Understanding Joint Trusts: A Survivor’s Trust vs. A Decedent’s Trust
When it comes to estate planning, many married couples choose to share almost everything, including their finances. This often leads to the decision of using a joint living trust instead of two separate ones. While separate trusts offer greater flexibility, a joint trust can be structured to provide the same level of control when one spouse passes away. This is achieved through the creation of two subtrusts: a Survivor’s Trust and a Decedent’s Trust.
What Is a Survivor’s Trust?
A survivor’s trust strikes a balance between the simplicity of a joint trust and the flexibility of separate trusts. With a survivor’s trust, the surviving spouse receives full control over their own portion of the estate, but they may have limited control over the deceased spouse’s assets.
How It Works:
When the first spouse dies, the assets are typically divided into the following categories:
- Joint assets
- Community property
- Separate property of the surviving spouse
- Separate property of the deceased spouse
The surviving spouse’s share of the estate is placed in the survivor’s trust, including half of any joint or community property, and the entirety of their separate property. The decedent’s trust, on the other hand, holds assets from the deceased spouse’s portion and has its own set of instructions regarding asset management.
What is a Decedent’s Trust?
A decedent’s trust is an irrevocable trust that holds the assets of the deceased spouse. Unlike the survivor’s trust, the decedent’s trust cannot be modified by the surviving spouse. The intent behind this setup is to provide control over how the assets of the deceased spouse will be handled and ensure that they are distributed according to their wishes—especially if they want to protect assets for future generations.
Why Choose a Survivor’s Trust?
The survivor’s trust offers flexibility for the surviving spouse. It’s revocable, meaning the survivor can make changes such as:
- Adding or removing assets
- Changing beneficiaries
- Appointing new trustees
- Terminating the trust altogether
This flexibility allows the surviving spouse to adapt the trust to their changing needs or circumstances.
However, while the survivor has full control over their trust, the decedent’s trust is typically irrevocable, ensuring that the deceased spouse’s wishes are upheld. This can be particularly helpful if the deceased spouse wants to protect assets from being altered after their death. For example, the decedent may want to ensure that assets are preserved for children or other beneficiaries rather than being changed by the surviving spouse—especially if the survivor remarries.
Should You Consider a Survivor’s Trust?
In situations where it’s important to safeguard assets or ensure they are distributed according to specific wishes, a survivor’s trust is a practical option. It provides flexibility and control while protecting assets from costly probate and taxes. To discuss how a joint trust, survivor’s trust, or decedent’s trust can work for you and your family, schedule a consultation with our estate planning attorneys.
