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

By John Stevens J.D.

Estate planning is an important and sometimes complicated means of planning for the disposition of property upon death, and an estate plan should only be prepared by an attorney. Before meeting with an attorney, you may wish to consider who you want to leave your property to upon your death, and who will serve as trustee. For married couples, the question often arises as to whether the surviving spouse can act as trustee. Naming the surviving spouse as trustee is fairly common, but there are some considerations to take into account before making any final decisions.

Martial Trusts

A marital trust is one in which both spouses create a single trust and transfer most, if not all, of their property to that trust. While both spouses are alive, they may each enjoy the property held in the trust. When one spouse dies, the trust property is generally transferred to the surviving spouse. Upon the death of the surviving spouse, the trust property is then distributed to the final beneficiaries named in the trust document.

Role of the Trustee

A trustee is a person or entity that holds trust property for the benefit of another. Because a martial trust consists of property owned by both spouses, both spouses are generally co-trustees of the trust property. A trustee must use the property only as directed by the trust document. Trust provisions generally provide a very general description as to how the trust property may be used. A common trust provision allows the trustees, who are usually both spouses, to use the trust property for their health, support, maintenance and education. These broad and subjective terms allow the spouses to use the property as they see fit. Upon the death of the last surviving spouse, the trustee named in the trust document must safeguard and distribute the property to the final beneficiaries.

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Spouse as Trustee

Both spouses are almost always named as co-trustees of a marital trust because the trust property consists of property owned by both spouses. Married couples are often concerned about the well-being of the surviving spouse. By naming both spouses as trustees, the surviving spouse can use the trust property for his or her own benefit. It is important to remember, however, that the trust must list at least one beneficiary after both spouses die. A person cannot hold property in trust if he or she is the only person who could potentially benefit from the trust.

Potential Problems When Naming a Spouse as Trustee

As previously mentioned, the surviving spouse is usually the beneficiary of all the trust property. On the death of the surviving spouse, the trust property is then distributed to the final trust beneficiaries. There does exist the possibility that the surviving spouse could spend all of the proceeds in the trust and leave nothing for the final beneficiaries. This risk is common if one or both spouses have children from a previous relationship and want to preserve some of their property for their kids. A common solution is to state in the trust document that the surviving spouse can use the trust property for her lifetime. This language could prevent a surviving spouse from selling a home the decedent spouse acquired prior to marriage, for example. A person other than the surviving spouse would serve as trustee to ensure that the property is maintained for the surviving spouse’s benefit, but also for the benefit of the final beneficiaries.

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Living Trusts & Surviving Spouses

References

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