Legal Question in Wills and Trusts in Nevada
Do married couples need a single or two separate Revocable Living Trust to take
To take maximum advantage of each person's federal estate tax exemption, as a married couple living in a community property state (with a net worth of more than twice the federal estate tax exemption), can we create just one single combined Revocable Living Trust (and still take advantage of two federal estate tax exemption)? Or must we create two separate (his and hers) Revocable Living Trusts? What are the advantages/disadvantages to either set up?
My understanding is that with just a single Revocable Living Trust, we can transfer all of our assets into the name of the ''his and her family Revocable Living Trust'', he and she Co-Trustees. There is no need to divide up our assets while we are both still living. Then after the death of one spouse, the surviving spouse can decide how to best divide up the Trust assets into the irrevocable B and C Trusts, and the revocable A-Trust. The first federal estate tax exemption will be taken at the time of the death of the first spouse. The second federal estate tax exemption will be taken at the death of the surviving spouse. Is my understanding here correct?
1 Answer from Attorneys
Re: Do married couples need a single or two separate Revocable Living Trust to t
Married couples typically draft a single Living Trust that remains revocable as long as either of them, as trustee, is alive. Upon the death of the first spouse, the other usually remains as the trustee. If the estate (corpus of the trust) exceeds the amount under which federal estate taxes are not paid, the trust can be structured to allow for the assets to be divided upon the death of the first, so that a portion is set aside in an irrevocable trust that preserves the exemption for the first spouse to die. This is called an "A-B" trust. Property allocated to the deceased spouse would be placed in the B trust (irrevocable), and the remainder of the property goes into the A trust (revocable), which would then be entitled to the exemption upon the demise of the surviving spouse.
You are very wise to be thinking about how you can avoid the onerous estate taxes, and any competent estate planning attorney can surely help you to avoid giving Uncle Sam more than his due. If I can help you with further details, please contact my office for a free initial consultation. 775-358-1958 (Reno/Sparks)
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