Can a Surviving Spouse Be the Trustee of a Marital Trust?

By Christine Funk

Can a Surviving Spouse Be the Trustee of a Marital Trust?

By Christine Funk

A marital trust starts as a revocable living trust. A surviving spouse can be its trustee. However, in practice, it is important for people to understand the terms used, as well as the consequences of their choices.

The Purpose of a Marital Trust

With a marital trust, the person or, in the case of a married couple, the couple, who transfers their assets into this agreement is called the trustor agent(s). Thus, instead of holding the title to their home as "John and Mary Smith," the title now reads, "John and Mary Smith, trustees of the Smith revocable living trust." During the time that John and Mary are both alive, they both can use the assets as they wish.

In any revocable living version, there are two types: the first is the person who enjoys the benefit of the agreement while the bestower is alive. Most of the time, the agent(s) and the trustee(s) are the same person or people. However, once this agent dies, the property is transferred to a beneficiary. In this case, the documents are written so that once one spouse dies, the surviving spouse becomes the sole trustee to the marital trust.

The Limitations of a Marital Trust

It is possible to create a marital trust that simply transfers all property from the couple to the surviving spouse. However, there may be limitations imposed to accomplish another purpose. For example, a couple may want to ensure that their children ultimately inherit the estate. If that is the case, the couple can create a document that allows the surviving spouse to enjoy the assets while they are alive but requires these assets pass on to an identified beneficiary or beneficiaries, such as the children, when the second spouse passes away. This prevents the surviving spouse from leaving their assets to a new love, for example.

Imagine a situation where one party to the marriage owns a family summer home that has been in the family for generations. They may wish to preserve this summer home for generations to come. A marital trust with identified beneficiaries to inherit after the second spouse dies could limit the surviving spouse's control over the property. For example, while the surviving spouse could enjoy the property during their lifetime, a trustor may include a limitation prohibiting the surviving spouse from selling the property and instead preserving it for the ultimate beneficiaries, the children or even the grandchildren.

Alternatively, the trust can be set up so the surviving spouse lives on the interest generated from the estate, without touching the principal. When setting up the conditions, the facts of each couple's situation will dictate some or all of the terms.

If you want to set up a marital trust, it is important to understand what assets can and cannot be included. You'll want to make sure that the assets you are wanting to add will actually be able to pass on to your designated beneficiaries. Understanding the different aspects of this process will ensure you are taking the steps to provide for your loved ones as a gift that will keep on giving.

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