At Heritage Law Office, our experienced estate planning attorneys in Eau Claire, Wisconsin, will thoroughly review your needs and wants when planning your estate and provide an outline of your best options, including the creation of various types of trusts. Contact us either online or at 414-253-8500 to schedule a free consultation today.
Understanding Trusts in Eau Claire, Wisconsin
What is a Trust?
A trust is a legal arrangement in which one party, known as the settlor or grantor, transfers assets to another party, called the trustee, who manages the assets for the benefit of a third party or parties, known as beneficiaries. Trusts can be an essential part of an estate plan, providing numerous benefits, such as asset protection, tax savings, and more control over how assets are distributed.
Types of Trusts
There are several types of trusts, each serving a different purpose and offering unique benefits. Some common trusts include:
Revocable Trusts
A revocable trust, also known as a living trust, can be changed or terminated by the grantor during their lifetime. This type of trust allows for greater flexibility and control over the assets, as well as the ability to avoid probate.
Irrevocable Trusts
An irrevocable trust cannot be changed or terminated by the grantor once it has been created. This type of trust offers more significant asset protection and tax advantages but sacrifices some control over the assets.
Testamentary Trusts
A testamentary trust is created through a person's will and becomes effective upon their death. This type of trust can help ensure that assets are distributed according to the grantor's wishes and can provide some level of asset protection for beneficiaries.
Special Needs Trusts
A special needs trust is designed to provide financial support for a person with disabilities without jeopardizing their eligibility for government assistance programs, such as Medicaid and Supplemental Security Income (SSI).
The Role of Trusts in Estate Planning in Eau Claire, Wisconsin
Asset Protection
Trusts can protect assets from creditors, lawsuits, and other potential threats. By placing assets in a trust, the grantor can ensure that their beneficiaries receive the intended benefits without being subject to financial risks.
Tax Advantages
Trusts can offer significant tax advantages, such as reducing estate taxes, avoiding capital gains taxes, and providing income tax benefits for beneficiaries. Properly structured trusts can help minimize tax liabilities and preserve more wealth for future generations.
Probate Avoidance
Assets placed in a trust can bypass the probate process, which can be time-consuming, expensive, and public. Avoiding probate can save time and money for the beneficiaries and ensure that assets are distributed more quickly and privately.
Control and Flexibility
Trusts provide the grantor with greater control over how assets are managed and distributed to beneficiaries. This includes specifying when and under what conditions beneficiaries receive their inheritance, as well as providing for the ongoing management of assets by a professional trustee.
Contact an Experienced Trust Attorney in Eau Claire, Wisconsin
If you are considering establishing a trust or need assistance with trust administration, contact our knowledgeable trust attorneys at Heritage Law Office by using the online form or calling us directly at 414-253-8500.
Frequently Asked Questions (FAQs)
1. What is the difference between a revocable trust and an irrevocable trust?
A revocable trust, also known as a living trust, is a type of trust that can be altered or terminated by the grantor during their lifetime. It provides flexibility and control over the assets and helps avoid probate. An irrevocable trust, on the other hand, cannot be changed or terminated by the grantor once it's established. While it offers less control, it provides more significant asset protection and tax advantages.
2. How does a special needs trust work in Wisconsin?
A special needs trust is designed to support a person with disabilities by providing financial resources without compromising their eligibility for government assistance programs like Medicaid and Supplemental Security Income (SSI). This is accomplished by assigning a trustee who manages and distributes the trust's assets for the benefit of the disabled individual, ensuring the funds don't directly go to the beneficiary and are not counted as personal assets when determining eligibility for government programs.
3. Why should I consider setting up a trust for estate planning?
Setting up a trust as part of your estate planning strategy can offer numerous benefits. These include protection of your assets from creditors and lawsuits, potential tax advantages, the ability to avoid the probate process, and greater control over the management and distribution of your assets to beneficiaries. Trusts can also provide you with a means to plan for incapacity and ensure the financial well-being of your loved ones.
4. Can a trust help reduce estate taxes in Wisconsin?
Yes, certain types of trusts can help reduce estate taxes. For example, by using an irrevocable trust, a grantor can remove assets from their taxable estate, potentially reducing the amount of estate taxes that may be due upon death. However, tax laws are complex and can change, so it's important to consult with an experienced estate planning attorney to explore the most effective tax strategies for your specific situation.
5. How do I choose the right type of trust for my situation?
Choosing the right type of trust depends on your individual circumstances and objectives. Factors to consider include your financial situation, your goals for asset distribution, your desire for control over the assets, and potential tax implications. Consulting with an experienced estate planning attorney can help guide you in selecting the type of trust that best suits your needs and goals.