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Living trusts – joint or individual for physician/non physician couple?

Home Estate Planning Living trusts – joint or individual for physician/non physician couple?

  • Avatar drdanburger 
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    Status: Physician
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    Joined: 05/03/2018
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    Looking at starting living trust but newly married and wife is not physician. Have read the pros and cons of using joint vs separate living trusts but none from the physician angle. Thoughts?

    #129250 Reply
    Avatar Steven Podnos MD CFP 
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    Status: Physician, Financial Advisor
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    Joined: 09/21/2017

    If you live in a state that has asset protection by virtue of “as tenants by the entireties” ownership, you should strongly consider  that instead of putting assets into a living trust (which has no asset protection, joint or otherwise).  I have seen joint living trusts with language that states it is the same as “ATBE” but I don’t think this has been litigated.

    For a young couple, owning assets in a living trust just adds hassles without any real benefit.  Your wills can “pour over” solely held assets into your trust (joint or sole) and in most cases everything passes via joint ownership or a beneficiary designation otherwise.

    #129271 Reply
    Liked by jfoxcpacfp
    Avatar spiritrider 
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    Status: Small Business Owner
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    Joined: 02/01/2016

    What state do you live in and exactly what benefit do you think a living trust will provide that can’t be better solved differently.

    Like LLCs and/or S-Corps, Living Trusts are overhyped, underperform and often counter-productive.

    #129279 Reply
    Craigy Craigy 
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    Status: Spouse
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    Joined: 09/16/2016

    You should consult an estate planning attorney in your state.

    LEVEL 1 WCI FORUM MEMBER.

    #129292 Reply
    Avatar drdanburger 
    Participant
    Status: Physician
    Posts: 5
    Joined: 05/03/2018

    We live in IL. Looking at living trusts for 2 main reasons –
    1. To avoid probate costs
    2. To exert some control over funds for our son’s well being in the case we both died in an accident.
    Have less than $200k in assets mostly seperately held retirement accounts and mutual funds + about 2MN life insurance.
    We are newlyish married and I like the idea if things went south of being able to update my own trust without involving divorce lawyer (or at least less).
    I am FP so not super worried about asset protection though perhaps I should be.

    #129317 Reply
    jfoxcpacfp jfoxcpacfp 
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    To exert some control over funds for our son’s well being in the case we both died in an accident.

    Click to expand…

    You do not need a RLT for this. A testamentary trust will do the job.

    We are newlyish married and I like the idea if things went south of being able to update my own trust without involving divorce lawyer (or at least less).

    Click to expand…

    You cannot count on a RLT to remain separate property in a divorce.

    1. To avoid probate costs

    Click to expand…

    This is the only reason I see for a RLT for you. I believe Anjali Jariwala (who is originally from IL) said in a previous thread that IL is one of the states where it makes sense to bypass a complicated probate. All states are not the same, though.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #129333 Reply
    AnjaliFIT AnjaliFIT 
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    You cannot do a joint trust in IL – joint/family trusts are usually only available in community property states which IL is not one.  If you go with a RLT you’ll need one for each spouse and the estate planning attorney will be able to help with dividing up the assets so you know what goes into which trust.  A good estate planning attorney will provide you with a funding letter after your documents are complete outline how everything should be titled.  Probate is expensive in IL but only applies to taxable assets, real estate, etc.  IL provides a $100k exemption for probate so that usually helps cover the bank accounts (unless your accounts are well over this amount).

    Anjali Jariwala CPA, CFP®
    [email protected]┃847.863.6836
    http://www.fitadvisors.com

    #129399 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 1909
    Joined: 01/15/2017

    Wow, mark up one reason not to live in IL.  I love Chicago too, 2nd only to Ann Arbor for any Midwest living — or outside of current Hi COL paradise.

    #129407 Reply

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