Trusts & Estates Law/Setting up a trust

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Question
Hi, first, thank you so much for taking your time to do this service. :) My question has to do with setting up a trust for my husband and I (we have children). Recently, he met with his best friend who is a lawyer and does estate planning and supposedly his laywer friend suggested we set up two separate trusts (one for each of us rather than one in both our names). He said something about if your marriage is solid, this is the way to go because of tax laws and it being easier to make changes, lots of legal jargon, etc(???). Anyway, since this is my husbands' good friend (and not mine), I want to make sure this is the case and that it is what is best for both of us as it seems to the average person it would be the opposite and separate trusts would be best for each individual rather than a couple who plan to stay together? Any insight you can provide would be helpful.
thanks!

Answer
Thanks for your question.  You don't say what state you live in.  

In California it's quite common (in fact, it's the "norm") for a married couple to set up a joint trust - especially because under our "community property" laws there are some important estate tax benefits that cannot be used (at least not as easily) if the husband and wife each set up their own trusts (if you are in a community property state, I suggest that you ask the lawyer about the use of the "double step-up" in cost basis and whether it's available if you use separate trusts; if you aren't in a community property state, then the "double step-up" doesn't apply to you).

In non-community property states separate trusts are used far more often than joint trusts.

I don't understand what the lawyer meant that "if your marriage is solid, this is the way to go because of tax laws".

It "might" be easier to make changes if it's a separate trust ... you would be able to change your trust without having to get your husband to agree to the changes, and he would be able to change his trust without getting you to agree.  BUT ... assuming you both would do the "usual" thing and leave your property to the surviving spouse (perhaps in an irrevocable trust) and then to your children, I don't see how having 2 trusts is any easier - presumably you'd both be making changes at the same time and you'd be making the same changes.

Have you checked out this lawyer's credentials?  I suggest you look him up on Avvo (dot com) and on SuperLawyers (dot com).  If your state has "certified legal specialists", then I'd also check to see if he's certified as a specialist in estate planning.... there are a lot of lawyers out there who think that estate planning is "easy" and so they dabble in it.  I don't like "dabblers" (but I admit that I'm prejudiced).

In any event it sounds like you aren't entirely comfortable with this guy.  Even if he's a "good friend" of your husband (or maybe because he's a good friend), you need to make sure you believe he has your best interests at heart.  The lawyer has a "legal obligation" to treat both you and your husband fairly, but that's sometimes easier in theory than it is in practice.  There are lots of competent lawyers out there.  Make sure you're comfortable with whomever you use.

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Janet Brewer

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BE CAREFUL about taking legal advice from non-lawyers.

I am a licensed attorney in California. I am available to answer questions about probating estates, preparing wills and trusts, administering estates and trusts, forming family limited partnerships and limited liability companies, and establishing a wide variety of estate and gift tax-sensitive trusts (charitable trusts, children's trusts, irrevocable life insurance trusts, etc.).

I can also answer questions regarding the preparation of estate tax returns (Form 706) in taxable estates. Please note that I do not prepare trust income tax returns and cannot provide you with any information about that type of return.

Please note: I am only able to practice law in the State of California. I cannot answer specific questions about other states' laws; I can only provide some "general" information that may or may not apply to your situation.

Experience

I have practiced California estate, gift-planning, and probate law exclusively since 1991. I am certified as a specialist in estate planning and probate law by the California State Bar Board of Legal Specialization (there are less than 125 such specialists practicing in Santa Clara County and fewer than 7,000 practicing in California - out of over 170,000 lawyers statewide).

I have served as an Instructor in the CFP (certificate in financial planning) program at University of California Santa Cruz, teaching the estate planning segment.

Organizations
Silicon Valley Bar Association
Wealth Counsel
Wealth Advisors' Forum
Executive Committee Member, Solo and Small Firm Section of the California State Bar (appointed to a 3 year term by the California State Bar Board of Governors)

Education/Credentials
I received my law degree (J.D.) from University of Denver Law School in 1975. I was admitted to the Colorado Bar in 1975 and to the California Bar in 1977 (NOTE: although I am a member of the Colorado Bar, I am on INACTIVE status there). I earned an M.B.A. in 1982, and I earned a Masters Degree in Taxation Law (LLM) at Golden Gate University Law School in 2010 (with honors).

More at:
http://www.calprobate.com

Awards and Honors
2007, 2008, 2009, 2010, 2011, & 2012 - chosen as a "SuperLawyer" - one of the top 5% of Northern California lawyers practicing in the estate planning and probate area (www.superlawyers.com). Avvo Rating of 10.0/10.0

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