In 2011, the Missouri legislature enacted a law that enabled married couples to transfer property to a Qualified Spousal Trust (“QST”) and the property inside the QST would enjoy the same immunity from creditor claims if each spouse continued to hold the property under tenancy by the entirety. The QST was codified in Missouri Statute Section 456.950.1.
This new trust structure had a lot of promise, but an array of pitfalls. For example, couples were required to retitle their assets jointly, which proved to be a significant inconvenience and carried adverse marital property consequences when a couple decided to divorce. It could also result in a large estate tax bill if either spouse died while the property was still owned jointly.
In 2015, the Missouri Governor signed a reform bill into law that made significant changes to QSTs. The 2015 reforms allow either spouse to transfer separately-owned assets directly to a joint QST, or directly to a separate share of a QST for their own benefit and have those assets completely insulated from all but joint lawsuits against the spouses, according to Wealthmanagement.com.
Major Benefits for Married Couples Under the New Qualified Spousal Trust System
The benefits that may be reaped from the 2015 law are significant. Married couples (including second marriages) with separately-owned assets can take advantage of the significant asset protection offered by the QST without the aforementioned retitling issue.
The 2015 law also created a big benefit for married couples who already established and funded a joint revocable trust because they no longer need to determine whether assets are owned by the joint trust were originally titled as tenancy by the entirety. Assets could have been transferred to the trust directly via paycheck or bonus check deposits, 401k or IRA distributions, inheritance or gift receipts.
Do I Really Need a Qualified Spousal Trust?
If you are married, establishing a qualified spousal trust would be a wise decision. A properly constructed QST will help ensure that your assets will be protected from individual creditors, you are able to avoid the time and expense of probate, and you can provide for estate tax planning as well. Establishing a spousal trust may require a wholesale update to your entire estate plan, but the potential creditor protection benefits are well worth the effort.
Speak to an Experienced St. Charles Trust and Estate Lawyer Today
Properly establishing a QST, making sure your assets are transferred correctly, etc. can get complicated. We are here to help. Polaris Law Group takes pride in offering an effective, full-service experience to our clients. If you want to ensure that you and your family are properly cared for, contact Polaris Law Group’s experienced trust and estate attorneys, Scott Stork and Raymond Chandler today. Scott and Raymond are seasoned estate planning attorneys and are members of the National Network of Estate Planning Attorneys, the National Academy of Elder Law Attorneys, and Elder Counsel. Schedule a meeting by phone or by filling out a quick contact form today.