Trusts & Estates

by Jeramie J. Fortenberry, JD, LLM (Taxation) | Legal Education Faculty

Most estate planning attorneys represent married couples that do not have taxable estates. Many of these couples have a simple objective—to provide for the surviving spouse after the first spouse’s death and distribute the remainder of the estate to or for the benefit of the children on the second spouse’s death (the so-called sweetheart estate plan). There is debate in the estate planning community about whether to use joint or separate trusts in this common planning scenario.

Practitioners differ in their views of joint trusts, especially when the trust is located in a separate-property state. Some estate planning attorneys believe that because joint trusts treat the spouses as a unit, they are more in line with the client’s understanding of the ownership of their marital property. Others feel that the potential complications of joint trusts outweigh the benefits and prefer to use a separate trust for each spouse.

This article will evaluate the merits of both joint trusts and separate trusts in separate and community property states, examining the issue through the lens of the basic sweetheart estate plan.