When couples begin the estate planning process, one of the most common questions I hear is whether to create one joint trust or two individual trusts. This decision may seem straightforward, but it’s influenced by a variety of personal, legal, and financial factors. When I help clients understand these factors, they can make informed decisions based on their unique situation.  That is the purpose of today’s blog, so without further ado…

 

What Is a Living Trust?

A living trust, also known as a revocable living trust, is a legal document created during your lifetime to manage your assets. You, the “grantor” or “settlor,” place assets into the trust and typically act as the trustee during your lifetime. This means you maintain control over the trust assets and can make changes or revoke the trust at any time. Upon your death (or the death of the surviving spouse in a joint trust), the assets in the trust are distributed to your beneficiaries according to your instructions. This avoids the dreaded probate process.

Probate can be time-consuming, expensive, and public. A living trust helps keep your affairs private and can speed up the distribution of assets, which is why it’s a popular estate planning tool.

 

Joint Living Trusts: When One Trust Might Be Enough

For many married couples a joint living trust is often the simplest and most efficient solution, especially for those in long-term marriages with shared finances and mutual children. In a joint trust, both spouses are typically co-trustees and joint grantors. The trust continues to operate after the first spouse passes away.

A joint living trust may be ideal if you own most of your assets jointly, share the same beneficiaries (e.g., your children together) and want to simplify administration and reduce legal costs.

Among the many advantages my clients gain through a joint trust are:

-Simplifies asset management as everything is under one document.

-Generally, less expensive to create and maintain.

-Easier to administer upon the death of one spouse.

-Commonly used in community property states where assets are presumed jointly owned.

 

Separate Trusts: A Better Fit for Some Couples

Separate trusts can offer more control and customization, particularly in marriages where each spouse brings significant separate assets into the relationship, has children from previous relationships, or simply prefers more financial autonomy.

You might consider separate trusts if you want to ensure your children from a prior relationship are protected, you and your spouse have different beneficiaries or estate planning goals, or you want more privacy and flexibility over individual assets.

You must be careful with separate trusts. They are more complex to create and manage, two individual trusts usually cost more than a joint trust and they require careful coordination to avoid conflicting instructions or unintended results.

I recently had a client that was considering a divorce and wanted to be sure his newly inherited assets retained their separate property status. He wanted to be sure that his assets went to his chosen beneficiaries after a possible divorce. This unique situation required careful planning and strategy.

 

Blended Families and Second Marriages

One of the most common reasons couples opt for separate trusts is to protect the interests of children from prior relationships. In a joint trust, surviving spouses often retain full control of the trust assets after one spouse dies. Without careful planning, this can unintentionally disinherit children from the first marriage. Separate trusts allow each spouse to preserve autonomy and set clear directions for how their assets should be handled. Joint trusts may work in this situation also, but it takes careful planning with intentional instructions.

 

Which One Should You Choose?

There is no ‘one size fits all’ answer. The decision between a joint and separate trust depends on your personal, financial, and family circumstances. It’s also important to consider your state’s laws, especially regarding community vs. separate property. Here in Arizona, we are a community property state and most marital property is considered community property. Maintaining separate property throughout a marriage requires careful and intentional planning to avoid commingling of assets.  

Estate planning can feel overwhelming; however, the peace of mind that comes from knowing your family and assets are protected is worth it. Whether you’re newly married, entering a second marriage, or just trying to get organized, I’m here to help.

Click below to book a consultation and let’s talk through the pros and cons of each option and help you choose the best structure for your family.