrevocable. This protects the deceased spouse’s assets from going to anyone other than who they chose.
Weighing The Pros and Cons
Before spouses decide to use Joint or Separate Trusts, they should consider other pros and cons.
Pros: This can be a wise option for couples who own Separate property from previous marriages or even from inheritance. They may also help if you have a prenuptial agreement that dictates properties and earnings should be Separate.
Cons: Separate Trusts can be more expensive, and administration is more complicated.
Pros: This might be the better option if you want more flexibility. Even when Separate property exists, a Joint Trust makes transferring property to the Trust easy, even if you want to name different beneficiaries. If you revoke the Trust, the property reverts to its original ownership status. Joint Trusts also allow for post-death administration, which requires less work after the death of the first spouse.
Cons: Joint Trusts may not offer as much protection against judgments. This Trust may also not be as easy to manage following the first spouse’s death or provide as much protection for beneficiaries in blended families.
If you want to know whether Joint or Separate Trusts are right for your needs, contact The Millman Law Group today for individualized support.
Estate Planning Made Easy With Millman Law Group
Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs Trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.