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In this video I discuss how a married couple’s joint living trust could be set up to get split into three new trusts upon the death of the first spouse to die. So when a married couple sets up their “avoid probate” RLT, there are both tax and non-tax factors that drive couples to set up their trust and their estate a certain way.

The non-tax factors (probably the most important factors) include decisions like: how do we want to leave our estate to each other; how does the estate or trust get distributed after both of us pass away; does the inheritance of any beneficiary need to be placed in a sub-trust after we die so they don’t get their inheritance in a lump sum; and who will be in charge of making sure all of this gets implemented correctly when we die as our executor and successor trustee?

While I am not a big fan of having tax laws drive your major estate planning decisions (so my estate planning discussions with people usually start with something like “Let’s figure out what you want to do with your estate and then we’ll figure out how to best make that work given our current tax structure,”, it’s important though how taxes play into leaving an estate because wise estate tax planning can help you and your family preserve more and keep more in the bloodlines as opposed to leaving to the almighty federal government.

Now estate planning, particularly for those who have accumulated some wealth, typically involves the creation of one or more either testamentary trusts (a trust which your will directs to be created upon your death) or one or more living trust sub-trusts (a trust which your living trust directs to be created upon the death of a married person).

0:00 The ABC Living Trust
0:26 Non-Tax Factors
0:54 Make Estate Tax Planning Fit
1:24 Testamentary Trusts and Sub-Trusts
1:44 Rocky and Adrian
2:48 The "A Trust"
3:38 The "B Trust"
5:28 The "C Trust"
6:51 Summary of ABC Trust Planning