CONTACT US

If you are married, then there are a few different types of trusts you can use to help protect your estate and leave your estate to your surviving spouse. With the unified credit amount being bumped up to $5 million for individuals and $10 million for couples, it has become a bit easier for people with larger estates to leave something for their heirs without tax complications. But that does not mean that couples should not investigate other options to keeping their estates in the family.

What Is A Sweetheart Trust?

A sweetheart trust is the nickname given to a revocable living trust set up between a married couple that is designed to protect the couple's assets. It is a trust that is set up when both spouses are alive and considered able to make decisions for themselves. The trust is set up to leave the surviving spouse whatever is considered part of the estate. It is a simple vehicle for protecting assets and making sure that those assets are moved to the surviving loved one.

Adjusting A Sweetheart Trust

Once a sweetheart trust is established, the spouses can make any changes they want. The one provision of changing a sweetheart trust is that both spouses must agree to the changes for those changes to take place.

Either spouse has the ability to revoke their portion of the trust, and the terms and conditions of the trust can be changed at any time. Not only is a sweetheart trust a very simple financial vehicle that can be used to protect and transition assets, but it is also extremely versatile and flexible to accommodate the needs of the couple.

The Drawbacks Of A Sweetheart Trust

The truth is that a sweetheart trust is a strong vehicle for protecting the assets of a married couple. The ability to alter the trust while the couple is still alive means that any changes that occur in the couple's life can easily be rolled into the trust. The couple can also agree to alter the structure of the trust to benefit other family members as well.

When one spouse passes away, the surviving spouse has complete control over the sweetheart trust. In many cases, this does not present a problem. But there could be instances where the surviving spouse having complete control over the couple's estate could be an issue.

As strong of a vehicle as a sweetheart trust is for a couple to use to protect their assets, it can also have its challenges. For example, if there are step-children in the marriage and one of the spouses passes away, the surviving spouse has the complete authority to take the step-children out as beneficiaries and leave their own natural children in.

If the surviving spouse remarries, then that surviving spouse could put their new spouse in as a part of the trust and completely disinherit the deceased spouse's family. While this is not a normal occurrence, the structure of the sweetheart trust does allow for this scenario to take place.

If you and your spouse are considering ways to protect your assets and provide for each other when one has passed, then talk to your estate attorney about a sweetheart trust. You may find that it is the solution that you and your spouse have been looking for.

A trust is a legal arrangement that distributes assets to heirs after the trust owner has passed on. The primary reason people use trusts is to try and avoid the hassles and costs that come with going through probate.

Before you decide to utilize a trust, there are some basic facts that you need to understand. While a trust can be a good method for accelerating the process in getting your heirs their inheritance, there are some elements of a trust that you should understand before you get involved in one.

You Still Need A Will

A trust is a great way to handle the distribution of your wealth after you have passed on, but it is limited in the other types of arrangements you may need to make. If you have a child with special needs, then you will need a will to outline what is to be done with that child when you pass on.

A will is the best way to make sure that your final wishes are honored, beyond taking care of the financial needs of your estate. While a trust can be more efficient than a will in some estate planning areas, a will is still an important tool to use.

A Trust Is Usually Kept Private

When a will is filed or read in probate, the terms of that will are often made public. With a trust, the information regarding the inner-workings of the trust are usually kept private. One of the exceptions is if someone challenges the trust and the trust must be revealed to the court. But if you want to decrease the chances that your final financial arrangements will be kept private, then you may want to consider a trust.

The Federal Protection Is Compounded

A trust allows you to compound the protection offered by the FDIC on your bank accounts. Under normal circumstances, you are offered $250,000 in protection on a bank account in the event that the bank may fail. But for the people who have more than that in the bank, the chances of losing most of their money before they pass away remain real.

With a trust, your first five beneficiaries are each given the $250,000 bank account protection for a total of $1.25 million in federal insurance. The protection for six or more beneficiaries varies depending on the situation, so it is a good idea to have your attorney talk to the FDIC to see what would happen to your six or more beneficiaries.

Trusts Do Not Need To Be Comprehensive

In most cases, anything with a beneficiary on it such as a life insurance policy or a retirement account will get paid to the beneficiary without needing to go through probate. This means that you do not need to include these types of beneficiary arrangements in your trust.

When you decide to get involved in estate planning, it is important to hire the services of an experienced professional. There are several tools that can be used to get you the results you want when planning your estate, but only an expert knows how to use those tools to your advantage. Spend some time with your lawyer and understand how a trust could be a better way to get your money through probate and to the people who need it after you have passed on.

Get a Free Case Evaluation
Schedule a consultation with one of our experienced lawyers today by filling out the form below, or call us at  718-667-1301

    Why Choose Us?
    Experience
    Our firm has a well-earned reputation for providing our clients with informed representation when they need it most. No matter the legal issue you are facing, we will put the law to work for you.
    Results
    Our clients have experienced great success after working with us, and we are proud to have helped them move forward in a positive direction.
    Personalized Attention
    We believe that an educated client is our best client and encourage your participation. Our attorneys are readily available to respond to your questions and return all calls promptly.
    crossmenu