People tend to think that you have to be married in order to have trust. However, unmarried couples should also have living trusts.
For married couples, a basic joint living trust is common and will meet all their needs. Both spouses will have control over the whole trust and can revoke the trust at any time. Each person will be a grantor and a trustee of the joint trust. Each person can also decide who will be a beneficiary of their share of the community-owned property, and for his or her separate property as well.
However, both married and unmarried couples can benefit from creating individual trusts to manage and distribute their assets, ensuring they align with their personal wishes and financial strategies. Here’s how they can approach this:
- Identifying Purpose: The first step is understanding the purpose behind the trust. This could range from asset protection, minimizing estate taxes, or ensuring that a particular family member or charity receives a portion of their estate.
- Selecting the Type of Trust: Depending on one’s goals, various trusts are available. A Revocable Living Trust, for instance, provides flexibility as it can be altered during the grantor’s lifetime. An Irrevocable Trust, once established, cannot be easily changed but offers strong asset protection.
- Drafting the Trust: It’s crucial to seek legal advice when drafting the trust document. This ensures that the trust accurately reflects the individual’s wishes and adheres to state laws.
- Funding the Trust: Once the trust is established, assets must be transferred into it. This might include real estate, investments, or bank accounts.
- Naming a Trustee: A trusted individual or institution should be designated to manage and distribute the trust’s assets per its terms.
Both married and unmarried couples can create individual trusts to retain control over their distinct assets, ensuring their legacy is passed on according to their wishes.
Individual trusts are useful if one spouse or both have a lot of separate property…or if one spouse just wants full control of their own property. Recently married couples can keep their individual trusts in order to maintain their previously acquired separate property.
Do note, however, that jointly owned assets are not very well suited in individual trusts. Spouses who co-own real property will have to record two deeds to transfer half-ownership of their interest into their separate trusts.