What Should Your Trust Protect?

Do you have a joint trust with your spouse or an individual trust?

It’s a great question that sometimes comes up as we work with families trying to create multi-generational wealth. There are many things to consider when making this decision, which should never be made without consulting a legal professional. One thing we like to focus on with the families we work with is: What is the purpose of the trust?

Just one of the reasons to set up a trust is to protect. When done correctly, trusts can add more protection from probate or even creditors. What does that look like in either a joint or individual trust?

One thing to consider when looking at a joint trust is that if any joint trust owners have judgments or problems, all the assets in the trust could be at risk. So, let’s say spouse 1 is running a small business with significant leverage and risk. The spouses combine their assets to be held in a joint trust. Spouse 1 then has a judgment placed on them to reclaim money owed. Spouse 2 could be at risk of losing their assets held in that joint trust.

Of course, any other agreements or titling of assets held in the trust can change the risk of the assets, even when in individual trusts. When we work closely with estate attorneys in this process, we focus on each asset to be held in trust. We also evaluate any prenuptial agreements and statutes that might apply.

There are a lot of other things to consider when establishing a trust. If you have a trust set up or are considering establishing one, consult a professional. That way, you are sure it will accomplish what you need it to.

*For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice.