Joint Trusts or Separate Trusts: Advice for Married Couples
Unless you have a specific need for separate trusts, it’s usually best to avoid the headaches they cause and go with a joint trust instead. Here’s why.


A revocable living trust is usually the best way to pass your assets to your heirs after you are gone.
Unlike a will, assets titled in a revocable living trust avoid both the time and expense of going through the probate courts and keep your financial affairs from becoming a matter of public record.
And like any good estate plan it can be used to plan for the possibility of your being incapacitated, reduce or avoid any death tax, make sure the right heirs get your assets after you‘re gone, and it does not change the tax treatment of your assets while you’re alive.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Separate or Joint?
A married couple has a choice of setting up either a joint trust or separate trusts. In situations where both spouses want the surviving spouse to inherit all the assets, which is often the case, a joint trust can be far less complicated to set up and maintain than separate trusts, with less headaches for the surviving spouse. However, there are situations where separate trusts will be a better choice.
Common Advantages of Separate Trusts
- Separate trusts may offer better protection from creditors, if this is a concern. For example, at the death of the first spouse, the deceased spouse’s trust becomes irrevocable, which makes it harder to access by creditors. And yet the surviving spouse can still access it for income and other needs.
- In cases where a spouse wants some or all of their assets to go to other heirs besides the surviving spouse, separate trusts may be a better solution. A common example is when one of the spouses has children from a previous marriage and they want to provide for their spouse, but also make sure their kids eventually receive the funds. They could set up a qualified terminable interest property trust, which would allow them to leave assets for the surviving spouse to provide them with income, while the balance of the funds are held in trust until the surviving spouse’s death, at which point they’re paid out to the children from the previous marriage.
- Separate trusts can be used to reduce or eliminate death tax. For most married couples federal death tax will not be a problem, because a married couple has a combined estate tax exemption of $23.16 million (going up to $23.4 million in 2021), which means if the value of their estate is under this amount they will have no federal death tax to be concerned with. However, there are 12 states, plus the District of Columbia, that have a state estate tax, and another six states with an inheritance tax. Assuming you live in a state with a death tax, if your net worth is above the state's exemption level — which can be as low as $1 million — your heirs could be subjected to this tax. That’s when separate trusts as part of a credit shelter trust, would allow the spouses to double their estate tax exemption, resulting in reducing or completely eliminating this death tax.
When a Joint Trust May Be Better
Assuming you have no creditor concerns, both spouses want all the assets to go to the surviving spouse, and state death tax will not be an issue, a joint trust may be the way to go, for several reasons:
- A joint trust is easier to fund and maintain during the couple's lifetime. They don't need to think about the hassle of equalizing the value of each of their separate trusts or trying to decide what assets to title in one trust or the other, since everything goes into one trust.
- A joint trust requires less work at tax time. It does not become irrevocable until both spouses have passed and therefore eliminates the need to file an extra trust tax return. With separate trusts, at the death of the first spouse that spouse’s trust becomes irrevocable and a separate trust tax return must be filed each year, which generates extra cost and can be a nuisance.
- A joint trust is not subject to the much higher trust tax brackets since it does not become irrevocable at the death of the first spouse. On the other hand any investment or interest income generated in an account titled in a deceased spouse’s trust, since it is now irrevocable, will be subject to trust tax brackets, which will trigger more tax for the surviving spouse, if the income isn’t taken out by Dec. 31 of each year. This will make it difficult for the surviving spouse to compound or reinvest the income into the same investment, since if it’s is not pulled out of the account by year end, in most cases, it will trigger a significant amount of extra tax.
- In a joint trust, after the death of the first spouse, the surviving spouse has complete control of the assets since an irrevocable trust with its restrictions is not created. When separate trusts are used, the deceased spouses trust becomes irrevocable at their death, and the surviving spouse has limited control over these assets, typically restricted to withdrawals for health, education, maintenance and support.
- It can make real estate transactions easier to deal with. If a piece of real estate, like a house, is titled in a joint trust and a surviving spouse sells the house with the intention of using the sales proceeds as a down payment for another house, any lender would be happy to loan them the money as long as they had reasonably good credit. On the other hand if the house is titled in a deceased spouse’s trust, the surviving spouse may have difficulty finding a lending institution that will make them the loan since the house would be titled in an irrevocable trust. This is because irrevocable trusts provide very strong protection against creditor claims, which will make it hard for the lender to secure its loan with a lien on the property and foreclose if there’s a default.
What to Do?
In many cases a joint trust may not be appropriate, but on the other hand, if the advantages of separate trusts are irrelevant to you and you don’t mind the surviving spouse getting the money, don’t volunteer for the unnecessary headaches of separate trusts.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
How Trump's First 100 Days Have Impacted Your Portfolio
President Trump's first 100 days in office have been busy, with a flurry of executive orders sparking volatility in the stock and bond markets.
-
Should You Donate Money to the Social Security Trust Funds?
You can make charitable donations to Social Security, the safety net for older Americans. But will it make a lasting impact?
-
Don't Veer Off Course at the First Sign of a Squall in the Markets
When markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
-
How Business Owners Can Prepare for a Terminal Diagnosis
The most important thing is readiness, whether the owner faces a life-changing diagnosis or an employee does.
-
Advisers, Take Note: How 2025 Social Security Changes May Impact Your Clients
What financial advisers might need to know to help their clients navigate Social Security in 2025.
-
Social Security Is Taxable, But There Are Workarounds
If you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to Take
A serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
To Stay on Track for Retirement, Consider Doing This
Writing down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your Retirement
Higher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
Within Five Years of Retirement? Five Things to Do Now
If you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.