Joint Living Trust Generator

A joint living trust is a single revocable living trust created by two individuals, almost always a married couple, to hold and manage their combined assets during their lifetimes and to distribute those assets upon the death of both spouses according to the terms they establish together. Both spouses serve as co-grantors and co-trustees, each retaining full authority to manage, invest, and distribute trust assets during their joint lifetimes. The joint living trust holds both community property and separate property of each spouse, though the trust document typically distinguishes between these categories for purposes of distribution upon the first spouse's death. A joint living trust avoids probate for all assets properly funded into the trust, providing privacy, efficiency, and continuity in asset management that a will-based estate plan cannot match.

Upon the death of the first spouse, a joint living trust typically divides into two or more sub-trusts depending on the estate planning strategy employed. The most common structure is the AB trust (also called a bypass trust or credit shelter trust), which splits the trust into a survivor's trust (the "A" trust) containing the surviving spouse's assets and a bypass trust (the "B" trust) containing an amount up to the deceased spouse's available estate tax exemption. The bypass trust is irrevocable after the first death, preserving the deceased spouse's exemption amount and removing those assets from the surviving spouse's taxable estate. Under IRC Section 2010 and the Tax Cuts and Jobs Act (TCJA), the estate tax exemption was significantly increased, but the TCJA provisions are scheduled to sunset in 2026, potentially reducing the exemption from approximately $13.61 million to around $7 million per individual. This makes trust-based estate tax planning through an living trust increasingly important for married couples with substantial assets.

An alternative to the AB trust structure is reliance on the portability election, which allows the surviving spouse to claim the deceased spouse's unused estate tax exemption (the deceased spousal unused exclusion amount or DSUE) by filing an estate tax return (IRS Form 706) within nine months of the first spouse's death. While portability simplifies estate administration by eliminating the need for an AB trust split, it has significant limitations: it does not apply to the generation-skipping transfer (GST) tax exemption, it requires the timely filing of an estate tax return, and the unused exemption may be lost if the surviving spouse remarries and the new spouse dies first. For couples with assets approaching or exceeding the estate tax threshold, the AB trust structure within a joint living trust provides more robust protection. A comprehensive estate plan often includes a joint living trust alongside a last will and testament or pour-over will for each spouse.

Creating a joint living trust requires careful consideration of how community property and separate property will be treated both during the spouses' lifetimes and after the first death. In community property states, assets acquired during the marriage are generally owned equally by both spouses, and a joint trust preserves this characterization while providing a mechanism for seamless management and distribution. In common law states, the joint trust must clearly identify which assets belong to each spouse and how jointly owned property will be allocated between the sub-trusts. The trust document should also address the surviving spouse's power to amend or revoke the survivor's trust portion while protecting the irrevocable bypass trust from modification. Both spouses should ensure their beneficiary designations on retirement accounts, life insurance policies, and transfer-on-death accounts are coordinated with the trust's distribution plan.