While exploring your options for estate planning, you may have heard the term Sweetheart Trust. The name has a nice ring to it, and these kinds of trusts are great for couples thinking about their own future in addition to their loved ones’ futures. Let’s take a quick look at how sweetheart trusts can work best for you, your spouse, and your loved ones.

What is Involved in a Sweetheart Trust?

The term can refer to a variety of trust structures, but Sweetheart Trusts are focused on giving the surviving spouse control over your assets upon your passing. The assets remain in the trust for the surviving spouse’s lifetime. If the surviving spouse is given Full Control, he or she can modify the trust easily without legal difficulty which sometimes includes adding or removing beneficiaries. Sweetheart Trust further stipulates that while both spouses are living, either person can revoke their shares of the trusts.

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The Benefits of a Sweetheart Trust

  • A sweetheart trust makes sense if you and your spouse are aligned on your trust administration goals and you want to have a simple agreement for the administration of your assets.
  • Keeps control over how assets are distributed.
  • Allows the surviving spouse to make changes to the trust.
  • Tax benefits: One major benefit was enhanced in 2012 when the unified tax credit amount, which is the tax-free amount one can pass on, was increased to $5 million under the American Taxpayer Relief Act. For the 2016 tax year, the amount went up to $5.45 million, and for the 2017 tax year, it will be $5.49 million. The increased amount means increased peace of mind for you and your spouse.

Smart Estate Planning Means Finding the Right Attorney

Sweetheart trusts are not right for every estate planning situation. No matter what your estate planning goals are, it’s essential to find a trusted, experienced estate planning attorney. If you are looking to set up an estate plan or modify an existing plan, get in touch with Christina Weed at Mendes Weed, LLP today.

Christina Weed has worked with clients in San Francisco, the East Bay, and throughout the United States. As a licensed attorney with an LL.M. in Taxation from the University of San Diego, and a Bachelor’s Degree in Accountancy, Christina offers a unique combined focus on Trusts & EstatesTax LawTax Litigation, and Business Law. Christina is Chair of the Tax Section of the Contra Costa County Bar Association and is also a member of the Estate Planning Council Diablo Valley and the Tri-Valley Estate Planning Council.

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Mendes Weed, LLP is located in Walnut Creek and serves clients around the Bay Area. For your convenience, we also have offices in OAKLAND and Sacramento by appointment only.

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