A well-planned estate is essential for ensuring your assets are distributed according to your wishes. One popular estate planning tool is a revocable trust. In this comprehensive guide, we'll discuss the ins and outs of revocable trusts in Eau Claire, Wisconsin, and how they can benefit you and your family.
At Heritage Law Office, our experienced estate planning attorneys in Wisconsin will thoroughly review your needs and wants when planning your estate and provide an outline of your best options, including the creation of a revocable trust. Contact us either online or at 414-253-8500 to schedule a free consultation today.
What is a Revocable Trust and How Does It Work in Eau Claire, Wisconsin?
A revocable trust, also known as a living trust, is a legal entity created to hold your assets during your lifetime and distribute them after your death. One key feature of a revocable trust is that it can be amended or terminated at any time during your life. This flexibility allows you to adjust your estate plan as circumstances change.
The Role of the Grantor, Trustee, and Beneficiaries
There are three main parties involved in a revocable trust:
- Grantor: The person who creates the trust, transfers assets into it, and sets the terms.
- Trustee: The person or entity responsible for managing the trust according to the grantor's instructions.
- Beneficiaries: The individuals or organizations who will receive the trust's assets upon the grantor's death.
The grantor can also act as the trustee during their lifetime, maintaining control over the trust's assets.
Benefits of Establishing a Revocable Trust in Wisconsin
A revocable trust offers several advantages as an estate planning tool:
One of the main benefits of a revocable trust is that it helps avoid the probate process. Probate is the court-supervised procedure of validating a will and distributing assets. It can be time-consuming, expensive, and public. By transferring your assets into a revocable trust, they will bypass probate and be distributed directly to your beneficiaries, saving time and money.
Since a revocable trust is not subject to probate, its contents remain private. This privacy can be especially valuable for individuals with substantial assets or high-profile lives.
A revocable trust can include provisions for managing your assets if you become incapacitated. This can be particularly important for individuals who want to maintain control over their financial affairs in the event of a sudden illness or accident.
Limitations of a Revocable Trust in Eau Claire, Wisconsin
While a revocable trust has numerous benefits, it's important to be aware of its limitations:
No Asset Protection
A revocable trust does not protect your assets from creditors during your lifetime. Since the trust can be amended or revoked at any time, your assets are still considered part of your personal estate.
A revocable trust does not provide any tax advantages. The trust's income and capital gains are taxed at your personal income tax rate.
How to Create a Revocable Trust in Wisconsin
To establish a revocable trust in Wisconsin, you'll need to take the following steps:
- Choose a Trustee: Select a trustworthy individual or institution to serve as the trustee.
- Draft a Trust Agreement: Work with an experienced estate planning attorney to draft a trust agreement that outlines the terms of the trust.
- Sign the Trust Agreement: Once the trust agreement is drafted, you will need to sign it in the presence of a notary public.
- Transfer Assets: Fund the trust by transferring your assets into it. This may involve changing titles, deeds, or beneficiary designations
Maintain the Trust: Throughout your lifetime, you should periodically review and update the trust as necessary to account for changes in your life, such as marriage, divorce, or the birth of a child.
Revocable Trust vs. Will: Which Is Right for You?
Both revocable trusts and wills are effective estate planning tools, but they serve different purposes and offer unique benefits. Here are some key differences to consider when deciding which is right for you:
- Probate: A revocable trust avoids probate, while a will must go through the probate process.
- Privacy: A revocable trust is private, whereas a will becomes public record during probate.
- Incapacity Planning: A revocable trust can include provisions for managing your assets if you become incapacitated, whereas a will does not address this issue.
- Cost: Establishing a revocable trust can be more expensive upfront than creating a will, but it may save your estate money in the long run by avoiding probate costs.
Ultimately, the decision to use a revocable trust or a will depends on your unique circumstances and estate planning goals. An experienced estate planning attorney can help you determine which option is best for you.
Trust Administration in Eau Claire, Wisconsin
After your death, the trustee will be responsible for administering the trust according to your instructions. This process typically involves:
- Asset Management: The trustee must manage and invest trust assets prudently.
- Tax Filings: The trustee is responsible for filing any required tax returns for the trust.
- Distributions to Beneficiaries: The trustee will distribute trust assets to beneficiaries according to the terms of the trust agreement.
- Accounting and Recordkeeping: The trustee must maintain accurate records of all trust activities and provide periodic accountings to beneficiaries.
Trust administration can be complex, and the trustee may need to work with professionals such as accountants and attorneys to fulfill their responsibilities.
Contact an Experienced Revocable Trust Attorney in Eau Claire, Wisconsin
Establishing a revocable trust can be an essential part of a comprehensive estate plan. At Heritage Law Office, our knowledgeable estate planning attorneys are here to help you navigate the complexities of revocable trusts and other estate planning tools to ensure your wishes are carried out.
To learn more about revocable trusts and how they can benefit you and your family in Eau Claire, Wisconsin, contact our experienced attorneys by using the online form or calling us directly at 414-253-8500.