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 webinar with Q&A


Conducted on Thursday, October 1, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

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

Description

For some families, choosing between a joint or individual trust is a key component that can significantly impact 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. Couples with certain assets, separate finances, prenuptial agreements, or second marriage, individual trusts may be the best option. 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 through careful drafting of the trust document.

Listen as our experienced panel explains how to structure a joint and individual trusts that will operate 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 power of appointment in JRTs in non-community property states

Faculty

Cohn, Beth
Beth S. Cohn

Shareholder
Jaburg Wilk

Ms. Cohn chairs the firm’s Estate Planning and Business Law Department. As both a Tax Specialist certified by the...  |  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

Miller, Rhonda
Rhonda A. Miller

Partner
Dunlap Bennett & Ludwig

Ms. Miller runs the national estate planning and tax department for the global law firm Dunlap, Bennett & Ludwig,...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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