Understanding Survivorship Trusts
Introduction
Estate planning is essential for ensuring that your assets are managed and distributed according to your wishes after your death. One powerful tool in estate planning is a survivorship trust. This blog post will explain what a survivorship trust is, how it works, and the benefits it offers to those looking to protect their estate and provide for their loved ones.
What is a Survivorship Trust?
A survivorship trust, also known as a joint trust or a joint survivor trust, is a legal arrangement created by a married couple or domestic partners. It allows both parties to place their assets into a single trust, which they manage together during their lifetimes. Upon the death of the first spouse or partner, the trust typically continues to benefit the surviving spouse or partner, with the assets eventually passing to the designated beneficiaries after the second death.
How Does a Survivorship Trust Work?
1. Creation of the Trust:
– Both partners create the trust and transfer their individual and jointly owned assets into it. This can include real estate, bank accounts, investments, and personal property.
2. Management During Lifetimes:
– While both parties are alive, they manage the trust’s assets together. They have the flexibility to use and distribute the trust assets as needed.
3. Survivorship Provision:
– When the first partner passes away, the trust includes provisions that allow the surviving partner to continue managing and using the trust assets. The terms of the trust can specify whether the surviving partner has unrestricted access to the assets or if there are any limitations.
4. Final Distribution:
– Upon the death of the second partner, the trust assets are distributed to the designated beneficiaries according to the terms set forth in the trust document.
Benefits of a Survivorship Trust
1. Avoiding Probate:
– One of the most significant advantages of a survivorship trust is that it helps avoid probate. Since the trust owns the assets, they can be transferred directly to the surviving partner and then to the beneficiaries without the need for probate court proceedings.
2. Continuity and Convenience:
– The surviving partner can continue to manage and use the assets seamlessly, without interruptions or delays that might occur with other types of estate transfers.
3. Flexibility and Control:
– The couple retains control over their assets during their lifetimes and can make changes to the trust as circumstances change.
4. Privacy:
– Trusts are not public records, so the details of the trust, including the assets and the beneficiaries, remain private, unlike a will that goes through probate.
5. Estate Tax Benefits:
– Survivorship trusts can be structured to provide estate tax benefits, potentially reducing the tax burden on the estate and preserving more assets for the beneficiaries.
6. Protection for Beneficiaries:
– The trust can include specific instructions for how and when the beneficiaries receive their inheritance, which can protect young or financially inexperienced beneficiaries.
Setting Up a Survivorship Trust
Creating a survivorship trust involves several steps:
1. Consult with an Estate Planning Attorney:
– Working with an experienced attorney ensures that the trust is set up correctly and that all legal requirements are met.
2. Identify Assets:
– Determine which assets will be placed into the trust. This includes real estate, financial accounts, investments, and personal property.
3. Draft the Trust Document:
– The attorney will draft the trust document, outlining how the trust will be managed, the rights of the surviving partner, and the final distribution plan for the beneficiaries.
4. Transfer Assets:
– Formally transfer the ownership of the identified assets into the trust.
5. Review and Update:
– Periodically review and update the trust to ensure it continues to meet your needs and reflects any changes in your circumstances or wishes.
Conclusion
A survivorship trust is a valuable tool for couples looking to simplify their estate planning, avoid probate, and provide clear instructions for the management and distribution of their assets. If you are considering a survivorship trust, it is essential to work with a knowledgeable estate planning attorney to ensure that your trust is properly established and meets all legal requirements. At [Your Law Firm’s Name], we are dedicated to helping you protect your estate and provide for your loved ones. Contact us today to schedule a consultation and learn more about how a survivorship trust can benefit you.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. For specific legal advice, please consult with our office.
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