What Is a Marital Trust?
A marital trust is a type of irrevocable trust designed to transfer a deceased spouse’s assets to the surviving spouse without triggering estate taxes. When the surviving spouse eventually passes, the trust assets are not counted as part of their estate—helping to reduce overall estate taxes.
In addition to tax advantages, a marital trust offers protection and control over how assets are passed down to future beneficiaries.
How Does It Work?
At its core, a marital trust involves three key players:
- Grantor: The person who creates the trust (typically one of the spouses).
- Trustee: The person responsible for managing the trust and its assets.
- Beneficiary: The individual(s) who benefit from the trust—initially the surviving spouse.
The “principal” refers to the assets placed in the trust, which might include investment accounts, real estate, retirement funds, or other valuables. These assets can generate income for the surviving spouse and are protected from creditors or claims from future spouses.
One of the biggest advantages? The income provided to the surviving spouse is typically tax-free, and the trust can be structured to limit how much can be withdrawn, helping preserve wealth for future generations.
What Are the Benefits?
A marital trust offers several significant benefits:
- Tax savings: It effectively doubles the estate tax exemption for a couple. For example, if the individual exemption is $12 million, a properly structured marital trust can increase that to $24 million, potentially shielding a large portion of your assets from estate taxes.
- Asset protection: Assets in the trust are shielded from creditors and outside claims.
- Family control: You can ensure that your wealth stays within your chosen circle, even after both spouses have passed.
Is It Right for You?
There are several types of spousal trusts—including Qualified Terminable Interest Property (QTIP) trusts, bypass trusts, and Spousal Lifetime Access Trusts (SLATs)—each offering different benefits based on your family’s needs and financial goals.
If you’re building a life together and want to protect what you’re creating, a marital trust might be worth exploring. The best way to find out? Talk to a qualified estate planning attorney. They can help you determine if a marital trust fits into your long-term financial and family plans.
Planning for the future might not feel romantic—but protecting your loved ones and your legacy is one of the greatest gifts you can give.
These legal topics are provided to you by the President of QMC, Mark Easley. While QMC does not engage in the practice of law, Mr. Easley has practiced estate planning and elder law for over 30 years and is currently the principal at the Elder and Estate Planning Law Firm of St. Louis.