When it comes to estate planning, most people think of a single trust as sufficient to protect their assets and loved ones. However, for many families, particularly married couples, a more sophisticated approach may be necessary. Having more than one trust can offer additional protection, ensure efficient tax planning, and provide peace of mind for your spouse and children, even under the most complex circumstances.

In this article, we’ll explore why you may need more than one trust, especially as the laws surrounding estate tax exemptions are set to change in the near future. We'll also discuss advanced strategies like Medicaid Asset Protection Trusts (MAPTs) to safeguard your home and savings from long-term care and nursing home costs.

What Is a Trust?

Before we dive into why multiple trusts may be beneficial, let’s quickly review what a trust is. A trust is a legal arrangement where you (the “grantor”) transfer ownership of your assets to a trustee, who then manages those assets for the benefit of one or more beneficiaries. Trusts come in many forms, but they generally help you avoid probate, reduce taxes, and protect your loved ones from the burden of managing complex assets when you pass away.

Why Having Just One Trust May Not Be Enough

For many families, having a single revocable living trust may seem sufficient. But estate planning isn't one-size-fits-all. In fact, there are several compelling reasons why you might need more than one trust to adequately protect your family, your wealth, and your legacy.

Let's explore these reasons below.

Maximizing Estate Tax Exemptions

One of the main reasons married couples may want to establish two trusts instead of one is to fully utilize their estate tax exemptions. As of now, each individual is allowed a significant exemption from federal estate taxes—currently over $13 million per person in 2024. However, this high exemption is set to sunset in 2026, when it is expected to be reduced to around $6 million per person, or even lower if proposed legislative changes come into effect.

By using two trusts, couples can capture both estate tax exemptions. This strategy is commonly referred to as an A-B Trust Plan or Spousal Bypass Trust. Here’s how it works:

- Trust A (the Survivor's Trust): Upon the death of the first spouse, this trust holds the surviving spouse’s assets.

- Trust B (the Bypass Trust): his trust holds the deceased spouse’s assets and utilizes their estate tax exemption. This trust is often designed so that the surviving spouse can benefit from the assets, but it keeps them out of the surviving spouse’s estate for tax purposes.

By doing this, a couple can protect millions of dollars from estate taxes that would otherwise reduce the amount passed on to their heirs.

For lager estates, additional trusts such as Spousal Lifetime Access Trusts (SLATs), Charitable Trusts (CRTs), Irrevocable Life Insurance Trusts (ILITs), Qualified Personal Residence Turts (QPRTs), and Grantor Retained Annuity Trusts (GRATs) can shield even more assets from estate taxes.

Asset Protection: Keeping Your Spouse and Kids Safe

A second reason for establishing more than one trust is to protect assets from creditors, divorce, or remarriage. For example, let’s say you have a blended family or want to ensure your children from a previous marriage are cared for after your passing. In that case, you might not want to leave all your assets to your surviving spouse, especially if you are concerned about:

- Remarriage: What if your spouse remarries after you pass? You may want to ensure that the assets you leave behind are kept separate from the new marriage and protected for your children.

- Creditors: Life is unpredictable. If your spouse encounters financial difficulties after you pass, the assets could be at risk. With the right trust structure, you can protect those assets for future generations.

A common solution is using a Qualified Terminable Interest Property (QTIP) Trust, which allows you to support your spouse during their lifetime but ensures that any remaining assets pass to your children when your spouse dies.

Segregating Property or Inheritances

Sometimes, it makes sense to set up additional trusts to segregate specific properties or inheritances. For instance, if you inherit a family business or property that you want to pass down to a particular child or relative, placing those assets in a separate trust can ensure they are managed according to your wishes.

You might also want to separate certain investments or real estate for tax purposes, or to provide for different beneficiaries, such as stepchildren or grandchildren.

Over the years, I've helped seevral families set up trusts to protect family farms, businesses, beach houses and cabins that they inherited from a parent. By setting them up in separate trusts, we were able to ensure that they stayed in the immediate family.

Advanced Estate Planning: Revocable and Irrevocable Trusts

As mentioned earlier, estate tax laws are always changing. In 2026, the federal estate tax exemption is set to drop significantly. This makes advanced estate planning essential for families with sizable estates. Revocable and irrevocable trusts can both play a key role in minimizing estate taxes.

- Revocable Living Trusts: These are flexible trusts that you can change or revoke during your lifetime. They are primarily used for avoiding probate and managing assets during incapacity.

- Irrevocable Trusts: Unlike revocable trusts, irrevocable trusts cannot be changed once they are set up. However, these trusts offer significant tax advantages. For example, by placing assets in an irrevocable trust, you can remove them from your taxable estate, which reduces the estate tax burden for your heirs.

Given the upcoming changes in estate tax law, now is the time to discuss whether an irrevocable trust might benefit your estate plan.

Protecting Your Home and Savings from Long-Term Care Costs

A crucial aspect of estate planning that many people overlook is planning for long-term care and nursing home expenses. The cost of nursing home care can be astronomical, often depleting a lifetime of savings in a matter of years. 

One powerful tool for protecting your assets is the Medicaid Asset Protection Trust (MAPT). These trusts are designed to protect your home and other assets from being counted as "available assets" for Medicaid qualification purposes. 

Here’s why you might want to consider a MAPT:

- Shield Your Home and Savings: By placing your home and other significant assets into an irrevocable Medicaid Asset Protection Trust, they can be excluded from Medicaid's asset calculations. This protects your estate from being drained to pay for nursing home costs.

- Maintain Control: Even though the assets are in an irrevocable trust, you can still maintain control over how they are managed and distributed after your death.

Planning ahead is essential here, as Medicaid typically has a five-year "look-back" period, meaning any transfers into the trust must be made at least five years before you apply for Medicaid benefits.

Conclusion: More Than One Trust Means More Control Over Your Estate

Having more than one trust is not just a strategy for the wealthy—it’s a powerful estate planning tool that can help you:

- Maximize your estate tax exemptions

- Protect your surviving spouse and children

- Safeguard assets from creditors and divorce

- Segregate specific properties or inheritances

- Plan for long-term care and nursing home costs

By using multiple trusts, you create a comprehensive, customized estate plan that ensures your wishes are carried out, your assets are protected, and your family is secure—both now and in the future.

If you’re unsure whether multiple trusts are right for your family, or if you’re concerned about the upcoming changes to estate tax laws, it’s essential to speak with an experienced estate planning attorney.

Ready to Take the Next Step?

At Roulet Law Firm, we work with you to determine you goals for your planning and then work with you to create sophisticated, tailored estate plans to help you achieve them. Whether you’re concerned about estate taxes, protecting your spouse, or safeguarding assets from long-term care costs, we’re here to help.

Call us today at our Florida office at (941) 909-4644 or our Minnetonka, MN office at (763) 420-5087 to schedule a consultation and discover how we can help you protect what matters most. Or, you can fill out the contact form on this page and a member of our team will reach out to you to schedule your consultation.

If you are not yet ready to schedule a consultation and would like additional information, we have some additional resources for you:

 

  Click here to downloard your copy of my book," Save Our Home, How To Protect Your Home and Life Savings from Long Term Care and Nursing Home Costs".

  Click here to sign up for our online masterclass on How to Protect Your Home and Life Savings from Long Term Care and Nursing Home Costs.

Click here to sign up for our online masterclass on estate planning where I reveal how to make it as easy and inexpensive as possible for your family to manage your affairs if anything happens to you.

Chuck Roulet
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Nationally Recognized Estate Planning Attorney, Author, and Speaker
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