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Trusts are a key part of estate planning in Wisconsin and can help with asset protection, tax considerations, and avoiding probate. The two key types of trusts in Wisconsin are revocable living trusts and irrevocable trusts. Wisconsin trust laws outline who can create a trust and the duties of those named in a trust.
A trust can be a smart estate planning vehicle for a wide range of people. Specific people who often use trusts include:
A trust allows parents to designate funds for their children’s education, living expenses, or special needs. A trust ensures children are taken care of in case something happens.
Families with blended relationships, children from multiple marriages, or estranged relatives often find a trust useful for setting clear terms on how assets are to be divided and managed.
A special needs trust can provide for a dependent without jeopardizing their eligibility for government assistance like Medicaid or SSI.
A trust can simplify the transfer of property, including across state lines, avoiding the need for probate in multiple jurisdictions.
Business succession planning can be complex, and a trust allows an owner to specify how their business assets will be managed and transferred to the next generation or to trusted individuals.
A trust can help manage and distribute substantial assets, ensuring that wealth is handled according to specific instructions and minimizing estate taxes.
Trusts don’t go through public probate, so they offer more privacy regarding the details of the estate and assets than a will alone.
For those looking to create a lasting charitable legacy, trusts can be structured to provide ongoing contributions to chosen causes.
Trusts provide far more control and flexibility than wills when it comes to asset management and distribution. Beneficiaries can receive the benefits as specified, such as regular income distributions or inheritance at a particular age or life milestone.
In addition to flexibility and control, trusts also:
A trust is a legal document and legal entity used in estate planning in Wisconsin. A settlor (the person who creates the trust) puts their assets into a trust to be managed by a trustee and ultimately be distributed to the chosen beneficiaries.
A trust in Wisconsin allows for greater control over how their assets are inherited or allocated, since the settlor gets to set the terms for how their assets are distributed.
Revocable trusts offer more active control but fewer protections. Irrevocable trusts have more tax and liability benefits, but the settlor has far less control over the assets.
| Revocable Trusts | Irrevocable Trusts | |
|---|---|---|
| Asset Ownership | The settlor, or the creator of the trust, maintains control of the assets within the trust. | The trust itself owns the assets, removing them from the settlor’s estate. |
| Modifications | The settlor can make changes to the trust. | No changes can be made without the permission of the beneficiaries. |
| Taxes and Creditors | Assets are part of the settlor’s estate and subject to estate taxes. Assets are also not protected from potential lawsuits. | Assets are not part of the settlor’s estate, which may have tax benefits. Assets are generally protected from creditors. |
In order to create a trust, you must choose the type of trust that meets your needs and choose your trustees and beneficiaries. Then a trust document needs to be drafted and signed in front of a notary. Finally, the trust needs to be funded, meaning the assets need to be placed in or scheduled to be placed in the trust.
The type of trust required depends on the specific goals, financial situation, family dynamics, and long-term intentions of the person making the trust. An attorney can assess your specific situation and make recommendations.
The person making the trust is the settlor. To form the trust, a trustee and beneficiaries need to be selected.
The trustee is a very important individual and needs to be chosen carefully. They will be responsible for managing the assets and executing the distribution of assets. In an irrevocable trust, they will have these responsibilities even while the settlor is alive.
The beneficiaries are the people the settlor wants to ultimately benefit from the assets in the trust.
Consult with an attorney to draft the legal documents to create the trust. If an attorney is not consulted, the trust may not be legally valid. An attorney will also ensure the trust achieves the primary goals as intended.
Transfer all the relevant assets into the trust. There are different processes for real estate, investment accounts, businesses interests, personal property, and other asset types. All assets must be correctly transferred or scheduled to be transferred to be distributed in accordance with the trust’s terms.
The trustee oversees and administers the assets within the trust according to the trust’s terms. They have a fiduciary duty to manage the assets responsibly. Then, based on the terms of the trust, they are responsible for the distribution of the assets to the beneficiaries.
While technically you can create your own trust, they are complex and there are several kinds to choose from. If you make your own and it is found not legally valid or if it is funded incorrectly, your loved ones may not receive the benefits you intended for them. Working with an attorney can ensure you choose a trust type that meets your needs and that it is created and funded correctly.
Estate planning is better done sooner rather than later. Contact an estate planning attorney at Grieve Civil Law today.Â
