If you’re married, your estate plan can be jointly created with your spouse (and most couples would go in this direction). However, people who get married later in their lives and enter the marriage with children and considerable resources may decide to plan their estates separately.
In this post, we are going to look at the shared estate plan option, with an emphasis on the joint living trust.
Before we focus on the shared living trust, we should explain why you would do well to use a trust instead of a joint will.
If you have a joint will, you and your spouse would be leaving everything to one another, and you would agree upon beneficiaries who would be the eventual inheritors.
For most married couples, the beneficiaries would be their children. On the surface, this can seem like a perfectly acceptable arrangement, but there are major drawbacks…
The surviving spouse would not have the ability to change the terms or terminate the will. For the most part, this stipulation is in place to protect the children’s interests if the surviving spouse was to get remarried.
This can be problematic, because the will would specifically state that everything will go to the children after the death of the surviving spouse. For example, the surviving spouse may not be able to sell or give away assets that are bequeathed to the children in the will.
Another drawback is the fact that the will would be admitted to probate after the death of the surviving spouse.
- This is a legal process that will take at least eight months to run its course, and probate expenses consume a noticeable portion of the estate.
It is a public proceeding, so anyone who is interested can access the records to find out what transpired, so there is a loss of privacy. Plus, the assets would be distributed to the beneficiaries in lump sums with no asset protection or reckless spending safeguards.
Shared Living Trust
A living trust is a better choice in many different ways. This approach can be ideal if you and your spouse own most of your valuable property jointly and you want to leave your respective interests in the property to one another.
Though there are other possibilities, we will look at the standard structure that is used by most married people who have children together.
If you create a joint living trust, you and your spouse would be co-trustees. This means that you would be the administrators, and you would mutually have total control of assets that you sign over to the trust.
This is a revocable trust, so both parties can decide to dissolve the trust, each individual would have that ability as well.
Jointly held property would be conveyed into the trust, and separate property that is owned by each respective partner could also be placed into the trust.
After the death of one partner, the survivor would become the sole trustee, the survivor would have total control of the community resources.
The deceased spouse’s personal property would go to beneficiaries who they decide upon when the trust is being created; the surviving spouse does not necessarily have to be the beneficiary of this property.
When there is just one trustee still living, he or she would have the ability to change the terms with regard to the distribution of separate property that is in the trust. However, the surviving trustee would not be able to alter the terms that apply to the deceased partner’s separate property.
After the death of the surviving trustee, the children would become the active beneficiaries of the trust. They would receive distributions outside of probate, so those probate fees would be avoided.
A couple could choose to provide spendthrift protections and allow for limited distributions over an extended period of time. This is another one of the advantages that a living trust can provide.
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We are here to help if you are ready to work with an Overland Park, KS estate planning lawyer to develop a plan that is ideal for you and your family. You can set the wheels in motion if you call us at 913-262-2000, and you can use our contact form if you would rather send us a message.