For married couples, a decision that might come up during the estate planning process is whether to set up a single joint Revocable Trust as a married couple, or two separate trusts. Quite frankly, this also comes up for unmarried couples in committed relationships. On the surface, one Joint Trust looks simpler and cheaper – and that is often the case. However, there may indeed be certain situations where married couples may want to each have separate trusts.
We have guided many Missouri couples through this decision, and the honest answer is that the right choice depends entirely on your specific financial picture, your family, and what you’re each trying to accomplish.
Differences Between Joint Trusts and Separate Trusts
A joint Revocable Trust is one document, created and funded by both spouses together. Usually you both serve as co-Trustees, and the Trust holds your shared assets in a single structure. When one spouse dies, the survivor generally keeps managing the Trust, and continues to be beneficiary and have access and control over all trust assets. Then after the second death, whatever’s left goes to the beneficiaries you named.
Separate Revocable Living Trusts usually work a bit differently: each spouse creates and funds their own Trust with their own property, and jointly owned assets often have to be divided between the two – with some property perhaps going to one trust or the other, or even being divided half and half into each trust when possible. Each Trust runs independently, with its own terms and its own successor Trustee. Often times, spouses may be the trustee and beneficiary of the other spouse’s trust upon a spouse’s death.
This may not sound like a huge difference, but it can be. Missouri’s treatment of marital property, creditor protection, and taxes can all factor into which structure actually protects your family — and getting that analysis wrong could cost a lot of money in the long run.
When A Joint Trust Looks Appealing
A lot of couples are drawn to a Joint Trust because it feels tidy. One document, one set of Trustee rules, one funding process (properly connecting the assets to the trust). If you have a modest estate, mostly shared assets, and you both want everything going to the same people, a Joint Trust can be a very efficient way to do it.
There are some issues that must be decided in how to structure the trust. For example, do you want the surviving spouse to have the ability to change the trust, including its beneficiaries? Or do you want the surviving spouse to be locked in to the rules you agreed to when you both set up the trust? There are certainly considerations regarding spousal rights after the first spouse dies that should be considered. These concerns will greatly affect the trust administrationone day when the first spouse dies, or even when both have passed away.
However, in our experience, most married couples prefer a joint trust, where they are not required to separate assets, and they can retain the legal protections that married couples enjoy as “tenants by the entirety”.
When Separate Trusts May Be Beneficial
For couples with a blended family, meaningful separate property, separate business interests, or a higher-value estate, Separate Trusts may make sense. Each spouse keeps clear, independent control of their own assets and can name beneficiaries they choose — such as children from a prior marriage — without the surviving spouse being able to amend those plans later.
Separate Trusts in very specific, certain situations can provide a different type of asset protection from the tenancy by the entirety protections mentioned above. In Missouri, a creditor coming after one spouse may have difficulty reaching assets held in the other spouse’s Separate Trust.
And for estates that might brush up against the federal estate tax threshold, Separate Trusts open up more sophisticated tax planning to make the most of each spouse’s federal estate tax exemption. However, to be fair, the same can often be accomplished with a joint trust that has the ability to split into two trusts (one for each spouse) upon the death of the first spouse.
So What is the Verdict? Joint Trust or Separate Trusts?
For the average married couple, who own most (if not all) of their assets jointly as Husband and Wife, a Joint Trust often makes the most sense. For married couples who intentionally own their assets separately, and not jointly, two separate trusts may make more sense. In our experience, most married couples own most of their property jointly, and prefer a joint trust – but there are exceptions.
Choosing between joint and Separate Trusts isn’t a decision to make on convenience, an online template, or generic advice. The danger of the do-it-yourself route is well documented: a poorly drafted Trust can fail to do what you wanted, create tax consequences you never saw coming, or leave assets exposed to probate — the exact outcome a Living Trust is meant to avoid.
Even a well-drafted trust falls short if it isn’t funded. One of the most common mistakes we see is a couple who paid to set up a Trust and then never moved their house, bank accounts, or investments into the Trust. The Trust only works if your assets are actually titled into the trust, either now or upon death, and getting real estate into the Trust takes careful legal execution.
Contact a Missouri Estate Planning Attorney for Married Couples
Missouri has specific rules on marital property, tenancy by the entirety, and trust administration that directly shape how both joint and Separate Trusts behave. Understanding how those interact — along with the difference between a Will and a Trust and what happens to a Trust when you die — takes more than any online resource can give you.
When you sit down with us, we take the time to understand your finances, your family, and your goals before recommending anything. There’s no one-size-fits-all answer here, because no two families are in the same spot.
Protect Your Family With The Right Trust Structure
Choosing between a Joint Trust and Separate Trusts is one of the more important estate planning calls you’ll make together, and the consequences of getting it wrong can follow your family for a long time. Rather than guess, let’s figure it out with someone who does this every day.
Call us at 417-882-5858 or set up a consultation. We’ll help you land on the right structure for your family — and make sure it’s done right.
