Richard Morgan, Morgan and DiSalvo.
We’re dealing with revocable living trusts. So one issue that comes up quite often, especially with individuals who come from a different state into the state of Georgia, oftentimes they come from a community property state like California or Washington state and then they come to a state like Georgia, which is a common law property state. So one of the things that they’ll have as part of their estate plan is what we refer to as a joint revocable trust. Husband and wife will have the same revocable trust document and they’ll use it together. From the client’s perspective, they believe it’s kind of like a joint checking account. It has no significant things to worry about and that’s the problem.
The question becomes should you continue using that joint revocable trust or even create one or is it better for those that want revocable living trust as their main document for each spouse to have their own separate revocable living trust? To us the answer is very clear. The clear answer is each spouse should have their own separate revocable living trust. I’ve been doing estate planning since 1987, have my own practice this own firm since 1995. I’m sure that some of these joint revocable trusts are properly administered. I have never seen one in my life.
What’s going on in a joint revocable trust are a lot of gyrations that don’t actually ever happen, so what’s actually supposed to be happening. If wife puts in assets into the trust there’s supposed to be a little sub account saying it’s the wife’s assets. The husband puts assets in, it’s supposed to be the husband’s assets. If there’s joint assets put in it’s supposed to be joint assets. If it’s community property it’s supposed to be community property. You have all these little sub accounts for accounting purposes. When money comes in, you account for it. When money leaves out, you account for it.
Then when someone dies, certain those assets belong to the first spouse to die and certain assets belong to the survivor and different things are supposed to happen. Again, I have never seen it done properly. Normally when someone comes to me after someone passes away, nothing has been done. They keep the same accounts and keep doing the same thing. So those people that are using joint revocable living trusts just kind of believe they’re simple. In reality, they’re way more complicated to deal with and they can cause way more amount of problems. So we go with the tried and true, each spouse gets their own revocable trust. We know exactly what each one is doing and what’s supposed to happen with each trust. We like t’s crossed I’s dotted and no problems.
Richard Morgan, Morgan and Disalvo.