What You Need to Know About Joint Trusts
There are seemingly countless estate planning instruments to choose from when creating your estate plans, and each has its own unique advantages. Trusts offer many benefits when compared to transferring assets through a will. Unlike property transferred through a will, assets transferred through a trust usually avoid probate. Furthermore, the trust maker, or grantor, enjoys greater control over how and when trust assets are distributed to heirs.
There are many different types of trusts to consider when building your estate plans. In this blog post, we will discuss the basics of joint trusts, when you should consider using a joint trust, and the advantages of using a joint trust instead of a separate trust.
What Is a Joint Trust?
A joint trust is a type of trust agreement that is typically set up by a married couple. Upon a spouse’s death, most married couples intend for the surviving spouse to inherit all of the deceased spouse’s assets. A joint trust allows this transfer to occur with fewer complications and delays. The grantors can choose how they would like their assets to be managed and distributed, such as upon their death or after they become incapacitated.
When Should You Use a Joint Trust?
Joint trusts are typically easier to maintain than two separate trusts. Spouses will not need to stress over which assets will go into which trust. There are also significant tax advantages to using a joint trust. Unlike separate trusts, joint trusts do not become irrevocable upon the first spouse’s death. This eliminates the need to file a separate tax return, A joint trust also allows the spouses to stay in a more favorable tax bracket. With a joint trust, the surviving spouse also maintains control over the trust assets after the other spouse dies. Lastly, when compared to separate trusts, joint trusts also allow for easier real estate transactions after a spouse’s death.
However, joint trusts may not work for every situation. For example, if a marriage is on rocky ground and divorce is a possibility, the couple may want to forgo setting up a joint trust. Joint trusts also do not provide as much protection from creditors as using two separate trusts would. Separate trusts become irrevocable upon a grantor’s death which means that creditors cannot touch the assets contained in the trust. If creditors are a concern for you or your spouse, you may want to explore other options to make sure your estate plans meet your specific needs.
Call Us For Help
Joint trusts are a popular estate planning tool for married couples who want to simplify asset transfers upon death. However, joint trusts are just one of many different types of estate planning instruments available. If you are considering setting up a joint trust or any other type of estate planning instrument, contact our Naperville estate planning lawyers for help. We can explain all of your options, evaluate your specific needs and goals, and work with you to create a comprehensive estate plan that meets these goals. Call the Gierach Law Firm at 630-756-1160 for a consultation.
Please note: These blogs have been created over a period of time and laws and information can change. For the most current information on a topic you are interested in please seek proper legal counsel.