The primary difference between these two structures is the number of creators (also known as trustors, grantors, or settlors):
Individual Revocable Trust (IRT): Created and funded by one person.
Joint Revocable Trust (JRT): Created and funded by two or more people, most commonly spouses or partners.
Resource:
The article digs into the factors to consider as well as the pros and cons of each type of trust to help you make an informed decision about your estate plan. We also have a helpful podcast, co-hosted by our Chief Legal Officer, Anne Rhodes, that covers 'Individual vs. Joint Trusts: Which One Makes Sense? '
How the Platform Recommends a Trust
When you begin your estate plan, you are guided through a quiz designed to identify your specific goals, family situation, and state requirements. The recommendation you receive is tailored to your unique circumstances and whether you live in a Community Property or Common Law state.
When to Consider a Joint Trust
Joint Trusts are most frequently used by married couples who share similar legacy goals and beneficiaries.
Community Property States: If you live in a community property state, a Joint Trust is often recommended to simplify the management of shared assets and ensure they bypass probate.
Simplified Administration: Couples who file taxes together and have shared assets often find a single trust easier to manage than two separate ones.
When to Consider Individual Trusts
Individual Trusts offer greater flexibility and are often the preferred choice in "Common Law" (non-community property) states. You should consider separate trusts if:
Separate Property: You own significant assets independently of your spouse.
Blended Families: You and your partner have different beneficiaries or distribution wishes.
Asset Protection: Separate trusts can provide better protection in the event one spouse is subject to litigation.
Flexibility: Separate trusts allow each person to designate different decision-makers (Successor Trustees).
Key Factors for Decision Making
Choosing the right trust involves evaluating several personal factors:
Marital Status: Whether you are legally married or in a state-recognized partnership.
Tax Filings: Potential complexity in income tax reporting if assets are shared by non-spouses.
Legal Claims: Separate trusts are often clearer if divorce or separation is a concern.
Gift Tax: Transferring assets into a trust created by someone else can trigger complicated gift tax or legal claims.
Note: If you are uncertain which structure is best for your specific financial or family situation, we recommend consulting with a qualified attorney.