Property Ownership in a Shared Trust

Before you begin to list property you want to add to your living trust, sort out what you have and who owns it: you, your spouse or partner or both of you. You need to label each item this way because each grantor names beneficiaries for his or her share of the trust property separately.

After you've made an inventory, the next section will help you decide which items you want to hold in trust so they don't have to go through probate after your death.

Grouping Items

When you list your property in the program, you can group items if you're leaving them all to one beneficiary. For example, if you want to leave all your books to your daughter, there's no need to describe each one individually -- unless your collection includes some particularly valuable or important books that you want to make extra sure get to the beneficiary.

Who Owns It?

You'll need to say who owns each item when you enter it in the program. This is because only your share of the trust property is distributed at your death.

For many couples, especially if they've been together a long time, nearly everything is owned together. But one or both of you may own a sizable amount of property separately. If you're married, your state's laws may give both spouses ownership rights in property that you may think is owned by only one spouse. If you're unsure about who owns what, read this section, which explains the ownership rules for your state.

Community Property States

* If spouses sign a community property agreement

** Registered domestic partners are also covered by community property laws.

If you live in a community property state and you aren't sure who owns what, don't rely on whose name is on the title document. For example, if while you were married you bought a house with money you earned, your spouse legally owns a share of that property -- even if only your name is on the deed.

Generally, any property that either spouse earns or acquires during the marriage (before permanent separation) is community property. Both spouses (the "community") own it together, and each spouse can leave his or her half interest through a will or living trust. The main exception to this shared ownership rule is that property one spouse acquires by gift or inheritance belongs to that spouse alone. Property acquired before marriage also belongs to each spouse separately.

Even separate property may, however, turn into community property if it is mixed ("commingled") with community property. For example, if you deposit separate property funds into a joint bank account and then make more deposits and withdrawals, making it impossible to tell what part of the account is separate money, it's all considered community property.

Non-Community Property States

* Spouses can, however, create community property by signing a community property agreement.

In these states, it is usually fairly simple to figure out who owns what. If the property has a title document -- for example, a deed to real estate or a car title slip -- then the spouse whose name is on the title is the owner. If the property doesn't have a title document, it belongs to the spouse who paid for it or received it as a gift. (It's possible, though, that if there were a dispute, a judge could determine, based on the circumstances, that a spouse whose name is not on the title document might own an interest in the property.)

If the trust is revoked, the property will be returned to each spouse based on the same ownership rights they had before the property was held in trust.