Trust & Estate Planning

Maintaining Separate Asset Ownership Can Benefit Estate Planning

December 11, 2015

Many couples pool their money and hold checking, savings, and investment accounts jointly. The sense of "share and share alike" can be comforting, but when it comes to estate planning, jointly held funds can limit your options.

Separate Assets Are Entitled to Separate Exclusions

Equalizing the amount of assets each partner holds in his or her own name can help to minimize estate taxes. When one spouse dies, assets that are jointly held pass to the surviving spouse free of estate taxes and become part of his or her estate. In 2015, the estate tax exclusion is $5.43 million. When the second spouse dies, only the first $5.43 million of assets in the estate will be excluded from estate taxes. But if assets are separately held and each spouse is still alive, each spouse can pass up to $5.43 million to the couple's heirs free of estate taxes.

Trusts are an important part of the estate planning toolkit. A bypass trust (bypassing the surviving spouse's estate) helps both you and your spouse maximize the use of your respective estate tax exclusions. A marital trust prohibits use of funds by a surviving spouse for other than designated purposes.

If you or your spouse have substantial assets, or expect to receive an inheritance, qualified advisors are essential to help you decide as a couple how best to manage your assets for current needs and future generations. An attorney familiar with the laws in your state can assist you in creating a valid will and evaluating the types of trusts and specific provisions that are appropriate for your situation.

An Exercise in Business Management

Managing a family's financial future requires a business approach, but money issues often bring emotional responses. Decisions about managing family wealth can create a host of problems in a relationship. If one or both spouses have children from a prior marriage, for example, a decision to establish a separate trust for the children's benefit can raise concerns about the level of trust and respect between the partners.

Maintaining a technical perspective on the financial and legal issues involved, and enlisting the assistance of objective experts in estate planning, can help smooth the way to establishing a sound plan that can meet your family's needs.

For additional information, call Washington Trust Wealth Management at 800-582-1076.

Any views or opinions expressed are those of Washington Trust Wealth Management. The information provided does not constitute legal, tax, or investment advice and it should not be relied on as such. It does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. Please consult with a financial counselor, attorney, or tax professional regarding your specific investment, legal, or tax situation. It should not be considered a solicitation to buy or an offer to provide investment advisory or other services. All information is current as of the date of this material and may change at any time without prior notice.  The information provided is solely for informational purposes and has been obtained from sources believed to be reliable but its accuracy is not guaranteed.