Joint vs. Individual Trusts in Separate and Community Property States

Key Structuring Considerations, Identifying "Problem" Assets, Coordinating With Credit Shelter Trusts, Drafting GPOAs

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, March 8, 2022

Recorded event now available

or call 1-800-926-7926

This CLE course will provide estate planners with a thorough and practical guide to overcoming the challenges of utilizing joint and individual trusts in separate property/common law states. The panel will outline when to use joint marital trusts (JMTs) instead of individual trusts and vice versa. The panel will offer drafting language to maximize the benefits and minimize the risks of using JMTs and individual trusts in separate and common law states.

Description

For some families, choosing between a joint or individual trust is a critical component that significantly impacts gift and income taxes. If both spouses want the surviving spouse to have full control over the assets in the trust and have the same beneficiaries of the residual estate, then a joint trust may be ideal. Individual trusts may be the best option for couples with certain assets, separate finances, prenuptial agreements, or second marriages. Estate planners must carefully consider applicable state laws and potential tax implications when deciding on the best structure.

Estate planning counsel should anticipate and avoid tax pitfalls when structuring joint trusts in separate property states. Where the spouses contribute unequal amounts, funding the trust may trigger gift tax if the trust instrument does not correctly assign the power to revoke or withdraw assets.

There are also income tax risks in structuring a joint trust in a separate property state. Estate planning counsel must identify hidden tax risks and manage them by carefully drafting the trust document.

Listen as our experienced panel explains how to structure joint and individual trusts in a separate property and community property state.

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Outline

  1. Community property states
    1. Tax and non-tax considerations
    2. Gift and estate tax issues to avoid in funding and administering
    3. Income tax issues and potential advantages
    4. Drafting recommendations and resources
  2. Separate property states
    1. Tax and non-tax considerations
    2. Gift and estate tax issues to avoid in funding and administering
    3. Income tax issues and potential advantages
    4. Drafting recommendations and resources
  3. Transitioning from community to separate property states and vice versa
    1. Navigating state law issues
    2. Tax and non-tax considerations
    3. Gift and estate tax issues
    4. Income tax issues and potential advantages
    5. Drafting recommendations

Benefits

The panel will review these and other key issues:

  • What are the gift, income, and estate tax risks to utilizing joint vs. individual trusts in separate and community property states?
  • What are the administrative and accounting costs associated with the use of joint trusts in separate property states?
  • Coordinating joint revocable trusts with credit shelter trusts
  • Drafting general powers of appointment in joint revocable trusts in separate property states

Faculty

Hemenway, John
John M. Hemenway

Partner
Bivins and Hemenway

Mr. Hemenway is a founding partner of Bivins & Hemenway, P.A. His educational background included substantial...  |  Read More

McKenzie, Dan
Dan McKenzie

Attorney
McKenzie Law Firm

Mr. McKenzie has helped consumers who had been defrauded by unfair business practices or who had been physically...  |  Read More

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