Are there advantages to creating a joint trust instead of an individual trust?
If you and your spouse or partner live in one of the 9 community property states in the U.S., you may have a tax advantage after after one of you passes away.
Specifically, 100% of any property that is community property will generally receive a new “basis” - or tax cost - for income tax purposes.
In non-community property states, only the property owned in the name of the deceased spouse or 50% of jointly owned property will get this “step up” in basis.
For couples living in a community property state, creating individual trusts could result in losing this tax advantage, whereas a joint trust should preserve it.
In addition, a joint trust reflects the joint ownership and management of community assets that applies to most couples living in community property states.
The 9 community property states are:
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.
Alaska is an opt-in community property state that gives both parties the option to make their property community property.
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Disclaimer: Tomorrow is not a law firm nor does it provide legal advice. Financial products and services are offered by Tomorrow Insurance Services LLC, a wholly owned subsidiary of Tomorrow Ideas, Inc. Tomorrow Ideas, Inc. and Tomorrow Insurance Services may use third party data believed to be reliable, but cannot guarantee the accuracy or completeness of that data.