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.

Connect with a wealth advisor

No matter where you are in life, we can help. Get started with one of our experts today. Contact us at 800-582-1076 or submit an online form.

Contact us

This document is intended as a broad overview of some of the services provided to certain types of Washington Trust Wealth Management clients. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, actuarial or tax advice. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. Please consult with a financial counselor, an attorney or tax professional regarding your specific financial, legal or tax situation. No recommendation or advice is being given in this presentation as to whether any investment or fund is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were, or will be, profitable.

Any views or opinions expressed are those of Washington Trust Wealth Management and are subject to change based on product changes, market, and other conditions. All information is current as of the date of this material and is subject to change without notice. This document, and the information contained herein, is not, and does not constitute, a public or retail offer to buy, sell, or hold a security or a public or retail solicitation of an offer to buy, sell, or hold, any fund, units or shares of any fund, security or other instrument, or to participate in any investment strategy, or an offer to render any wealth management services. Past Performance is No Guarantee of Future Results.

It is important to remember that investing entails risk. Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions. Investments in foreign markets through issuers or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, or other conditions. Emerging markets can have less market structure, depth, and regulatory oversight and greater political, social, and economic instability than developed markets. Fixed Income investments, including floating rate bonds, involve risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. The value of a portfolio will fluctuate based on market conditions and the value of the underlying securities. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss. Investors should contact a tax advisor regarding the suitability of tax-exempt investments in their portfolio.