Many people make a trust to ensure responsible parties handle their assets. Per California law, a trust is valid if the settlor establishes it and if said trust involves property and a beneficiary.
Though you can establish a trust alone, you could consider sharing it with someone else, aka a joint trust. Joint trusts allow you to control resources with your spouse. Here are a few pros and cons to help you decide if it’s right for you.
Advantages of joint trust ownership
Establishing a joint trust has many upsides:
- It’s less work for one person: If you and your spouse created your own trusts, you would have to account for exorbitant expenses, plus estate plan administration could be more difficult. In addition, sharing one trust allows one individual to take over when the other passes away.
- Real estate settlements are easier to handle: Suppose you and your spouse own a residential or commercial building. After one of you dies, the other person can sell or continue to manage the property.
- Tax season is a breeze for married couples: It eliminates the need for separate tax returns. Individual trusts require their own tax returns, which creates more work (and more expenses) than necessary.
Disadvantages of joint trust ownership
Sharing a trust comes with some shortcomings, too:
- The surviving trustee can make changes to it: Upon the first trustee’s death, there’s nothing stopping the other from adding or removing beneficiaries.
- Joint trusts have little to no asset protection: Because properties are held under a single trust, this puts them at risk if one of the beneficiaries faces a judgment.
Are you still unsure about owning a joint trust with a loved one? If you have any questions regarding joint trusts, consider seeking legal assistance.