Benefits of a Trust in Wisconsin
Safeguarding Your Assets and Legacy
In Wisconsin, establishing a trust can offer numerous advantages when it comes to estate planning and asset management. From avoiding probate and protecting privacy to minimizing estate taxes and providing for incapacity, a trust provides a flexible and comprehensive framework for safeguarding assets and preserving one's legacy. Niebler Pyzyk has experienced will and trust attorneys, ready to guide you in this process.
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What is a Trust?
A trust is a legal arrangement in which a person (the trustor or grantor) transfers ownership of their assets to a trustee. The trustee holds and manages these assets for the benefit of designated beneficiaries according to the trust's terms and instructions.
Advantages of a Trust
Probate Avoidance: One of the primary advantages of a trust is that assets held in a trust can bypass the probate process, saving time, costs and keeping the details of your estate private.
Privacy Protection: Unlike a will, which becomes a matter of public record during probate, a trust allows for the private transfer of assets and maintains confidentiality.
Asset Management: Trusts provide a structured mechanism for managing and preserving assets, especially in cases where beneficiaries are minors or have special needs. A trustee can ensure assets are utilized wisely and distributed according to your instructions.
Incapacity Planning: A trust can include provisions for the management of assets in the event of your incapacity, ensuring your financial affairs are handled smoothly without the need for a court-appointed guardian or conservator.
Flexibility in Distribution: Trusts offer flexibility in determining when and how assets are distributed to beneficiaries. You can set specific conditions, such as age or milestones before beneficiaries receive their inheritance.
Control over Asset Distribution: With a trust, you can specify detailed instructions on how you want your assets distributed, ensuring that your intentions are carried out precisely.
Protection from Creditors and Lawsuits: Certain types of trusts, such as irrevocable trusts, can provide a level of asset protection by separating trust assets from personal ownership, making them less vulnerable to creditors and legal claims.
Tax Planning: Trusts can be used for strategic estate tax planning, particularly in cases where the estate is subject to federal or state tax laws. By leveraging certain types of trusts, you may be able to minimize estate tax liability.
Charitable Giving: Trusts can be used to facilitate charitable giving by establishing charitable trusts or including charitable beneficiaries, allowing you to support causes you care about even after your passing.
Family Legacy and Continuity: By creating a trust, you can establish a framework for preserving and passing on your family's wealth, values and legacy. This can include provisions for subsequent generations and the ongoing management of family assets.
Benefits of a Trust vs Will
| Wills | Trusts | |
| Distribution of Assets | Assets are distributed through the probate process. | Assets can be distributed outside of probate, saving time and costs. |
| Probate Avoidance | Generally subject to probate, which can be time-consuming and costly. | Assets held in a trust can bypass probate, saving time, costs, and maintaining privacy. |
| Privacy Protection | Will becomes a matter of public record during probate. | Trusts offer privacy as they are not subject to public record. |
| Incapacity Planning | Does not provide immediate management of assets in case of incapacity. | Can include provisions for the management of assets during incapacity without court intervention. |
| Flexibility | Relatively fixed in terms of asset distribution and conditions. | Allows for flexibility in determining how and when assets are distributed, with specific instructions for beneficiaries. |
| Control over Assets | Limited control over assets after death. | Provides greater control over assets during and after one's lifetime. |
| Asset Protection | Limited asset protection against creditors and lawsuits. | Can provide a higher level of asset protection depending on the type of trust used. |
| Tax Planning | Limited tax planning options beyond basic exemptions and deductions. |
Can be used for advanced tax planning, reducing estate taxes for larger estates. |
| Continuity | No mechanism for ongoing management or continuity of assets. | Allows for ongoing management of assets, preservation of wealth and passing on a family legacy. |
Are There Tax Benefits to a Living Trust?
Yes, there can be tax benefits associated with establishing a trust. Types of tax benefits may include:
- Estate Tax Reduction: Certain types of trusts, such as irrevocable life insurance trusts (ILITs) or charitable remainder trusts (CRTs), can help reduce estate tax liability by removing assets from your taxable estate.
- Gift Tax Exclusion: By utilizing certain trusts, such as a qualified personal residence trust (QPRT) or a grantor-retained annuity trust (GRAT), you may be able to transfer assets to beneficiaries while minimizing or eliminating gift tax liability by taking advantage of applicable exclusions and deductions.
- Generation-Skipping Transfer (GST) Tax Planning: A generation-skipping trust, such as a dynasty trust, can help transfer wealth to future generations while avoiding or minimizing the impact of the generation-skipping transfer tax.
- Income Tax Planning: Certain types of trusts, such as grantor trusts, allow you to retain control over the trust assets while still being taxed on the income generated by the trust. This can provide income tax benefits by shifting tax liability to beneficiaries in potentially lower tax brackets.
- State Tax Planning: In states with their own estate or inheritance taxes, establishing a trust can help mitigate state tax liability by utilizing strategies specific to that state's tax laws.
Why Use a Lawyer for Setting up a Trust in Wisconsin?
While it is possible to prepare your own trust document in the state of Wisconsin, there are many situations where it makes sense to work with a reputable trust lawyer.
- trust contains conditions
- confused what to put in trust vs will
- have a large life insurance policy
- will owe estate tax (or you're unsure if you will)
- skipping generations in your bequest
- one or more beneficiaries are receiving government assistance
- need help transferring assets
Niebler Pyzyk's trust lawyers can help you work through these unique matters to ensure your wishes are documented in compliance with Wisconsin law, avoiding costly complications in the future.
Contact us online for a consultation to get legal advice on any matters relating to your trust.