Joint, Separate, and Unmarried Trusts

There are different types of revocable trusts for different family situations. The first and simplest trust to understand is the unmarried trust. This revocable trust is established for one unmarried individual. It is taxed as a grantor trust because it is revocable. It may use the grantor’s social security number as the tax id number for the trust. See Regulation 1.671-4.

The grantor of the trust typically serves as the trustee and manages the trust while they have capacity. Upon their incapacity or death, their successor trustee(s) manage the trust as they had intended. The grantor may revoke or alter the trust at any time and may direct the trustee to distribute more assets to them, for example.

When an individual is married, they may either do a married separate trust or a married joint trust. A married separate trust accepts the assets of the individual spouse and operates much like the unmarried trust during lifetime. At death, typically such a trust splits into a Family Trust for the surviving spouse and children and perhaps a Marital Trust for the amount over the estate tax exclusion. Then, after the death of the surviving spouse, the assets go as directed by the grantor. This trust may be advantageous over giving the assets directly to the surviving spouse because the predeceasing spouse retains control over the assets and their ultimate disposition via the Family and Marital trusts.

A married individual may also create a married joint trust. Clients often like a married joint trust because it is like joint property, with which they typically are familiar already. If the spouses are married and filing a joint income tax return, they may use the social security number of a spouse as the tax ID number of the trust. In the unusual circumstance where the spouses are not filing a joint income tax return, they’d need to get an employer identification number for the trust. Then the trust would report all items of income attributable to spouse 1’s assets to spouse 1 and those attributable to spouse 2 to spouse 2.

How can I decide if a Trust is right for me?

Call today to schedule your complimentary estate planning consultation with Ed Matthews.

Ed Matthews is one of only a few attorneys in the state of Minnesota who is also a currently licensed Certified Public Accountant (CPA). Ed graduated summa cum laude from William Mitchell College of Law in 2003, where he served as Executive Editor of the Law Review.  He is a former Minnesota Supreme Court law clerk.  Perhaps, most importantly, he does not practice probate!  Instead, he has dedicated his life to helping Minnesota families avoid probate and protect their hard-earned assets.

To schedule a complimentary consultation with Ed Matthews, call (651) 501-5608.