Couples often work together to develop estate plans. Marital trusts can offer tax benefits and other advantages that other trusts do not offer. However, you want to work with an experienced estate and trust attorney to ensure your trusts work effectively with your estate plan.
Our attorneys at Merlino & Gonzalez have decades of combined experience handling probate and estate matters. We have assisted thousands of clients in protecting their loved ones and the legacy they have built. Our legal team works with you to personalize an estate plan that respects your personal wishes and ensures your wishes are carried out.
Contact Merlino & Gonzalez to schedule a consultation with our estate planning attorneys in New Brunswick, NJ. A lawyer can help you determine if a marital trust is the best way to achieve your goals for your estate plan.
How Merlino & Gonzalez Can Help You With Marital Trusts in New Jersey & New York
There are several types of trust agreements couples may use in an estate plan. When you hire our top-rated estate planning attorneys in New Jersey and New York, we will help you by:
- Discuss your estate planning goals and needs
- Explain the different marital trusts, including the advantages of marital trusts
- Develop an estate plan that utilizes marital trusts and other documents to their fullest potential
- Discuss incapacitation planning as an element of your estate plan
- Ensure your estate and retirement plan work together to maximize benefits
- Review and explain estate documents as we guide you through executing your estate plan
Our law firm is dedicated to assisting clients in making delicate decisions regarding estate and probate matters. We are well-versed in all aspects of estate planning. Therefore, our attorneys understand how various aspects of estate planning impact retirement, incapacitation, wealth protection, and long-term care planning. We help you put your desires into legally binding estate documents to protect your estate from challenges and problems.
Call our office to schedule a consultation with a New Brunswick estate planning attorney. We assist clients in New Jersey and the area surrounding Staten Island.
What Is a Marital Trust?
A marital trust is a legal document primarily used by married couples as part of a comprehensive estate plan. These types of trusts are designed to provide financial benefits based on lifetime gift exemptions and unlimited marital deductions. When properly drafted, a marital trust can protect assets, provide for the financial needs of a surviving spouse, and reduce or eliminate estate taxes.
A married couple can choose from several types of trusts. The type of marital trust you choose depends on your financial situation and goals for creating the trust. Each marital trust has specific advantages and drawbacks that should be carefully considered, including how the various elements directly or indirectly impact your overall estate plan.
The Bypass Trust or A-B Trust
A common marital trust is the Bypass or A-B trust. The couple begins by creating a joint trust during their lifetime. Upon the death of one spouse, the joint trust is divided into two trusts.
The surviving spouse controls the A Trust. Therefore, it is known as the Survivor’s Trust. The surviving spouse sets the terms of the A Trust, including how the funds are managed, used, and distributed upon their death. The Survivor’s Trust ensures that the surviving spouse maintains the power to decide how their estate is distributed.
The B Trust is an irrevocable trust containing the deceased spouse’s assets. Therefore, it is known as the Deceased’s Trust. This trust can provide for the surviving spouse during their lifetime. The trust is distributed to the secondary beneficiaries upon the surviving spouse’s death. The spouse who dies first decides the terms for Trust B when they establish the joint trust with their spouse.
QTIP Trust
A QTIP (Qualified Terminable Interest Property) Trust is an irrevocable testamentary trust. This marital trust is created through the decedent’s will. The will directs that specific assets be transferred directly to the QTIP Trust from the decedent’s estate.
Generally, the income from a QTIP Trust is paid to the surviving spouse during their lifetime. The trust may direct a portion of the principal to be paid to the surviving spouse. It is up to the spouse creating the trust to choose whether to do that.
When the surviving spouse dies, the principal assets are distributed to the beneficiaries named in the will or held in trust for their benefit. A QTIP Trust is useful in blended family situations. A spouse can provide income for their current spouse while leaving the principal of the trust to their children from a prior relationship.
SLAT Trust
A SLAT (Spousal Lifetime Access Trust) differs from the QTIP and A-B Trusts. The SLAT takes advantage of a spouse’s lifetime gift exemption to create a marital trust while they are living. It can be a powerful estate planning tool that provides protection of assets during your lifetime and minimizes estate taxes after your death.
The grantor spouse transfers assets to the SLAT. The SLAT benefits the non-grantor spouse through distributions from the trust. These distributions indirectly benefit the grantor trust because the funds can be used to support the family. Children and grandchildren can be included as beneficiaries concurrently with the non-grantor spouse or as successor beneficiaries.
The SLAT should be drafted to clearly define when the non-grantor spouse can access funds and how those funds can be used. Selecting an impartial trustee to manage the trust helps protect the trust assets for future generations. Drafting the trust to avoid triggering the reciprocal trust doctrine is also crucial.
Grantor Spouse
Divorce and the death of the non-grantor spouse mean the grantor spouse loses indirect access to the trust. However, the trust can be worded to mitigate these situations. SLATS require careful financial planning and assistance from an experienced trust attorney.
Because a SLAT is an irrevocable trust, you lose access to the assets when you create and fund the trust. Therefore, it is crucial to weigh the benefits against the drawbacks.
Contact Our New Brunswick & Staten Island Estate Planning Attorneys for a Consultation
Our estate planning attorneys in New Jersey and New York have extensive experience developing marital trusts to meet a client’s goals and protect their assets. Contact our office to schedule a meeting with an attorney to discuss how a comprehensive estate plan can benefit you now and protect your family after your death.