Many married couples in California know that they need a trust, but aren’t always sure whether a joint trust or two separate trusts makes the most sense.
That’s because in California each partner often brings their own significant assets to the marriage. Whether that’s multiple properties, family inheritances, significant investments, or even businesses, there isn’t always a straightforward answer for how those assets should be structured in a trust.
The choice typically comes down to deciding between a joint trust vs separate trusts. While both methods are viable solutions, the choice often boils down to a couple’s specific financial situation and long-term goals.
Because California is a community property state, choosing the right trust structure can be especially important for married couples.
Understanding the difference between these trust options can help married couples make a more confident decision and avoid problems later.
What is a Joint Revocable Trust
A joint revocable trust is a single trust that is created and managed by both spouses together. While they are alive, both spouses serve as co-trustees. The trust usually holds the assets the couple owns together, such as their home, shared bank accounts, and joint investment accounts.
With a joint revocable trust, when one partner passes away the trust typically continues for the benefit of the surviving spouse, who can use and control the assets for the remainder of their life. Beneficiaries typically receive their inheritance when the second spouse passes away.
For example, if a married couple with a joint revocable trust leaves their primary home to their only child, the child would not inherit the home until both parents pass away. The surviving spouse would be able to continue living in the home until they pass.
What is a Separate Revocable Trust
Separate revocable trusts offer more flexibility for couples that own significant assets independently. Even though they are married, each partner maintains a separate trust that has instructions about how their individual assets should be distributed to beneficiaries.
Instead of sharing one trust, each spouse retains control over certain assets and can distribute them however they see fit.
Separate trusts often make the most sense when each spouse owns significant assets individually. They can also be useful when spouses have inherited properties and want to pass them along to different beneficiaries.
Blended families with children from previous marriages or relationships can also benefit from separate revocable trusts.
Joint Trust vs Separate Trust Comparison
The choice between a joint trust vs separate trust comes down to flexibility vs simplicity.
Joint trusts are generally easier to set up and manage because there is only one document which both spouses manage together.
This is ideal when both spouses are in alignment with their wishes. However when changes need to be made to the trust, both spouses are often required to sign off. This can occasionally be problematic if one spouse travels frequently or cannot always be available when documents need to be signed.
On the other hand, separate revocable trusts allow each spouse to retain control over the assets that they own individually. When assets are not shared equally, or when a couple has more complex estate planning goals, this type of trust structure can be beneficial.
This structure is often ideal when spouses have children from previous relationships. For example, if one partner has a child from a previous marriage and also has a house from that same relationship, a separate revocable trust can ensure that the home is passed along to their first child, and not to heirs from their current marriage.
Can Married Couples Use Both a Joint Trust and Separate Trusts?
Many clients come to us at the Law Office of Vidhya Babu wondering if they must choose to have either a joint trust or separate trusts. In reality, many California couples use both trust forms effectively.
Some couples choose to create a joint trust to manage shared assets, like the home they live in and joint bank accounts, while also creating a separate trust for assets that belong only to one spouse. This is very common in California, where the state’s community property rules make it important to have a clear distinction between shared property and separate property.
Using both types of trusts allows couples to keep shared assets in a simple joint trust structure while still protecting their individual assets and pass them on as they choose.
Separate Property, Inherited Assets and Premarital Agreements
Some marriages choose not to share assets evenly, particularly when one spouse has significant inherited assets or assets from before the marriage.
Couples who want to keep some assets separate often use premarital or postnuptial agreements to clearly document the ownership of those specific assets.
This can help avoid disputes later and ensure assets go to the intended beneficiaries.
It’s important to remember that spouses also have a fiduciary duty to each other. Open and honest communication between both partners is essential, especially when deciding how certain assets should be handled.
At the Law Office of Vidhya Babu, we help couples navigate these conversations and create a plan that works for both partners.
Living Trust vs Will for Married Couples
Most couples who start thinking about estate planning begin by deciding between a trust and a will. While wills are effective estate planning tools, trusts offer significant benefits for couples in many situations.
One of the biggest advantages of establishing a trust is that it can help assets placed in the trust avoid probate. Probate is the legal process of validating a will, settling debts, and distributing inheritances. In California, the probate process usually takes many months, and in some cases more than a year, depending on how complex the estate is.
Many couples choose to establish a trust because it helps avoid the probate process in most cases. Avoiding probate also means more privacy for the surviving spouse, as probate becomes a matter of public record.
Both joint trusts and separate trusts are forms of living trusts. Unlike a will that takes effect after death, a living trust can manage assets during the grantor’s lifetime. That gives them more control over how assets are distributed than a will does.
Revocable Trust vs Irrevocable Trusts for Married Couples
Most joint and separate trusts are revocable trusts. This means that the trust can be changed or even ended at any time while the grantors are alive and of sound mind. But there is another type of trust that is often considered, the irrevocable trust.
Irrevocable trusts are used in more complex estate plans because of their potential for tax planning and asset protection benefits. The drawback is that an irrevocable trust cannot be easily altered or terminated once it has been established unless a court approves the change or the trust document includes specific powers that allow modifications.
An irrevocable trust can be a strong choice under the right circumstances, but it is something that requires the guidance of an experienced estate planning attorney to determine whether it is the right fit for your family.
Need Help Choosing the Right Trust Structure for Your Family? The Law Office of Vidhya Babu Can Help
Married couples have several trust options available, and the right choice depends on each couple’s financial situation and long-term goals.
The right choice for your family will depend on how each partner’s assets are owned, and whether you desire to maintain individual ownership of them.
For many couples, a joint revocable trust is more than sufficient and is often preferred for its simplicity and straightforward management. For other couples, separate trusts provide flexibility and independence, while some couples can effectively benefit from using both structures.
When you’re ready to speak with an estate planning attorney about which option is best for your family, consider the Law Office of Vidhya Babu.
We have helped Bay Area families for decades create estate plans that protect the things you care about most, while building a long-term plan that protects your family’s future. Contact us today for an initial consultation, and let us bring clarity and confidence to your family.
**DISCLAIMER**
This blog post is for informational purposes only and does not constitute legal advice. Please consult with an attorney to discuss your specific circumstances