One Trust or Two? How Married Couples Can Build the Right Estate Plan Together

By: Randall A. Denha, J.D., LL.M.

When married couples start planning their estate, one of the first major choices is whether to create one joint revocable living trust or two separate revocable trusts. Both approaches can work well, but the best fit depends on how the couple’s assets are held, their family structure, personal goals, exposure to risk, and the laws of the state where they live.

Understanding Revocable Living Trusts

A revocable living trust is a flexible legal tool that lets you place your assets in a trust while keeping full control during your lifetime. You can change or cancel it whenever you wish. The trust names beneficiaries to receive your assets after death and helps avoid probate, which can be slow and public. For married couples, a trust also simplifies management if one spouse becomes incapacitated or passes away.

The Concept of a Joint Trust

A joint trust, sometimes called a family trust, combines both spouses’ assets into a single trust that they manage together. Both spouses are usually co-trustees and make decisions jointly. When one spouse dies, the surviving spouse continues as the sole trustee and keeps full access to the trust assets.

Why Couples Choose a Joint Trust
A joint trust is often appealing because it keeps things simple. There’s just one document to administer, one account structure, and one unified estate plan. For couples who share financial goals and have the same beneficiaries, such as a traditional family with children together, it’s an efficient way to organize everything. The surviving spouse can continue managing all property and investments without the need for transfers or court involvement.

Possible Downsides
Joint trusts can become complicated if each spouse has different beneficiaries, such as in blended families. They may also expose all assets to creditors or lawsuits if one spouse has a risky profession or business. In addition, couples in certain states may lose potential tax benefits that come with keeping assets separate.

The Case for Separate Trusts

Separate trusts give each spouse their own revocable living trust. Each person places their own assets into their trust and controls how those assets will be managed and distributed after death.

Separate trusts give each spouse independence and flexibility. They can design their own plans, decide who receives their property, and protect their interests even after one spouse passes away. This structure works especially well when one spouse owns a business, has children from a prior relationship, or has significant personal assets. It can also shield assets from the other spouse’s potential liabilities and help make full use of estate tax exemptions in states that impose inheritance or estate taxes.

However, they have drawbacks. Separate trusts take more time and money to set up. Assets must be divided and retitled, and each trust requires its own recordkeeping. For couples who pool all their resources and operate as one financial unit, the process may feel unnecessary or overly complicated.

State law heavily influences which option makes sense. In community property states such as Arizona, Texas, and California, both halves of community property typically receive a full step-up in tax basis when one spouse dies, which can lower capital gains taxes when assets are sold. In these states, a joint trust is often more efficient. In common law states such as Michigan, only the deceased spouse’s half receives a step-up in basis, so maintaining separate trusts can help preserve tax flexibility and clarify ownership.

Liability, Family, and Legacy

Asset protection is another key factor. If one spouse owns a medical practice, operates a business, or works in a field with a higher risk of lawsuits, combining everything in one trust can endanger the other spouse’s property. Separate trusts keep each person’s assets isolated from the other’s potential liabilities.

Family structure also plays a large role. In blended families, joint trusts can unintentionally leave control of the entire estate to the surviving spouse, who could later change beneficiaries or exclude stepchildren. Separate trusts prevent this by letting each spouse direct their share to their own children or chosen heirs.

Tax and Estate Planning Considerations

Although the federal estate tax exemption is currently $13.99M per spouse and increasing to $15M in 2026 per spouse, some states impose their own estate or inheritance taxes. In those states, separate trusts may help couples reduce taxes by using both spouses’ exemptions. For wealthier families or those with complex holdings, separate trusts can also create more flexibility in managing charitable gifts, family business interests, and generation-skipping transfers.

Funding the Trust Properly

No matter which route is chosen, the trust must be properly funded. Real estate must be retitled in the trust’s name. Bank and brokerage accounts need to be moved or assigned to the trust. Personal property should be transferred through written assignment. Retirement accounts typically stay in the individual’s name, but the trust can be listed as a beneficiary. Life insurance can also name the trust as owner or beneficiary. Without proper funding, even the best-written trust will fail to avoid probate.

Common Mistakes to Avoid

The most frequent mistakes include creating a trust but never transferring assets into it, forgetting to update the plan after major life changes, or failing to adjust the trust after moving to a new state. Couples sometimes pick a joint trust for its convenience when separate trusts would provide more protection and control. Regular reviews, especially after marriage, birth, divorce, relocation, or business changes are essential.

Obviously, there isn’t one answer that fits every couple. A joint trust is ideal for spouses with shared goals, low liability risk, and mutual beneficiaries. Separate trusts are better for couples with blended families, significant individual assets, or professional or business liability concerns.

For Michigan couples, where the law follows a common law system rather than community property rules, separate trusts usually provide more flexibility and protection. Each spouse keeps control of their assets while still coordinating with the other to meet family goals.

Final Perspective Estate planning is not about choosing the simplest path but the one that best protects your family. A joint trust can streamline management for couples with shared goals, while separate trusts provide security and customization when lives, assets, or families are more complex. The key is to plan intentionally, review regularly, and seek guidance to ensure your estate plan grows and adapts with you.