Professional Service With A Personal Touch

Office of Drendel & Jansons Law Group
  1. Home
  2.  » 
  3. Estate Planning
  4.  » More Considerations on the Use of Joint Trusts or Separate Trust for Spouses

More Considerations on the Use of Joint Trusts or Separate Trust for Spouses

A beginning question for couples who want to avoid probate by using a trust or trusts is whether to use a single, “joint trust” or to use separate trusts, one (or more) for each spouse. There is no one-size-fits-all answer. Many couples own all or most of their property jointly,  and couples naturally want to duplicate that with a joint trust, but that may not be the best arrangement. Spouses should at least consider the various issues before making a decision which way to go.

I have previously covered this topic, whether to use Joint Trusts of Separate Trusts, but there are more considerations on the use of joint trusts or separate trusts for spouses. The only real hard and fast rule is this: if a couple has a taxable estate (subject to estate taxes), two separate trusts are recommended. Beyond that, the nuances are many so I am covering some of the nooks and crannies of those nuances in this follow up piece.


To Keep Separate Property Separate

Couples who own separate property acquired before the marriage may want to consider a separate trust. Couples who were previously married and are getting together later in life may fall into this category. Spouses who have signed a prenuptial agreement usually desire to keep each spouse’s earnings and property separate. In that case, two separate trusts are advisable to maintain the separation of the property evidenced in the prenuptial agreement.

Couples for which one or both of them have received or expect to receive an inheritance may desire separate trusts to keep family property separate. Couples typically share equal authority over all the assets contained in a joint trust, but one or the other spouse (or both) may want sole control over certain assets, like inherited assets. Separate trusts make sense when one partner or the other wants to maintain sole control over inherited property, like a vacation home that has been on one side of the family for generations.

One thing to keep in mind is that trusts will not change the character of marital property, but they can protect the character of non-marital property. Understanding the distinction between marital and non-marital property can be important in doing estate planning.

Creditor Protection during Marriage

Marital assets of one spouse can be shielded from the creditors of the other spouse with a separate trusts. With separate trusts, the marital assets are allocated and “funded” between the two trusts. In that way, the assets of the both spouses are separated into the two, separate trusts. In that scenario, a judgment against one spouse for injuring someone in a car accident, for instance, could only be satisfied out of that spouse’s trust, leaving the assets in the other spouse’s trust safe. The entire marital estate would be at risk from a large personal injury judgment if the assets are in a joint trust.

People should keep one caveat in mind. A person may risk having a transfer undone if the transfer is made at a time when significant liability is pending or when that person is insolvent. Transfers into the other spouses trust in those circumstances could be considered a “fraudulent transfer”. A judge can undo any transfer that is considered “fraudulent” (which generally means, in this context) a transfer for the sole purpose of avoiding creditors). Consult an attorney before taking any action with the intention of protecting assets from creditors.

Creditor protection after a spouse’s death

Spouses can extend the creditor protection after death with separate property. The surviving spouse can have access to the deceased spouse’s trust assets, but those assets will be protected from the creditors of the surviving spouse. While a surviving spouse’s assets owned individually or in the surviving spouse’s own trust will not be protected, the assets in the deceased spouse’s separate trust will be protected, but still available to meet the surviving spouse’s needs.

Most joint trusts give both spouses full, unrestricted access to all assets in the trust while both spouses are alive and after one spouse’s death. To the extent that both spouses have control over the assets in a joint trust, creditors are able to reach those assets in the typical joint trust both during the lives of both spouses and after the death of the first spouse to die. Separate trusts can protect spouses from each others creditors during life and after death.

Remarriage protection

Most long-time married couples leave everything to the surviving spouse and then to the children after both are gone. Most couples are focused on each other during their joint lives. Surviving spouses often get remarried,however, particularly if one spouse has an untimely, early death. Spouses sometimes remarry even after long marriages, as the prospect of living out one’s last years in loneliness might seem unbearable.

We all know stories about the gold digging younger man or woman. These things do happen in real life. Even if a surviving spouse does not fall prey to a gold digger, the prospect of sharing an estate that was built together with another person may not sit well. Shared trusts may fall into the hands of a new spouse, but separate trusts, provide “remarriage protection”.

Separate trusts can preserve and protect the assets for the surviving spouse without making them vulnerable to a new spouse. A separate trust can insure that the assets in the trust of the first spouse will be preserved for the children if there are assets left when the second spouse dies. Joint trusts generally do not and cannot provide this remarriage protection.

Flexibility Considerations

Separate trusts can be amended after the other spouse’s death. A if you have assets in a separate trust, they are your assets; you can generally revoke your trust, change it, do whatever you want to your trust at any time, regardless of whether your spouse has survived or not. Joint trusts generally become irrevocable after the death of the first spouse (unless changed by drafting).

On the other than, a separate trust can provide limited powers of appointment over the other’s trust so that, after a death, the survivor can change certain, limited elements of the deceased spouse’s trust. These elements are usually limited to changing the pattern of distribution and/or the terms of the distribution.

Separate trusts can have less administration after one spouse’s death. Some joint trusts have provisions that require a surviving spouse to create separate trust funds after one spouse’s death, one in the name of the deceased spouse and one in the name of the survivor. If the joint trust was never funded, the survivor will have to go through a process of itemizing and valuing all of the marital assets and allocating and funding them to each of the new separate trust funds.

By having fully funded separate trusts at the outset, you separate the assets now while you are alive and well. The assets are then titled in the name of you and your spouse’s separate trusts. After your spouse’s death there is no need to be worrying about how to allocate the assets between trusts because it is already done.


Drafting can deal with some of the issues for which separate trusts might be a better fit. For instance, two spouses with some separate property can name separate beneficiaries for specific property in the trust. In this way, family property or heirlooms can be directed to stay in the family, even in a shared trust.

Joint trusts require the agreement of both spouses to be changed, though only one spouse is sufficient to revoke a joint trust. Separate trusts are controlled separately by each spouse and can be amended or revoked only by the spouse for whom the separate trust is established.

If there are issues with the marriage, either spouse may revoke the trust at any time. Once the trust is revoked, the ownership status of the property reverts to the way it was before the trust was created.

With separate trusts, after the first spouse dies, the property must either be left in the first spouse’s trust, in which case the survivor must deal with property in two separate trusts, of the property must be moved to the surviving spouse’s trust. Thus, there may be extra work for the surviving spouse. In a shared trust, the same property would just stay in the living trust when the first spouse dies.

Some joint trusts have provisions that require a surviving spouse to create separate trust funds after one spouse’s death, one in the name of the deceased spouse and one in the name of the survivor. If the joint trust was never funded, the survivor will have to go through a process of itemizing and valuing all of the marital assets and allocating and funding them to each of the new separate trust funds.

Joint trusts become irrevocable after the death of one spouse and are not amendable or changeable after that time as a general rule. With this provision in a joint trust, neither you nor your spouse can change a thing in the joint trust after one spouse’s death, even if circumstances change with the survivor or your loved ones. This general rule can and often is changed by drafting.


A married couple could create both a shared living trust for the jointly-owned property as well as separate trusts for their separate property. More trusts will result in more legal fees and includes more paperwork and decision-making, but for many couples, it may be easier in the long run.


There’s one other complicating factor to all of this: community property laws. In community property states, all property acquired during the course of a marriage is considered to be jointly owned by both spouses. For advisers in those states, it usually makes sense to offer only shared trusts. Community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. While Illinois residents are “safe” from the considerations of community property as long as they remain in Illinois, any contemplation of moving to a community property state should involve consideration of the community property principles.

See our Estate Planning Blog for more articles on estate planning topics.

See our Family Law Blog for articles on family law topics.

If you would like help, contact us.