In general, people establish a trust for their own financial purposes or to financially protect their family members. Many different types of trusts exist that can accommodate the different reasons people have. At Heritage Law Office, our trust attorney helps you figure out which trust will work best for you and your needs and then guide you through the entire process, which––depending on the amount and extent of assets and the instructions accompanying them––can be either a relatively quick or enduring one.
To learn more about trusts and if you will need an estate planning lawyer in Wisconsin to help you with it, contact our office today either using the online form or calling us directly at 414-253-8500 to schedule a free consultation.
Wisconsin Trusts as Part of an Estate Plan
A trust is a way for a property owner to pass their assets to someone else to protect the assets and to avoid the probate process, if applicable. The trustor, also referred to as the settlor or trust maker, is the owner of the property and transfers it to the trustee. The trustee is the one who manages the property for the benefit of someone else, known as the beneficiary. The beneficiary is a person or entity whom the trust was established.
Trusts can have multiple trustors, trustees, and beneficiaries. Further, for some trusts and some situations, can also be the trustee and/or beneficiary.
As part of an estate plan, a trust can be used to minimize estate taxes (for someone with high assets). But they offer other benefits, too, if well-crafted. A trust can keep your assets private even when you die because a trust does not need to go through probate, and probate is a matter of public record. Further, a trust can protect assets from creditors or help beneficiaries who cannot manage money well. Whatever you need is for a trust, our estate planning lawyer can help make sure the trust you choose and the way it is drafted benefits you and the intended beneficiaries.
Types of Trusts in Wisconsin
Specific types of trusts that people can use to protect their assets or pass their property on to someone else come in many forms. However, all of these trusts are either revocable or irrevocable.
Revocable trusts, also known as living trusts, allow the trustor to continue to alter the property in the trust. They can even revoke the trust entirely. This gives the trustor far more control over their property. With that control, though, comes a downside: because the trustor still has access to the property in the trust they created, their creditors can often reach into the trust to satisfy debts owed to them.
Irrevocable trusts, on the other hand, cannot be changed or revoked once the trustor creates one. The trustor relinquishes control over the assets in the trust. Creditors cannot touch those assets once they are removed from your estate. Often, the trustor gains in terms of tax and probate avoidance.
Examples of Different Types of Trusts
Just to give you an idea of what types of trusts there are to address your specific needs, here's a list of some of the most common.
- Asset protection trust
- Charitable trust
- Constructive trust
- Special needs trust
- Spendthrift trust
- Tax by-pass trust
- Totten trust
You can also create a trust specifically for your pets, farmland, and even your gun collection.
Benefits of a Trust in Wisconsin
As mentioned, trusts are beneficial to avoid probate and taxes. By using a trust (in addition to a will or in lieu of a will), the trust's assets pass directly to the trust's beneficiary when the trustor dies. This means that the assets do not go into the trustor's estate – they are transferred inter vivos, or between living people. As a result, certain estate taxes do not apply to trusts. Using a trust to pass property to your heirs can have tax advantages and can avoid the potential legal complications of dividing your estate or a contested will.
A trust also gives you the ability to create instructions and conditions for asset distribution upon your death–giving you control over your assets even when you are not here. So, if you have a beneficiary whom you want to finish college before disbursement of funds or if you want only a certain amount of funds disbursed at different times of the beneficiary's life, you get to decide those things. Further, you can identify a successor trustee––someone you know who can manage the trust according to the terms and conditions.
1. What are the key benefits of establishing a trust in Wisconsin?
Establishing a trust in Wisconsin offers several key benefits. Firstly, it enables you to avoid the probate process, making asset distribution faster, more private, and less complex. Secondly, trusts can offer significant tax benefits, particularly for those with large estates. Additionally, trusts allow you to control the distribution of your assets after your death, setting conditions or timelines for beneficiaries if desired. Lastly, trusts can protect your assets from potential creditors, especially in the case of irrevocable trusts.
2. How do I know if I need a revocable trust or an irrevocable trust in Wisconsin?
The choice between a revocable and an irrevocable trust depends on your personal circumstances and goals. If you want to maintain control over your assets and have the flexibility to change the trust terms or beneficiaries over time, a revocable trust may be appropriate. However, if your primary goal is to protect your assets from creditors or reduce estate taxes, an irrevocable trust, where you relinquish control over the assets once they're in the trust, may be the better option.
3. Can a trust in Wisconsin be changed or revoked?
This depends on the type of trust. Revocable trusts, as the name suggests, can be altered or revoked by the trustor at any time. This means the trustor can change the terms of the trust, beneficiaries, or even dissolve the trust entirely. On the other hand, irrevocable trusts generally cannot be changed or revoked once established, providing more asset protection but less flexibility.
4. How does a trust in Wisconsin protect my assets from creditors?
In the case of an irrevocable trust, once you place your assets in the trust, they are no longer considered your personal property and thus are generally protected from creditors. This means that even if you personally run into financial difficulties, the assets in the trust are safe and can still be passed onto your designated beneficiaries.
5. Do all types of trusts in Wisconsin avoid probate and offer tax benefits?
Most types of trusts can help avoid probate, but not all offer tax benefits. For example, assets in a revocable trust will avoid probate but are still considered part of your taxable estate. On the other hand, assets in an irrevocable trust are not part of your taxable estate and thus can provide estate tax benefits. It's best to consult with a trusts attorney to understand the specific tax implications of each type of trust.
Contact a Trusts Attorney in Wisconsin Today
Whether you have some or a lot of assets, a trust may be just the thing you need to manage those assets and to decide what's done with them upon your death. Our trusts lawyer in Wisconsin will consider what you want the trust to do for you, review the assets you want to transfer to the trust, and guide you through the entire process, providing solid legal advice as you need it or the situation demands it.
To learn more about trusts and how a specific one can benefit you, contact us either online or at 414-253-8500 to schedule a free consultation.