Planning for the future well-being of your loved ones is important. Part of that process is creating a comprehensive estate plan. A testamentary trust can be a great tool for most estate plans but not necessarily all estate plans. It depends in part on your purpose.
At Heritage Law Office, our estate planning attorney in Wisconsin will make sure your estate plan encompasses all the right tools for your specific needs and purposes. To find out if a testamentary trust is right for you and what other estate planning tools can be used to complement it, contact us by using the online form or calling us directly at 414-253-8500 to schedule a free consultation.
Understanding Wisconsin Testamentary Trusts
A testamentary trust is created by and contained in the terms of a person's Will. The trust is not actually created until the person that created the Will dies. Upon their death, the trust is created and funded.
Generally speaking, testamentary trusts are typically created for loved ones with special needs, minor children, and anyone else who inherits a large sum of money when the trust funds.
Pros of a Testamentary Trust in Wisconsin
There are advantages to creating a testamentary trust, including:
Costs
Unlike living trusts, which are created while the trustor is still alive, a testamentary trust can be less costly and more simple to create.
Ease of Funding
It is possible to create the testamentary trust in a Will and have it funded by a life insurance policy that pays when the creator of the Will dies. This makes funding the trust a relatively simple matter.
Control
A testamentary trust allows its creator to retain control of their assets while they are alive. Until they die, the creator may change the terms or altogether revoke a testamentary trust.
Asset Protection
A testamentary trust must be administered according to its terms. This means that it can last for as long as the creator wishes, and it allows for the protection of assets that are passed from one generation to the next.
Cons of a Testamentary Trust in Wisconsin
There are disadvantages to testamentary trusts that you should consider. Some of these disadvantages are described below.
Trustee Matters
When the trust is created, a trustee is named. The trustee is responsible for administering the trust according to its terms and on behalf of the beneficiaries. There is a lot of responsibility placed on a trustee, and it can be for an extended period of time. It is important that the person chosen is trustworthy, dependable, and willing to perform the duties required of them. Also, should they fail to properly carry out their responsibilities, it can be difficult to have a trustee removed or replaced.
Probate Process
Unlike some other types of trusts, a testamentary trust must pass through probate. Probate is the process of going through the courts to administer a deceased person's estate. It is often tedious and time-consuming.
Public Knowledge
Testamentary trusts are public, unlike some trusts that are administered privately. If it is important to you that the terms of your estate be kept private, a testamentary trust may not be for you.
Testamentary Trust Revocation in Wisconsin
While alive, the trustor is able to change the terms of the testamentary trust whenever they choose to do so. However, because a testamentary trust is not actually established until its creator dies, once it is established, it is typically irrevocable, and the trust must be administered by the trustee in the way the trust requires.
Contact a Testamentary Trust Attorney in Wisconsin Today
Will a testamentary trust work well in your estate plan? They offer many benefits but you still want to consider any potential disadvantages. Contact us online or at 414-253-8500 for a free consultation to get the legal advice you need to create a solid estate plan that benefits you today and protects your family tomorrow.
Frequently Asked Questions (FAQs)
1. What is a Testamentary Trust?
A testamentary trust is a legal entity created by the stipulations included in a person's Will. It does not come into existence until after the person who created the Will has passed away. This type of trust can serve as a valuable tool in estate planning, especially when aiming to provide for minor children, special needs individuals, or any other inheritors of a substantial sum of money.
2. What are the advantages of a Testamentary Trust in Wisconsin?
Testamentary trusts offer several benefits. For one, they are generally less expensive and easier to create than living trusts. They allow the trust's creator to maintain control over their assets during their lifetime and can be altered or revoked at any time before their death. Testamentary trusts can be funded easily, often through a life insurance policy that pays out upon the creator's death. Lastly, they enable long-term asset protection and can ensure the safe transfer of wealth between generations.
3. What are the disadvantages of a Testamentary Trust in Wisconsin?
While testamentary trusts have many benefits, they also have a few downsides. The responsibility of managing the trust falls upon a trustee, whose role can be demanding and long-term. If the trustee fails to execute their duties correctly, replacing them can be a complicated process. Furthermore, testamentary trusts are subject to the probate process, which can be time-consuming and tedious. Lastly, unlike some private trusts, the details of a testamentary trust become public record, which may not be desirable for those seeking privacy.
4. Can a Testamentary Trust be revoked in Wisconsin?
While the creator of the trust is alive, they can change the terms of the testamentary trust at any time. However, since a testamentary trust is only established upon the creator's death, it is typically irrevocable once activated. From that point forward, the trust must be administered by the trustee according to the stipulations within the trust.
5. How can I set up a Testamentary Trust in Wisconsin?
Creating a testamentary trust requires careful legal guidance to ensure it's set up correctly and in alignment with your wishes. Reach out to an experienced estate planning attorney to discuss your specific needs and circumstances. At Heritage Law Office, our attorneys can help you navigate this process. You can contact us online or at 414-253-8500 for a free consultation and professional advice on crafting a robust estate plan that safeguards your assets and protects your family's future.
