A married couple who creates a shared revocable living trust legally declares that both parties will act in each other's best interest by making sound medical and financial decisions on behalf of one another, should one partner become mentally or physically incapacitated. After the death of one spouse, the surviving spouse promises to distribute the deceased's assets exactly as instructed in an ethical and responsible manner.
Basic Shared Revocable Living Trust
A basic shared revocable living trust is usually all that's needed for a couple that owns most of its assets together and has an estate valued at less than $1 million. Upon the death of one spouse, property that was left to the surviving spouse by the deceased can stay in the trust and no formal paperwork is needed to transfer the property. At this point, the single trust splits into two, one that contains the deceased's share of trust property that was not left to the surviving spouse and a second trust that contains the surviving spouse's individual property along with property that was bequeathed to the surviving spouse by the deceased.
AB Living Revocable Living Trust
An AB Living Revocable Living Trust helps high-income couples avoid estate taxes by maximizing the use of the U.S. government's personal estate tax exemption. Although U.S. law dictates that a spouse can leave her entire estate to the surviving spouse tax-free, when the last spouse dies the couple's children may have to pay estate taxes on the remainder of the estate. To avoid this situation, a couple with an AB Revocable Living Trust never technically combines each party's estates or becomes legal owners of the property contained within the respective estates. Instead, the AB trust owns the property. Upon the death of the first spouse, the deceased's estate is not subject to taxes as long as it was under the taxable threshold set by the government. Although the surviving spouse -- known as the “life beneficiary” of the trust -- still doesn't technically own his deceased partner's trust property, this spouse can still use the property assets to maintain the standard of living to which he is accustomed.
Notifying Others After Death
Some states require the surviving spouse to register the couple's revocable living trust with the local court immediately after the first spouse dies. However, in most cases registration doesn't give the government any power to administer the estate's assets, provided that there are no challenges by disgruntled relatives or creditors. The surviving spouse also does not have to tell anyone who is not specifically named in the trust what was bequeathed by the deceased. This person also doesn't have to share what is in his portion of the trust or who will receive it upon his death.
Surviving Spouse Rights
Couples who live in community property states don't have to bequeath individually owned property to the surviving spouse, but couples residing in common law property states are obligated to share at least one-third of the property with each other, even if the property was acquired before marriage or given as a gift to one member of the couple. When a person living in a common law property state dies, the surviving spouse can sue to get that property, even if the deceased chose not to bequeath the property to their spouse in the couple's revocable living trust.