Getting married is a joyful time. Though there is much to celebrate, there is also much to consider when you join your life to another person’s life. One area you may overlook is the impacts on your estate plan and any trusts that are or become a part of it.
When you get married, many of your assets will become joint property, either by choice or by state law. The challenge is knowing whether trust assets are legally joint properties. So, does marriage override a trust? It can. Let’s take a deeper dive into the potential impacts getting married can have on trust.
Does Marriage Override a Trust When Created Ahead of Time?
If you create a trust before you get married, the marriage may override the trust if you pass while you are still married. State laws dictate spousal rights during marriage and inheritance rights after you pass. However, many states will assume that you will want your spouse to inherit your property if you die. In these instances, the court can rewrite portions of your trust to include your spouse as beneficiary.
What happens when you don’t want anything to change about the trust terms after you get married? You must specify that you want your trust to remain as is after your marriage. A living trust is amendable, which means that you can modify it to include the stipulation that marriage won’t impact the trust terms.
Talking to your spouse-to-be about your wishes is important. Though your trust is a legally binding document, your spouse may contest it. While winning a contest is difficult, it can happen. Furthermore, the process can create financial hardships for beneficiaries and drag out the distribution process.
If you don’t want marriage to override your trust, we recommend that you consult with an attorney before amending it to make sure the language and terms comply with state laws. Even if you include language that maintains trust terms regardless of marriage status when you first create your trust, you may still want an attorney to review the document before you get married to ensure it remains effective and compliant with both the law and your current desires, especially since a living trust covers more than just asset allocation.
Additional Trust Considerations
A revocable trust establishes financial and care guidelines should you become incapacitated. Though your primary concern may be for your beneficiaries, you also need to consider the other elements of your trust. For instance, you may want to ensure that your trust includes long-term care guidance and financial support. Otherwise, your spouse may be left with the hard decisions about your care, including figuring out how to pay for it.
Even when you want your current beneficiaries to remain the same, you may want to consider provisions that provide your spouse support after you pass for the duration of their life, with the remaining assets passing to your current beneficiaries after both spouses pass. A qualified terminable interest property trust allows you to allocate specific assets to your spouse during their lifetime, with the remainder passing to current beneficiaries upon your spouse’s death.
A QTIP trust provides for your spouse but protects your assets should your spouse remarry after your death, ensuring your beneficiaries continue to benefit from the trust. This type of trust is often used for second marriages, but if you already have a trust when you enter into your first marriage, you can amend it, converting it to a QTIP trust.
Does Marriage Override a Trust When Created After Marriage?
State laws determine spousal inheritance rights, and these laws may supersede trust inheritance. Most states adhere to common law rights, which establish spousal rights after death. However, some states have community property laws. These laws determine spousal property rights during a lifetime, thereby establishing rights for property distribution in the event of a divorce.
Most states have common law regulations that determine spousal inheritance rights for property obtained after marriage. In these states, assets specifically belong to the person whose name is on the title or who used their income to purchase the asset unless both names are placed on the title. In these states, a marriage does not override a trust. If one spouse creates a living trust, the assets that go into the trust must belong to the grantor unless the other spouse gives permission to transfer the asset into the trust.
If you create a trust after marriage and do not name your spouse as beneficiary, the law in community property states would negate the trust for any assets obtained after marriage, regardless of who purchased it or whose name is on the title. Nine states have community property laws on the books:
- Arizona
- California
- Idaho
- Louisiana
- New Mexico
- Nevada
- Texas
- Washington
- Wisconsin
If you live in one of these states, the law assumes that your spouse has a right to assets that the state considered marital property. Your marriage does override the trust when the assets fall within this category. However, any assets that are considered separate property are protected, and your marriage would not override the trust for these assets.
Does Marriage Override a Trust Created During a Previous Marriage?
Marriage and divorce rates have both declined in the past decade. Approximately half of all first marriages will end in divorce, but the percentages of second marriages that don’t last is higher. Over half of divorcees remarry. If you created a trust during a marriage that ended in divorce, it’s important that you understand the ramifications of marrying again, especially if you have children. Likewise, you should know how to protect your assets and your beneficiaries if your ex remarries.
Considerations for Remarriage
If you created a trust that allocates physical and financial assets to beneficiaries, including your ex and children, you will want to revisit the trust terms before you remarry. An AmeriEstate attorney can help you determine whether you need to amend the trust based on the goals you have for the trust. In either case, the assets in your trust are those you acquired before your second marriage. However, depending on your state’s laws, the court may override the trust to provide for your new spouse upon your death.
You may want to amend the trust if you want to remove an ex as a beneficiary. Additionally, revisions will also be necessary to provide for your new spouse. You can create a QTIP trust to allow your new spouse to benefit from specific assets during their lifetime. You may also decide to create a second trust to provide for your new spouse and any children you might have.
If you pass before your spouse, your trust should protect assets for any beneficiaries you designate other than your spouse. It should provide clear guidance for the distribution of non-marital property and any restrictions if your spouse remarries after your death and before the dissolution of the trust.
Do You Still Have Questions About if Your Marriage Overrides Your Trust?
Every person’s situation is different. Inheritance, property rights and trust laws can be complex and vary between states. If you have questions about your current trust and an upcoming marriage or you’d like to create a trust that ensures your assets are passed on as you desire, AmeriEstate’s attorneys are here to help. Contact us to get your questions answered.
Sources:
https://www.census.gov/library/stories/2023/07/marriage-divorce-rates.html
https://www.investopedia.com/terms/c/common-law-property.asp
https://www.nolo.com/legal-encyclopedia/prenuptial-agreements-and-inheritance-rights.html
https://www.justia.com/estate-planning/trusts/trust-contests
https://www.investopedia.com/inheritance-laws-by-state-5113616
https://www.justia.com/estate-planning/estate-planning-in-second-marriages
https://www.realized1031.com/blog/can-a-spouse-override-a-trust