Planning for the future is one of the most important things you can do for your spouse and your children. In Michigan, courts follow a rule of fair distribution, which typically results in each spouse receiving roughly half of the marital estate during a legal separation or divorce.
Because the law aims for this balanced split, many couples use trusts to manage their finances. Deciding whether to use a joint trust or separate trusts depends on your family structure, your history together and your specific financial goals.
The advantages of a joint trust
A joint trust allows you and your spouse to manage your assets in one legal document. The benefits of this approach include:
- Simplified management: Moving assets into the trust is much easier because you only have to manage and fund one entity.
- Shared oversight: Both spouses have equal control and visibility over all the assets in the trust.
- Seamless transition: You gain immediate control over all assets if your spouse passes away.
- Lower administrative effort: Managing a joint trust often requires less paperwork and less time over the years.
Choosing a joint trust provides a unified strategy for couples who view their finances as a single, shared pot. It is often the most straightforward way to ensure both partners are taken care of as they age.
The advantages of a separate trust
Separate trusts keep each person’s assets in a distinct legal space. Couples often choose this route for the following reasons:
- Protection for pre-marital property: It is much easier to keep assets you owned before the marriage separate from your shared marital estate.
- Clarity for blended families: If you have children from previous relationships, you can keep your funds for them separate from your finances with your current spouse.
- Debt protection: You can shield the assets in your own trust from the creditors or legal liabilities of your spouse.
This arrangement offers clarity for individuals who want to maintain their own financial identity while still planning for the future of their family.
Make the right choice for your family
The decision you make today will shape how your family handles your estate for years to come. Staying informed about the differences between these trust types can ensure your plan actually works when your family needs it most.