When you are planning your estate as a married person, you and your spouse have to make some decisions. Do you want to create separate estate plans, or would you prefer to develop a shared arrangement?
Regardless of the choice that you make in this regard, you have to decide on an asset transfer vehicle. There are joint wills, but they are very rarely used, because there are some significant drawbacks.
The negatives stem from the fact that the terms of the will cannot be changed and the document cannot be revoked after the death of one spouse. Various different circumstances can arise that would give the survivor a reason to adjust the terms of the will.
A shared living trust would be a more effective solution, we will provide details in this post.
Joint Living Trust
The joint living trust is a revocable trust, so either party would have the ability to exercise their right of revocation. If you and your spouse establish a joint living trust, you would typically act as the co-trustees.
This course of action could make a lot of sense if you and your spouse own most of your property jointly. They are especially appealing for people that live in community property states.
What is a community property state? In these states, all of the property that is acquired by either person during the marriage is considered to be shared property. California is a community property state.
When you have a joint living trust, the surviving spouse would become the sole trustee after the death of the other spouse. The survivor would assume full control of the shared property in the trust.
It is possible for the partners to convey separate, personally owned property into a joint living trust, and it could be transferred to the surviving spouse or other named beneficiaries.
Separate Living Trusts
A separate living trust can be a better choice when certain circumstances exist. For example, even though California is a community property state, a prenuptial agreement that allows for separately held property would trump the property division law.
If you and your spouse have decided that you want to keep your earnings and income separate from one another, you have the right to assert this choice in a legally binding manner. Since the separation would be important to both of you, separate living trusts would make sense.
A lot of people do this when they get remarried later in their lives after they have significant resources and/or children from other marriages. People that are recently married with no shared property could also choose to go in this direction.
Living Trust Benefits
When it comes to the eventual transfers to the next generation, living trusts provide some profound benefits. One of them is the streamlined estate administration process.
A will would be admitted to probate, which is a costly and time-consuming legal proceeding. Asset distributions through the terms of a living trust would not be subject to the probate process, so the pitfalls would be avoided.
You can include a spendthrift provision when you have a living trust, and the trust would become irrevocable after the death of the last surviving grantor. The beneficiary’s creditors would not be able to reach the principal.
In the trust declaration, you could instruct the trustee to distribute a certain amount each month or dictate some other incremental arrangement to provide guardrails. Another benefit is the ability to name a disability trustee to administer the trust in the event of your incapacity.
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If you know that you should work with a Los Angeles estate planning attorney to put a plan in place, there is no time like the present. We can send us a message to request a consultation appointment, and we can be reached by phone at 310-337-7696.