Should You Have a Joint Trust or Separate Trusts With Your Spouse?

When it comes to estate planning, one of the most common questions married couples ask is whether they should have a joint trust or separate trusts. Believe it or not, some of my clients are unaware that they even have the option to share a single trust with their spouse.

For many younger couples, a joint trust is a great starting point. It is often simpler and more cost-effective to establish compared to maintaining two separate trusts. However, there are certain situations where having separate trusts may be the better choice. Here are three key reasons why separate trusts might be right for you:

1. Blended Families

If this is your second marriage or if you or your spouse have children from a previous relationship, separate trusts can help ensure that each spouse’s assets are distributed according to their wishes. This approach can prevent potential conflicts and provide clarity in how your estate is managed.

2. Estate Tax Considerations

If your estate exceeds the tax threshold in your state or is above the federal estate tax exemption limit, separate trusts may help lock in each spouse’s exemption, potentially reducing estate tax liability. This can be an essential strategy for high-net-worth couples looking to preserve their wealth for future generations.

3. Liability Protection

If you or your spouse own a business, rental properties, or engage in activities that carry financial risk, separate trusts can help shield assets from potential liabilities. This can be particularly important if one spouse has a higher level of exposure to lawsuits or creditors.

While a joint trust is a simple and effective solution for many couples, it is important to assess your specific financial and family circumstances when making this decision. If any of these situations apply to you, separate trusts may offer added protection and flexibility. Consulting with an experienced estate planning attorney can help you determine the best approach for your unique needs.

If you’re unsure whether a joint trust or separate trusts are the right choice for you, or would like me to review or create a trust for you, then click the link below to schedule a call with me today - I’m always happy to help!

To learn 80% of what you need to know about estate planning in less than 30 minutes, check out my full-length video. It’s a quick and comprehensive guide to help you understand the basics and start taking steps to secure your future.