Charting a Course for Family Security

Estate Under $3,500,000



Often a married couple with an estate under $3,500,000 will hold title to all of their assets in joint tenancy so that at the death of one of them the assets will automatically go to the other without going through probate.  There are also no federal estate taxes at the first death because of the unlimited marital deduction.  That is, an unlimited amount of property can pass between husband and wife without any transfer (gift or estate) taxes.  Under this form of planning, after one spouse dies the other spouse then sets up a revocable trust so as to avoid probate at the second death.

If you wish to avoid probate at the second death and you are concerned that after one of you dies the other one may not have the time or ability to set up a trust either because you die together in a joint accident, one of you dies and the other is incapacitated and therefore unable to set up a trust, or one of you dies and the other one just never gets around to setting up the trust then you may wish to set up a joint revocable trust while both of you are alive.
Under this arrangement you would have a joint trust agreement prepared under which you would serve as your own co-trustees. This agreement would be revocable so that you could either amend or revoke it at any time. Consequently, you would remain in complete control of your assets. You retain complete flexibility to manage and sell your own assets. There is no need to report to anyone, to file any accountings or to file separate income tax returns. This form of trust has a minimum of "humbug'.


  1. Upon the death of the first of you to die, the other would not need to set up a trust in order to avoid probate. The trust would already be set up and in place. The survivor of you would continue on as trustee and would continue to have the ability to amend or revoke it at any time.
  2. Upon the death of the second of you to die, your assets would be distributed to your beneficiaries or continue to be managed for your beneficiaries without going through probate.
  3. If either or both of you become incapacitated through illness or injury, the other of you or the successor trustee which you named in the trust agreement (a family member, a friend or a trust company), could step in and take over the management of your assets and pay your bills without the need for a court appointed guardian.
  4. Upon the death of both of you, the successor trustee named in your trust agreement could immediately take over the management of your trust and have access to your bank accounts and other assets without having to wait for the court to appoint a personal representative of your estate.
  5. Upon the death of the second of you to die, tangible personal property (items such as furniture, furnishing, jewelry, clothing and personal effects) could be distributed either according to a separate list or among your children as they agree.  The balance of the trust could either then be distributed to your children or continue to be held in trust for the benefit of your children until they have reached more mature ages.  The trust, of course, could be distributed to whoever you designate in the trust agreement in whatever proportions you wish.


The joint revocable trust is only suitable for estates under $3,500,000 and not expected to grow over $3,500,000 before the death of both husband and wife.  This is because only the $3,500,000 federal estate tax exemption of the second of you to die is available.  If your combined estates exceed the exemption, then it would be better to set up a more sophisticated plan involving two trusts (one for each of you) and divide your property between the two trusts.  This would then make use of both of your exemptions and allow you to pass $7,000,000 on to your heirs tax free this year.  In 2010, the estate tax is repealed and in 2011, the exemption decreases to $1,000,000 per person.

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