There are multiple types of trusts available for individuals or couples. One of the more common types of trust is called a living trust. This type of trust is an agreement between the trustmaker, who is the creator of a trust, and a trustee, who is responsible for managing and distributing the trustmaker’s assets, based upon what is laid out in the trust document. There are two classifications of living trusts — revocable (where the trustmaker can make changes to the trust until their passing) and irrevocable (where the trustmaker can not make any changes once the trust is established).
If you are discerning whether or not to embark on setting up a living trust, review the following facts and fictional information regarding this type of estate planning.
Facts About Living Trusts
Probate Can Be Avoided
Avoiding probate is a significant factor for many when determining whether a will or trust is in their best interest. Heirs will avoid probate when a living trust is established, unlike those who only have a will. This not only saves heirs time and money but also ensures privacy. Additionally, a will is a public document, whereas assets and beneficiary information listed in a living trust are private with a trust.
Managing Finances if the Trustmaker Becomes Incapacitated
If the trustmaker were to become incapacitated, the trustee would have the flexibility to manage any finances without needing court involvement. This is especially beneficial for those who may be unmarried, do not have children, or if the trustmaker does not trust the credibility of their spouse to manage finances if they should become incapacitated.
Fiction About Living Trusts
You Will Not Have to Pay Taxes
Trustmakers will still be responsible for paying estate or income taxes even if they have a living trust in place. However, Wisconsin does not have a state estate tax, so trustmakers will not need to worry about paying that. Additionally, a trustmaker will only need to pay federal estate taxes if there are more than $12 million in taxable assets.
You Can Avoid Creditors
Assets can still be subjected to creditors because the trustmaker retains them until their passing. However, an experienced estate planner can work with a trustmaker to help guard assets.
Learn More About Living Trusts
There is a lot more to learn about living trusts before establishing one. That’s why the team at Krause Estate Planning wants to work with you to develop the best estate plan to fit your needs. We serve areas throughout Wisconsin, including Janesville, Madison, Middleton, Milwaukee, Oregon, Sun Prairie, Verona, and Waunakee.
Reach out to us online or by phone today so we can start working for you — (608) 344-5491