Can a married couple use joint tenancy until one spouse dies, then set up a trust for the survivor?

Yes, but this unfortunately has several problems associated with it. There is no guarantee that the surviving spouse will have time to set up a trust after the first spouse dies, or, more to the point, will actually get around to setting up a trust, regardless of the amount of time available. This method also loses the estate tax exemption advantage, because, like an outright gift, joint tenancy lumps all the assets in one spouse’s estate. In addition, the survivor will not see the increase in basis for the survivor’s interest as would happen in a community property state, and the surviving spouse loses out on the ability to protect up to one-half of the estate from future creditors and divorces.

Contributed by MH Arrowhead, Scottsdale and Phoenix Estate Planning Attorney and Partner, David T. Eastman.

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