To a large extent, you control the outcome when you plan your estate. This is what it is all about. Legally binding documents do not rule you; it is the other way around. You utilize specific documents to facilitate the fruition of your wishes.
With this in mind, let’s look at the question that serves as the title of this post.
Separate Living Trusts for Married Individuals
When you create a living trust, you have a great deal of control over the terms of the trust. If you are married, you could create a joint living trust with your spouse. On the other hand, you and your spouse could each have your own respective living trusts.
The outcome after the death of one individual would depend on the circumstances. If each party had a separate living trust, the terms of the trust in question would be carried out by the trustee after the death of the trust holder. The surviving spouse would have no control over the outcome.
When each person in the marriage has significant separate personal property, two different revocable living trusts would probably be the best option. This is especially true if you want to arrange for the distribution of a significant percentage of the assets in the trust to beneficiaries other than your spouse.
Joint Living Trusts
If you have a lot of jointly held property, it would be difficult to divide the individual shares and convey each respective share into two different trusts. As a result, a shared living trust could be a better option if you and your spouse own most of your valuable property together.
If you had a joint living trust, exactly what would happen after the death of one spouse would depend upon the terms of the trust agreement.
To look at a common scenario that would involve “one and only” spouses, the spouses could act as co-trustees while they are living. After the death of one spouse, the survivor would become the only trustee. He or she could inherit full control of the jointly owned property.
If the decedent had conveyed personal property into the trust, this property could be distributed to any beneficiaries according to the terms of the trust.
Technically speaking, the portion of jointly held property that was owned by the decedent could potentially be distributed to any beneficiaries of the decedent’s choosing.
However, in a one and only spouse situation, these beneficiaries would probably be the couple’s children. The survivor would presumably be leaving the same resources to the children if he or she was the initial beneficiary.
Learn More About Revocable Living Trusts
In this post we have provided a tidbit of information. If you would like to learn more about revocable living trusts for married couples, we can help. Our firm offers free consultations, and you can request an appointment right now through our contact page.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.