If you're a parent who wants to leave an inheritance to your child but is concerned about the possibility of their spouse getting a share of that money in the event of a divorce, you're not alone. Fortunately, there are legal ways to protect your child's inheritance and ensure that it stays in the family. In this article, we'll discuss how you can leave money to your child but not their spouse, focusing on revocable living trusts in Wisconsin.
When you leave an inheritance to your child, that money becomes their separate property. However, if your child is married and later gets divorced, their spouse may be entitled to a portion of the inheritance as part of the divorce settlement. This can be a frustrating and upsetting prospect, especially if you intended for the inheritance to stay in your family.
The Solution: A Revocable Living Trust
One effective solution is to set up a revocable living trust. With a revocable living trust, you can leave your child's inheritance to the trust instead of directly to your child. You can then specify in the trust document that the funds are to be used only for your child's benefit and are not to be distributed to their spouse in the event of a divorce.
Setting up a revocable living trust also has the added benefit of allowing you to retain control over the assets during your lifetime. You can name yourself as the trustee and maintain control over the trust's assets until you pass away, at which point the trust becomes irrevocable and your named successor trustee takes over.
This can also protect your child's inheritance from creditors or lawsuits, as the assets held in the trust are not considered the property of your child or their spouse.
How to Set Up a Revocable Living Trust in Wisconsin
If you're considering setting up a revocable living trust, it's important to work with an experienced estate planning attorney. Here are the basic steps involved in setting up a revocable living trust in Wisconsin:
- Meet with an estate planning attorney to discuss your goals and determine whether a revocable living trust is the right solution for you.
- Draft a trust document that specifies the terms of the trust, including who will be the trustee, who will be the beneficiary, and how the assets will be distributed.
Transfer ownership of your assets to the trust. This may involve changing the titles on your bank accounts, real estate, and other property.
Manage the trust while you're alive, and update the trust document as needed to reflect changes in your circumstances.
- After you die, your child will become the trustee of the trust and will be responsible for distributing the assets according to the terms of the trust
Advantages of a Revocable Living Trust
There are several advantages to using a revocable living trust to leave money to your child:
- You can maintain control over the assets while you're alive.
- You can change the terms of the trust at any time.
- The assets in the trust avoid probate, which can save time and money.
- The assets in the trust are protected from your child's creditors, which can be especially important if your child owns a business or works in a high-risk profession.
Leaving money to your child but not their spouse can be a complex issue, but a revocable living trust is an effective way to protect your child's inheritance and keep it in the family. If you're interested in setting up a revocable living trust in Wisconsin, it's important to work with an experienced estate planning attorney to ensure that the trust is set up properly.
At Heritage Law Office, we have experience in probate, estate planning, and business law services, and we can help you set up a revocable living trust that meets your needs. Contact us at 414-253-8500 or send us a message to schedule a consultation and learn more about how we can help you protect your assets and leave a lasting legacy for your loved ones.
Frequently Asked Questions (FAQs)
1. What is a Revocable Living Trust and how can it protect my child's inheritance?
A revocable living trust is a type of legal entity you create to hold and manage your assets while you're alive. When you pass away, the trust becomes irrevocable, meaning it can't be changed, and the assets are distributed according to your wishes. By using a revocable living trust, you can specify that your child's inheritance is to be used solely for their benefit and not distributed to their spouse in the event of a divorce.
2. Can a revocable living trust protect my child's inheritance from their spouse in all cases?
In most cases, yes, a revocable living trust can protect your child's inheritance from their spouse. However, the effectiveness of this protection can depend on several factors, including the specific terms of the trust, the timing of the inheritance, and the laws of the state in which your child resides.
3. What are the steps to set up a revocable living trust in Wisconsin?
The basic steps to set up a revocable living trust in Wisconsin include determining the assets to be included in the trust, drafting the trust document, appointing a trustee, and transferring ownership of your assets to the trust. It is important to consult with an experienced estate planning attorney to ensure the process is handled correctly and in accordance with state laws.
4. Besides protecting my child's inheritance, what other advantages does a revocable living trust offer?
In addition to protecting your child's inheritance from their spouse in the event of a divorce, a revocable living trust also offers benefits such as control over your assets during your lifetime, ease of asset distribution after death, and protection against creditors and lawsuits.
5. Do I need an attorney to set up a revocable living trust?
While it is possible to set up a revocable living trust on your own, it is strongly recommended to work with an experienced estate planning attorney. Legal complexities can arise during the process, and an attorney can ensure the trust is set up correctly, meets your specific needs, and is in compliance with all state laws. Contact us at 414-253-8500 or send us a message to schedule a consultation!