Posts tagged revocable trust
How are trusts structured for spouses?

Developing one or more revocable trusts for a married couple depends on the character of the property they own, i.e., all community property, some community and some separate property, or only separate property. In addition, the amount of community and separate property may also play a role in determining the most efficient structure for the couple.

All Community Property

Where a couple can appropriately characterize all of their assets as community property, estate planning lawyers typically create a single revocable trust for both spouses. Generally in this situation, a couples' wishes as to how the community property should be distributed after one and eventually both spouses pass away is fairly consistent. A single revocable trust is generally more cost effective as the estate planning lawyer only has one trust document to produce.

Some Community and Some Separate Property

Where a couple has some community property and some separate property, whether a single revocable trust or multiple revocable trusts is preferred may turn on the relative values of each type of property. If either or each spouse only has a relatively small amount of separate property, a single revocable trust with provisions taking into consideration the separate property may be appropriate, as the cost of creating a separate revocable trust to deal with one spouse's separate property may not be justified.

However, if one spouse owns a substantial amount of separate property, he or she may wish to create a separate revocable trust to hold those assets and prevent the likelihood of commingling those separate assets with community assets, which would be held in a community property trust. It can also help with housekeeping to ensure that both spouses have clarity on which assets are community and which are separate.

Only Separate Property

If a couple has entered into an agreement where they agreed that there is no community property between them, for example, by virtue of a premarital or postnuptial agreement, then having separate trusts to hold each spouse's separate property will likely be the most sensible approach.

Although general guidelines can be prescribed, speaking with a qualified estate planning professional is an important step, especially for those who own substantial amounts of separate property. There may also be tax considerations that may cause you to re-characterize property as either separate or community property.

How is a trust administered while you are alive?

During their lifetimes, the creators of a revocable living trust (also known as Trustors, Grantors, or Settlors) are typically the ones administering the trust. As the party in charge of administering the trust, they are also known as the Trustee. While the Trustor is competent and alive, administration is typically very informal. More often than not, the Trustor may not see or experience any difference in life prior to, or after, the creation of the trust.


It's important to remember the steps needed to ensure that the trust will help the Trustor achieve the estate planning objectives--usually probate avoidance and that beneficiaries are properly provided for.

Some of the biggest stumbling blocks faced by Trustors is the failure to properly re-title assets in the name of the trust and updating beneficiary designations on assets such as retirement accounts and life insurance policies so that they can be distributed without the need for probate. Because of the technicalities involved, an estate planning lawyer often provides guidance to the Trustor on how assets should be dealt with to avoid probate.

Other Considerations

All income of a revocable living trust is reported on Trustor's personal income tax returns. In addition, while a Trustor of a revocable living trust is also the Trustee, no other beneficiary of the trust has the power to compel the Trustee. California Probate Code Section 15800 provides as follows:

Except to the extent that the trust instrument otherwise provides or where the joint action of the settlor and all beneficiaries is required, during the time that a trust is revocable and the person holding the power to revoke the trust is competent:

(a) The person holding the power to revoke, and not the beneficiary, has the rights afforded beneficiaries under this division.

(b) The duties of the trustee are owed to the person holding the power to revoke.

One of the beauties of utilizing revocable living trusts in California is that for all practical purposes, the creator experiences no change in day-to-day life. The primary hurdle is to ensure that assets are properly titled in the name of the trust; however, this is typically a one-time event that is taken care of at the time of the creation of the trust. Once the trust is in place, a Trustor should take care to ensure that subsequently acquired assets are placed into the trust, as appropriate.