Joint Living Trust Disadvantages
Rather than write a traditional last will and testament when dealing with estate planning, some people create a“living trust” in which they state their wishes more clearly and take a more active role in estate planning. A joint living trust is one in which a husband and wife create a single estate plan that encompasses all of their assets. A joint living trust has advantages and disadvantages.
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Taxation
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One major disadvantage of a joint living trust is that the estate is viewed as a single sum and total for tax purposes. So, if your estate as a whole is valued at more than $625,000, you may be subjected to higher tax rates and a heavy tax burden. Decide whether your estate as a whole falls under the higher tax bracket when filed as a joint living trust before making the decision to plan your estate this way.
Privacy
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Another disadvantage of a joint living trust is that the information contained within it remains private. If you have other relatives or heirs who wish to collect their portion of the inheritance, they will be unable to view the living trust documents or determine whether they are legally entitled to any portion of the estate. In some cases, you may wish your estate information to be public and a joint living trust will prevent this.
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Divorce
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A potential disadvantage of a joint living trust that a divorce or separation will disrupt the joint living trust and require you to spend time and money re-drafting the trust as an individual trust or a joint trust with your new spouse or partner. Because of these disadvantages, think long and hard about whether you wish to plan your estate with a last will and testament, an individual living trust, or a joint living trust.
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