Flowers and chocolate make for a classic gift on Valentine’s Day. However, such a gift may become mundane after a while. Surely your partner would appreciate an additional gift. Perhaps, a gift that can be beneficial to you as well? Sounds nice, doesn’t it? Bonus—this gift can benefit you both for the rest of your lives. Just because Valentine’s Day is over doesn’t mean you can’t keep celebrating the love you have for one another. And what better way to celebrate than to plan for your future?
Joint Living Trust
A joint trust can offer all of the things mentioned above and more! Joint trusts are preferred in community property states due to the individual ownership of community property interests. During a married couples lifetime, they both have the capacity to amend or rescind their joint trust. They both control the assets in the trust as well. Since the trust holds the assets of both spouses, the transferring of said assets would not be required if one were to pass away. If one partner dies or becomes incapacitated, then the surviving partner resumes control of the trust and its assets. When the remaining spouse passes away, the elected successor trustee will control the trust assets, settle any and all liabilities, as well as make distributions as per the trust instructions.
Other benefits include the lack of court involvement which could result in increased privacy and reduced legal costs. It is recommended to characterize the trust assets as community property. The National Law Review’s article entitled “Joint Trusts: A Useful Tool for Some Married Couples,” states” the benefit of having assets characterized as community property is that such property will receive a full basis adjustment for income tax purposes (commonly referred to as a “step-up” in basis) at the death of the first spouse as opposed to only one-half of the property receiving such a basis step-up.”
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Additionally, there’s the simplification of a married couple’s affairs, which in turn, smoothens the administration process, and as a result, reduces the costs. A joint trust can provide tax benefits as well, though one should keep in mind that the combined amount of a married couple’s assets would need to fall under the estate tax limit. There is also the possibility of adding asset protection to the joint trust so the real property in the trust can be granted the same protection as real property owned by a married couple as tenants by the entireties.
A joint trust is not ideal for every couple, married or not. There are certain criteria a couple has to meet, so talk to your estate planning attorney to verify a joint trust is right for you.
Estate planning goes beyond money, and includes intellectual, spiritual and human wealth.