Should You Have A Joint Revocable Trust in Your Estate Plan?
In the right circumstances, using a joint revocable trust as an estate planning tool can make a married couple’s administration and distribution of their assets easier, with the added benefit of reducing time and expenses.
What is a Joint Revocable Trust?
A joint revocable trust is a single trust document that two persons establish to hold title to assets which they typically own together as a married couple. While both spouses are alive and competent, they both retain full control of the trust assets and can change the trust at any time. If one spouse becomes incapacitated, the other spouse continues to control the trust assets and can use the assets for both couples’ care. If both persons become incapacitated, then an appointed successor trustee steps in to ensure the couple is properly cared for.
After the death of one spouse, the surviving spouse continues to have control over the trust assets. Upon the death of the surviving spouse, the trust becomes irrevocable. The designated successor trustee then takes control of the trust and distributes the remaining assets as directed in the trust document.
Given the current increased federal estate tax exemption, more married couples can use a joint trust as a practical and cost-efficient estate planning tool, instead of having to establish separate trusts for tax-oriented estate planning.
A joint trust usually works best when the following circumstances exist for a couple:
- The couple has a long, stable relationship and divorce is not a concern.
- The couple has no children from a prior relationship.
- There are no creditor problems or high-risk occupations that would expose the trust assets to the liability of one spouse.
- The couple is in complete agreement on how the assets will be disbursed when both have died, regardless of the order of death.
- The value of the couple’s assets is less than the federal estate tax exemption amount. (For 2021 this amount is $11,580,000 per individual and $23,400,000 for a married couple).
Once it is established, a joint trust is relatively easy to administer. Its advantages also include:
- Probate court is avoided, minimizing time and costs before and after the death of the surviving spouse.
- The terms of the trust are private because probate administration is not involved.
- The couple does not have to worry about two separate trusts and what assets are in each trust.
- No transfer of assets is required after the death of the first spouse simplifying the administration of the trust.
Hiring an Experienced Estate Planning Attorney
With the right circumstances, the use of a joint trust can be an effective estate planning tool to simplify a couple’s affairs before and after death as well as providing privacy and lowering costs. It is not the estate planning answer for all couples. Any couple interested in a joint trust should consult with an experienced estate planning attorney so that all issues will be thoroughly evaluated. Contact Bill Ager to discuss whether a joint trust should be included in your estate plan and if it can, how it can be done for a reasonable flat fee.