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Myths And Frequently Asked Questions Planning With A Joint Pour-Over Trust

Myth #1: Because we are married, we must use a joint trust.

When considering a trust-based estate plan, which has benefits such as privacy and probate avoidance, you and your spouse may use a joint trust, two separate trusts, or maybe even all three, depending on your situation. Considerations when deciding between two separate trusts or a joint trust include

  • your need for asset protection,

  • ease of administration,

  • the level of flexibility for planning after the first spouse’s death, and

  • your views on your marital accounts and property.

Working with an experienced estate planning attorney can help you match your desires for the future with the appropriate estate planning tool.

Myth #2: I have to leave everything to my surviving spouse.

Because families come in all shapes and sizes with members having different needs, you may hesitate leaving all of your money and property to your spouse if there are others whom you would like to provide for, such as a child from a previous relationship, a parent, or another loved one.

Although you do not have to leave everything you own to your spouse, you do need to be aware of a couple of things. One is that any accounts or property that you own jointly with your spouse will most likely pass automatically to them upon your death. Also, each state has a set of laws, sometimes referred to as elective share laws, that dictate the minimum amount that a surviving spouse is entitled to. If you want to leave money and property to someone other than your spouse, we encourage you to meet with us so that we can design a plan that meets the legal requirements while also providing for all of your loved ones.

Question #1: Should we fund all joint accounts and property into a joint pour-over trust?

Jointly owned accounts and property will automatically go to the surviving owner when a joint owner dies. However, should both die simultaneously, the accounts and property may be subject to the probate process. Therefore, funding joint accounts into a joint trust can allow the joint owners to continue exercising control and enjoyment over the accounts and property while providing a safety net of being administered outside probate when the last owner dies or if both owners die simultaneously.

However, if you own accounts or property as tenants by the entirety, you may need to keep these accounts and property out of a trust. Tenancy by the entirety provides married couples additional asset protection in some states. Placing this type of account or property into a joint trust may terminate that protection, depending on your state law. If you own property as tenants by the entirety, you need to let your estate planning attorney know so that this special account or property can be handled appropriately according to your objectives.

Question #2: My spouse and I have thoroughly discussed my wishes after my death. Is that good enough?

If you do not intentionally create an estate plan stating your wishes, your state will divide your money and property according to its laws. In some cases, your spouse may receive everything; in other cases, your spouse may receive only a portion, having to share the estate, including money and property, with other family members. Regardless of who gets the money and property, they will receive it in a lump sum with no restrictions; it will be theirs to do with as they wish.

If you leave everything to your spouse outright with an understanding that they will leave money to the rest of your family at their death, this result may not happen unless your spouse creates an estate plan directing that outcome. Also, depending on the type of estate plan, in most cases, your spouse will be free to change their mind at any time while they are still mentally capable of making decisions. Therefore, if you have a blended family, you may think that your spouse’s will or trust leaves the money and property equally to all of your children, but your spouse could change their will or trust the day after you pass away and leave everything to only their children.

If you have specific wishes about what should happen to your money and property, creating a formal estate plan with an experienced estate planning attorney is crucial to guaranteeing that your wishes are carried out at, and after, your death.

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