Estate planning is not just about passing on wealth—it’s about protecting your legacy, taking care of your loved ones, and making smart decisions that align with your long-term goals. One of the most effective and often underutilized estate planning tools for married couples is the marital trust. These trusts are simple in structure but powerful in what they accomplish: they provide for your surviving spouse, minimize estate taxes, and ensure your assets are distributed the way you intend.
At Allenby Law, we believe estate planning should be smart, efficient, and easy to understand. In this article, we’ll walk you through what a marital trust is, how it works, and why it could be the right solution to protect your assets and your family’s future.
What Is a Marital Trust?
A marital trust is an estate planning tool that allows a person to leave assets to their surviving spouse in a tax-advantaged way. It is typically used in conjunction with other types of trusts to ensure that both spouses can pass assets to one another without triggering estate taxes, and that any remaining assets go to children or other beneficiaries after the second spouse dies.
When one spouse dies, their share of the estate is placed into a marital trust for the benefit of the surviving spouse. The surviving spouse can usually receive income from the trust during their lifetime and may also have access to the principal under certain conditions. Once the surviving spouse passes away, the remaining assets are distributed to the final beneficiaries—often children from the marriage or previous relationships.
Key Benefits of a Marital Trust
1. Estate Tax Deferral
One of the biggest advantages of a marital trust is that it qualifies for the marital deduction, which allows unlimited transfers between spouses without incurring federal estate taxes. This means when the first spouse dies, the assets placed in the marital trust won’t be taxed until the surviving spouse passes away.
This deferral can be critical for high-net-worth couples who want to avoid or reduce estate taxes while ensuring their spouse is financially secure.
2. Support for the Surviving Spouse
A marital trust ensures that the surviving spouse has a reliable source of income and financial support after their partner’s death. The trust can provide regular income distributions and, depending on how it’s written, may allow the trustee to distribute principal if needed for health, education, maintenance, or support.
This level of control and planning can offer significant peace of mind—especially when one spouse was the primary earner or managed the family’s financial affairs.
3. Asset Protection and Control
While a surviving spouse benefits from the marital trust, the original grantor retains a degree of control from beyond the grave. They can specify how the trust should be used, who the remainder beneficiaries are, and what limitations (if any) apply to the trustee’s discretion.
This is especially important in blended families or second marriages, where you want to provide for your current spouse but also ensure that your children ultimately receive an inheritance.
4. Avoiding Probate
Like most types of trusts, a properly drafted marital trust avoids probate. This means faster distribution of assets, lower legal costs, and a more private process overall. In California—where probate can be lengthy and expensive—this is a major benefit for families.
Common Types of Marital Trusts
There are several variations of marital trusts, but the two most common are:
1. A-B Trusts (Bypass Trusts and Marital Trusts)
In an A-B trust structure, the estate is split into two trusts upon the first spouse’s death:
- Trust A (the marital trust or “Survivor’s Trust”) holds the surviving spouse’s share of the assets.
- Trust B (the bypass or “Credit Shelter Trust”) holds the deceased spouse’s share, up to the estate tax exemption limit.
This strategy allows couples to use both spouses’ estate tax exemptions effectively, potentially shielding millions of dollars from taxation.
2. QTIP Trusts (Qualified Terminable Interest Property)
A QTIP trust is a specific kind of marital trust that gives the surviving spouse income for life but allows the deceased spouse to control who gets the assets after the surviving spouse dies. This is particularly useful in second marriages where the grantor wants to care for their spouse but ultimately pass the wealth to children from a previous marriage.
The QTIP trust also qualifies for the marital deduction, deferring estate taxes until the second spouse’s death.
When Should You Consider a Marital Trust?
Marital trusts are most useful in the following scenarios:
- You want to minimize or defer federal estate taxes.
- You have a high-value estate that may exceed the federal exemption ($13.61 million per person in 2024, but subject to change).
- You want to ensure your surviving spouse is financially secure.
- You are part of a blended family and want to ensure children from previous marriages inherit your assets.
- You want to avoid probate and keep your estate plan private.
- You have specific wishes about how and when beneficiaries receive their inheritance.
Even if your estate is below the current exemption, changes in tax law could reduce the threshold significantly in the future. Setting up a marital trust now ensures you’re protected regardless of what happens later.
How Marital Trusts Fit into a Broader Estate Plan
A marital trust is just one piece of a comprehensive estate plan. At Allenby Law, we often pair marital trusts with:
- Revocable living trusts for holding other types of assets
- Durable powers of attorney for managing financial matters in case of incapacity
- Advanced health care directives to make medical wishes known
- Pour-over wills to catch any overlooked assets
- Irrevocable life insurance trusts (ILITs) to manage life insurance proceeds outside the estate
The goal is to build a complete, flexible plan that evolves with your life—protecting what you’ve built and simplifying the process for your family.
What to Watch Out For
While marital trusts are powerful tools, they must be carefully drafted and maintained to be effective. Common mistakes to avoid include:
- Failing to fund the trust properly. Just creating a trust document isn’t enough—you must transfer the title of assets into the trust.
- Ignoring tax implications. While the marital deduction defers estate tax, it doesn’t eliminate it. Your plan should account for what happens when the second spouse dies.
- Lack of clarity in trust terms. Vague language can lead to confusion, mismanagement, or family disputes. Clear instructions and the right trustee make a big difference.
- Not updating the trust. Life changes—divorce, new children, changes in tax laws—may require updates to your trust. A stale trust can cause more problems than it solves.
How we can help
At Allenby Law, we make estate planning smarter, not harder. Whether you’re just starting to think about protecting your assets or you’re ready to create a comprehensive plan, our team will walk you through every option with clarity and care.
We’ll help you determine if a marital trust is right for your situation, design the trust to reflect your unique wishes, and ensure it works seamlessly with your overall estate plan. And because we focus on simplifying the process, you’ll never feel overwhelmed—we’ll handle the legal details so you can focus on peace of mind.
Get in touch with Allenby Law today to schedule a consultation and start building a stronger, smarter plan for your future.
