Joint or separate trusts: choosing the right structure

Start with ownership, not a template

Michigan is not a community-property state. Property can be owned by one spouse, by both spouses, or through a trust, and the trust should reflect those real ownership interests. Moving an asset into a joint trust without understanding its history can blur separate property, inheritance, or premarital ownership.

When a joint trust may fit

A joint revocable trust often works well for spouses with the same beneficiaries, similar goals, and mostly jointly owned property. While both spouses have capacity, they commonly serve together and can amend the plan under the terms of the document.

One coordinated set of instructions can simplify bill paying and asset management if one spouse becomes unable to act. After a death, however, the document must say clearly what the survivor may change and what becomes fixed.

When separate trusts may be safer

Separate trusts can be useful when spouses entered the marriage with different assets, have children from prior relationships, expect different beneficiaries, or want clearer control over inherited property. They can also make accounting easier when a prenuptial agreement or business interest must remain separate.

Questions to resolve before drafting

• Should the survivor be free to change every beneficiary?
• Are any assets inherited, premarital, or governed by an agreement?
• Will either spouse need access to the other spouse’s trust after death?
• Who manages each trust if both spouses become incapacitated?
• Do retirement accounts and beneficiary forms match the trust design?

The decision is not permanent

A revocable plan can usually be updated as property and relationships change. Review the structure after a move, inheritance, business sale, divorce, remarriage, or major change in wealth.