A living trust vs. a survivor's trust

Get expert advice on living trust and survivor's trust today! Stefanie Lipson shares her advice on setting up a survivor's trust quickly and easily.
The Differences Between A Living Trust And A Survivor's Trust
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A living trust vs. a survivor's trust

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So when a husband and wife establish a revocable trust, their living trust, their core estate plan, often it will provide that on the first spouse's death, all of the assets are to be held for the benefit of the surviving spouse. This is generally consistent with what most couples want, to make sure that all of the assets are available for the surviving spouse. The survivor's trust is funded with the property from the family trust, from the revocable trust, that belongs to the surviving spouse. So for example, in California, which is a community property state, that would be one half of any community property assets and any of the surviving spouse's own separate property assets. The survivor's trust during the survivor's lifetime is entirely revocable and amendable, just like the family trust, the revocable trust was during both spouses lifetime. There's no different; they can do anything that they want with the property. The deceased spouse's half of the property, if we're again in a community property state, goes between a tax shelter trust, which is sometimes called a credit trust or a bypass trust, and on the other hand the marital trust. The credit trust is funded with the amount that can pass tax-free based on the Federal Credit Against Estate tax. So in 2011, at least as the law currently stands, $5 million. If it was 2001, it would be $1 million and under the current law, if it was 2013 it would again be $1 million. So it fluctuates each year. Their other consideration for what goes into the credit trust is whether there are any other state estate taxes. Sometimes states charge their own inheritance tax or death tax. Everything else goes to the marital trust, and the credit trust and the marital trust, while they are for the benefit of the surviving spouse, are irrevocable trusts that with only certain exceptions really can't be changed once the deceased spouse passes away.

Get expert advice on living trust and survivor's trust today! Stefanie Lipson shares her advice on setting up a survivor's trust quickly and easily.

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Stefanie Lipson

Estate & Tax Attorney

Stefanie J. Lipson is an attorney in the Family Wealth Planning Group of Greenberg, Glusker, Fields, Claman, & Machtinger, LLP.  Stefanie’s practice focuses on comprehensive estate planning for high net worth individuals, family business succession planning, probate and trust administration and the law of tax exempt organizations.  Stefanie counsels her clients with a holistic approach to wealth transfer solutions, structuring plans to meet a family’s individual needs while addressing the complex estate, gift and income tax implications of wealth transfer.  In addition, consistent with Stefanie’s belief that the most effective estate planning begins early, Stefanie has developed an estate planning program designed specifically to meet the planning needs of young families as they encounter common life events. 

Stefanie’s unique approach and application of Trust and Estate law has been well acknowledged by the legal community.  She served as a panelist at the 2010 Southern California Tax and Estate Planning Forum in a discussion involving multijurisdictional issues in estate planning and has authored publications for The Los Angeles Daily Journal and The Recorder.  Stefanie has been listed in Southern California Rising Stars each year since 2009.

Stefanie received her Bachelor of Arts in 2003 from University of California Los Angeles, graduating magna cum laude with the distinction of departmental honors and a member of Phi Beta Kappa.  Stefanie received her J.D. from the University of Southern California Law Center in 2006.  Following her graduation from USC, Stefanie clerked for the Honorable Fred Keiser, Jr. in the New Jersey Superior Court, Family Law Division.  During her time with the court, Stefanie also served as a court appointed mediator for small claims civil matters. 

In furtherance of her estate planning work, Stefanie is currently pursuing a Master of Laws in Taxation (LL.M.) from New York University School of Law.  Stefanie’s studies at NYU focus on estate, gift and income tax matters relating to wealth succession planning and family business ownership.

Stefanie lives in Los Angeles, with her husband Marc and their new son Noah, whom she regards as her greatest achievement.

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Transcription: 
So when a husband and wife establish a revocable trust, their living trust, their core estate plan, often it will provide that on the first spouse's death, all of the assets are to be held for the benefit of the surviving spouse. This is generally consistent with what most couples want, to make sure that all of the assets are available for the surviving spouse. The survivor's trust is funded with the property from the family trust, from the revocable trust, that belongs to the surviving spouse. So for example, in California, which is a community property state, that would be one half of any community property assets and any of the surviving spouse's own separate property assets. The survivor's trust during the survivor's lifetime is entirely revocable and amendable, just like the family trust, the revocable trust was during both spouses lifetime. There's no different; they can do anything that they want with the property. The deceased spouse's half of the property, if we're again in a community property state, goes between a tax shelter trust, which is sometimes called a credit trust or a bypass trust, and on the other hand the marital trust. The credit trust is funded with the amount that can pass tax-free based on the Federal Credit Against Estate tax. So in 2011, at least as the law currently stands, $5 million. If it was 2001, it would be $1 million and under the current law, if it was 2013 it would again be $1 million. So it fluctuates each year. Their other consideration for what goes into the credit trust is whether there are any other state estate taxes. Sometimes states charge their own inheritance tax or death tax. Everything else goes to the marital trust, and the credit trust and the marital trust, while they are for the benefit of the surviving spouse, are irrevocable trusts that with only certain exceptions really can't be changed once the deceased spouse passes away.