I often meet with couples who have spent decades building a life together. They share a home, bank accounts, and a vision for the future. Yet, their estate plan consists of two separate wills that treat them almost as business partners. When one spouse dies, the survivor is left to manage their own assets while probating the deceased’s will. We work to prevent this duplication of effort and potential for conflict through intentional planning.
For many of these couples, a joint living trust is appealing. It seems to mirror how they live their lives—as a single economic unit. In many ways, that is exactly what it is designed to do.
How a Joint Trust Functions
A joint revocable living trust is a single trust document created by a married couple. Both spouses act as co-trustees during their lifetimes, managing the assets they transfer into the trust. The goal is simplicity—one pot, one set of rules. While both spouses are alive, they retain full control. They can amend the trust, add or remove assets, or revoke it entirely if their circumstances change.
Upon the death of the first spouse, the trust continues for the benefit of the surviving spouse, who becomes the sole trustee. They use the trust assets to support themselves. Only after the second spouse passes away do the trust’s final instructions take effect, distributing the remaining assets to children, charities, or other beneficiaries. This process bypasses probate for assets held in the trust, which can save the next generation significant time and expense in Surrogate’s Court.
New York’s Property Laws Change the Equation
A crucial distinction exists for families in New York. Joint trusts are common in community property states, where assets acquired during a marriage are generally considered owned equally by both spouses. New York, however, is a separate property state. Assets are owned by the person who holds the title.
When you transfer separately owned property into a joint trust, you may be unintentionally co-mingling it. This can have serious consequences. If one spouse has a creditor issue, for example, assets in a joint trust that were previously protected as separate property could become vulnerable. For couples where one partner enters the marriage with significant family wealth or a business, a joint trust may not be the most prudent path.
Furthermore, creating any trust in New York must adhere to specific legal formalities. Under Estates, Powers and Trusts Law (EPTL) § 7-1.17, the signature of the person creating the trust must be acknowledged by a notary public or signed in the presence of two witnesses. This formality underscores that a trust is a serious legal instrument, not an informal agreement.
Considering Blended Families and Future Contingencies
A joint trust assumes a shared, unchanging set of goals. But what happens if those goals diverge? For blended families, this is a major consideration. A joint trust might be amendable by the surviving spouse after the first spouse has died. This could allow the survivor to change the ultimate beneficiaries—potentially disinheriting the children of the first spouse to die.
While a trust can be drafted to become irrevocable upon the first death to lock in the beneficiaries, this reduces flexibility for the survivor. They might be unable to adapt the plan to changing family needs, tax laws, or financial circumstances. Stewardship requires planning for these contingencies.
In my practice, we often recommend individual trusts, even for couples with a seemingly straightforward estate. Two separate trusts can be coordinated to work together, providing for the surviving spouse while also ensuring that each spouse’s wishes for their ultimate legacy are protected. It allows for a greater degree of asset protection and more precise planning for complex family dynamics.
A joint trust can be an effective tool for the right family. The key is to make a deliberate choice, understanding both its efficiencies and its limitations. It is not a default option but one of several structures we consider when designing a plan to protect a family’s legacy for the next generation.
The first step in this process is to create a clear inventory of your shared and separate assets. With that document in hand, schedule a meeting with our firm to analyze whether a joint trust or another structure is the most effective custodian of your family’s future.
