Traditionally, joint trusts reigned as the most popular among married couples due to their less expensive start up costs and ease of management. There are some advantages that in some situations make the extra cost worth creating and managing separate trusts. Let’s compare:
First, separate trusts offer better asset protection. Separating the marital estate into two separate trusts helps to insulate those assets from creditors brought against the other spouse.
Next, while managing one trust is simpler than two, separate trusts still offer the opportunity for each spouse to name the other as co-trustee. This allows both spouses to maintain control of all assets despite those assets being funded into separate trusts.
Finally, once the first spouse dies, the trust assets are disbursed according to that spouse’s designations. Separate trusts preserve the surviving spouse’s ability to amend or revoke the assets held in the surviving spouse’s trust. If they were combined together in one joint account, the surviving spouse would not have that ability because all the assets would be distributed according to the terms of the joint trust.
To summarize:
Separate Trusts – May be better options for remarriages and couples who own individual property or who expect to inherit separate property.
Joint Trusts – May be a good option for couples who have the same beneficiaries in mind, the same distribution goals, want to use the same trustee, and prefer the ease of only one trust to manage. To discuss options for setting up trusts, please contact Stouffer Legal at 443-470-3599 in the Greater Baltimore area.
