Many couples use a joint revocable living trust to avoid probate and to handle both their co-owned property and their separately held property. Here, both partners establish the joint revocable living trust and as such, both act as co-grantors and co-trustees of the joint revocable living trust. As co-grantors, each partner can nominate beneficiaries for their individual or separate property and for their portion of joint property. In addition, each partner can unilaterally call for the return of their assets to them and/or revoke the joint revocable living trust at any time. When the joint revocable living trust is revoked, the assets return to the parties that placed them in to the trust. Each partner retains full ownership and control of all their separate property as well as their share of the jointly owned property.
When one of the partners dies, the joint revocable living trust automatically splits into two separate trusts – we’ll call them the ‘first trust’ and the ‘second trust’. The deceased partner’s property and share of the joint property is automatically transferred in to the first trust. The terms of the first trust immediately become irrevocable which means the surviving partner cannot amend them in any way. Thereafter, the surviving partner in his/her capacity as successor trustee distributes the property in the first trust in accordance with the deceased partner’s wishes as set out in the revocable living trust Agreement. In many cases, the deceased partner will leave his or her assets to the surviving partner’s trust – the second trust.
All of the remaining trust assets are transferred to the second trust, which continues to exist as a stand-alone trust – similar to an individual trust. This trust is revocable by the surviving partner in the same way as an individual trust. When the surviving partner dies, the trust assets will be distributed in accordance with the terms of the trust in the usual way.
How Can EstateBee Help You?
For more information on revocable living trusts, read some of the other revocable living trust articles on our website.
If you would like to make a bespoke living trust for a couple, check out our Online Living Trust Software. It is one of the most advanced pieces of software on the market, and offers you bespoke provisions that cannot ordinarily be found in other online living trusts or in template documents.
Alternatively, if you would like more detailed information on living trusts and how they work, check out our book entitled Make Your Own Living Trust & Avoid Probate. You’ll learn all you need to know about living trusts, their advantages and disadvantages, the tax implications, the alternatives to living trusts and, of course, how to easily make your own.
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