A revocable trust is a valuable estate planning tool that provides numerous benefits for individuals and their families. At Heritage Law Office, our experienced estate planning attorneys in Wisconsin will help you understand your options and create a personalized revocable trust that meets your specific needs. 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 Bayside, Wisconsin?
A revocable trust, also known as a living trust, is a legal document that allows you to place assets under the control of a trustee while you are still alive. The trust can be amended or revoked at any time during your lifetime, giving you flexibility and control over your assets.
Benefits of a Revocable Trust
There are several benefits to setting up a revocable trust, including:
- Avoidance of probate: Assets in a revocable trust do not have to go through the probate process, which can be time-consuming and expensive.
- Privacy: Unlike a will, a trust is not a public record, keeping your estate details private.
- Control: You can make changes to the trust at any time and designate a successor trustee to manage your assets in the event of your incapacity or death.
- Asset protection: Although revocable trusts do not provide significant protection against creditors, they can protect your assets from being mismanaged by heirs.
Choosing a Trustee for Your Revocable Trust in Bayside, Wisconsin
Selecting a trustee is an important decision, as this person will be responsible for managing the assets within the trust. You can choose to serve as your own trustee, but it is essential to also appoint a successor trustee in case of incapacity or death.
Factors to Consider When Choosing a Trustee
- Trustworthiness: Choose someone who is honest and reliable.
- Financial knowledge: A trustee should have a basic understanding of financial matters and be able to manage the trust assets responsibly.
- Availability: The trustee should have the time and ability to perform their duties.
- Willingness to serve: Confirm that the person you choose is willing to take on the responsibility of being a trustee.
Funding a Revocable Trust in Bayside, Wisconsin
Once your revocable trust is created, you will need to fund it by transferring assets into the trust. This may include real estate, bank accounts, investments, and other valuable property.
Steps to Fund a Revocable Trust
- Retitle assets: Change the ownership of assets from your name to the name of the trust.
- Assign new beneficiaries: Update the beneficiary designations on life insurance policies, retirement accounts, and other assets to name the trust as the beneficiary.
- Transfer tangible personal property: Create a document called an "assignment of personal property" to transfer items such as jewelry, art, or collectibles to the trust.
Revocable Trust vs. Will: Which is Right for You?
Both revocable trusts and wills can be useful estate planning tools, but they serve different purposes and offer different benefits.
Key Differences Between Revocable Trusts and Wills
- Probate: A will must go through probate, while a revocable trust avoids this process.
- Incapacity planning: A revocable trust allows you to plan for incapacity by appointing a successor trustee, while a will does not address this issue.
- Privacy: Trusts are private documents, while wills become public record upon your death.
- Flexibility: Revocable trusts can be easily amended, while updating a will may require more formal procedures.
Ultimately, your specific circumstances and goals will determine whether a revocable trust, a will, or a combination of both is the best option for your estate planning needs. Consult with an experienced estate planning attorney in Bayside, Wisconsin, to determine the most appropriate strategy for you.
Tax Considerations for Revocable Trusts in Bayside, Wisconsin
While revocable trusts offer numerous benefits, it is essential to understand the potential tax implications associated with them.
Income Tax
During your lifetime, the income generated by assets in the trust is typically taxed as if you personally earned it. This means that you will report the trust's income on your personal income tax return. Upon your death, the trust may need to obtain a separate tax identification number, and the trustee will be responsible for filing annual trust income tax returns.
Estate and Inheritance Tax
Revocable trusts do not provide any estate or inheritance tax savings during your lifetime, as the trust assets are still considered part of your taxable estate. However, proper planning with an experienced attorney can help minimize potential estate tax liabilities.
Common Mistakes to Avoid When Creating a Revocable Trust in Bayside, Wisconsin
Creating a revocable trust can be an effective way to manage and protect your assets, but it is crucial to avoid common mistakes that can undermine your estate planning goals.
Failing to Fund the Trust
A trust is only effective if it is funded. Be sure to transfer your assets into the trust after it is established to ensure your estate planning objectives are achieved.
Not Updating the Trust
Your financial and personal circumstances may change over time, necessitating updates to your trust. Review your trust regularly and consult with your attorney to make necessary amendments.
Choosing the Wrong Trustee
Selecting an appropriate trustee is crucial for the successful management of your trust. Choose someone who is trustworthy, knowledgeable, and willing to serve as a trustee.
Contact a Revocable Trust Attorney in Bayside, Wisconsin
When considering a revocable trust as part of your estate planning strategy, it is essential to work with an experienced attorney who can guide you through the process and ensure your objectives are met. At Heritage Law Office, our knowledgeable estate planning attorneys are here to help you create a personalized plan tailored to your unique needs. To schedule a free consultation, contact us either online or by calling 414-253-8500 today.
Frequently Asked Questions (FAQs)
1. What is a revocable trust?
A revocable trust, also known as a living trust, is a legal document that allows you to place assets under the control of a trustee while you are still alive. This type of trust can be amended or revoked at any time during your lifetime, providing flexibility and control over your assets.
2. What are the benefits of a revocable trust?
The main benefits of a revocable trust are the avoidance of probate (which can be time-consuming and costly), privacy (since trusts aren't public records like wills), control (you can make changes to the trust at any time), and asset protection (helping protect your assets from potential mismanagement by heirs).
3. How do I choose a trustee for my revocable trust?
Choosing a trustee for your revocable trust is a critical decision. Some factors to consider include trustworthiness, basic understanding of financial matters, time and ability to perform their duties, and their willingness to serve as a trustee.
4. How does a revocable trust differ from a will?
A revocable trust differs from a will in several ways. Trusts allow for the avoidance of probate, the ability to plan for incapacity by appointing a successor trustee, privacy since trusts are private documents, and flexibility as they can be easily amended. Wills, on the other hand, must go through probate, do not provide incapacity planning, become public record upon death, and may require more formal procedures to amend.
5. Are there tax implications for revocable trusts?
Yes, there are tax considerations for revocable trusts. During your lifetime, the income generated by assets in the trust is typically taxed as personal income. Upon death, the trust may need a separate tax identification number, and the trustee will be responsible for filing annual trust income tax returns. Revocable trusts do not provide any estate or inheritance tax savings during your lifetime, as the trust assets are still considered part of your taxable estate. However, an experienced attorney can help you plan to minimize potential estate tax liabilities.