Last Will vs Living Trust: Breaking Down the Differences

Only 42% of Americans have a will or living trust.

While most Americans over seventy-two years old have thought about the need, those in younger generations are not thinking that far ahead. Around 53% of those ages 52 to 71 have a will and the majority of Gen X’ers and Millenials don’t have one.

While no one likes to think about the future, it can make life much easier for your loved ones if you’re prepared for the inevitable. It will lower their stress levels and help provide for them as you wish.

Yet what about the last will vs. living trust? Is there a difference, and how can you choose the one that’s right for you?

Let’s take a look.

What Is a Last Will?

A will’s main function is to state how you would like to pass along your assets to future generations. It also appoints guardianship of any minor children you may have.

A Judge or Register in Probate will preside over your estate transfer. The will provides direction as to how your beneficiaries will get allotted your assets. You can address what you would like to leave your beneficiaries and how you want them to divide it.

A will can also allow you to disinherit a spouse or child. Anything left in a will must go through a probate court and become part of the public record.

What is a Living Trust?

Like a will, a living trust will transfer your property to your loved ones after your death. It’s created while the property owner, or settlor, is still alive. It can also be changed throughout the life of the settlor.

A declaration of trust gets used to state the basic terms of your trust. It passes your estate directly on to your heirs.

Last Will vs Living Trust

The main difference between a living trust and a will is that a trust will pass your property without going through probate court. Your loved ones will not incur any court expenses after it is established.

A trust names someone as a beneficiary to control the disbursement of assets, rather than the court. The property can be passed quickly along to your loved ones.

Another main difference between the two is privacy. A will becomes public record after you pass, and a living trust keeps the information between yourself and your family.

There are also, however, extra steps that must get taken when you create a living trust that isn’t required with a will. You will need, for example, to have your trust signed and stamped by a notary public

Another important step when creating a living trust is that property must be transferred into the trust before you can leave it to someone else.

Titled assets, for example, must get retitled. This includes real estate. Retitling the deeds to your property is usually not a complicated process.

Additional Differences

Another main difference between the two documents is that a will can appoint a guardian for your children and a living trust cannot. Wills can also appoint someone to manage the property left to your children while a living trust cannot.

Living trusts can also be more complex than wills to create and may require the help of a lawyer. Wills that are more complicated or nuanced will also require professional assistance.

When You Need a Last Will vs. Living Trust

You must have a will if you have minor children living with you so you can properly appoint a guardian. You won’t want to put a court process in the hands of your loved ones in addition to the other pain they’ll be experiencing.

A will is also helpful for writing out your funeral wishes and designating owners for smaller property items. This could include your fine china or jewelry and who you want to leave them to.

Some people prefer a living trust because it allows them to transfer assets without putting their loved ones through the time and expense of probate court. It’s also possible to change it while you’re still alive, so many people like that flexibility.

Oftentimes, folks will choose to have both a living will and trust that they use to give instructions about different types of property. It can put their minds at ease as they think about what’s to come.

Taking Care of the Future

It can seem negative or morbid to think about your will or living trust. Your loved ones will be grateful, however, for the clarity as to who will get your assets.

You can also avoid your assets going to people who you don’t want to have access to them, including estranged relatives. It will also give clear direction as to who will care for your children if you have them.

A will can also be a great way to give gifts and charitable donations. This can help offset any estate tax against your assets.

Moving Along

The differences between a last will vs. living trust may seem minor, but they can make a big difference in how you decide to leave your property to your loved ones. With little homework and planning, you and your beneficiaries can face the future with confidence.

Don’t stop planning for tomorrow now. For more information on professional assistance with wills and trusts, contact us today.

3 Wisconsin Probate Myths Explained

Wisconsin probate

Probate is the court-supervised process in Wisconsin through which the assets from an estate are distributed. There are both Formal and Informal Probates, the formality dictates how involved the Court is in the process. This process can be lengthy and complicated or it can be short and smooth; there are steps that can be set up to ensure the process is the latter.

Unfortunately, many Wisconsin families are not aware of those steps or are held back by misconceptions about probate. An experienced estate planning lawyer can assist with the steps needed to make the time after a death easier for the family. This post can help clear up the most common misconceptions about Wisconsin probate proceedings.

Myth 1: Every estate goes into probate

Most estates are subject to probate. During the probate process, creditors have three months to file claims against the estate. There are also income taxes to file; the exact details of income tax filings depend on the estate.

However, there are some estates that do not go through the probate process. If the amount of the estate is under the  Wisconsin threshold, the estate is not subject to the probate process. Some assets in an estate may not be subject to probate.

Myth 2: There is no way to avoid probate

As discussed above, not all estates are subject to probate. Even if an estate is going through the probate process, not all assets in the estate may be part of the process. These assets may include accounts with a beneficiary designation, assets included in a trust, or property that is jointly owned. In a joint ownership, property automatically passes to the second party named in the joint ownership.

It should be noted that accounts are only excluded from probate IF the owner has specifically named beneficiaries. This is one of several estate planning steps that can make the process easier for friends and family members after a death.

revocable living trust is another way to make the distribution of assets smoother during a difficult time. Certain items of the estate are placed into a revocable living trust; the “revocable” label means the trust can be revoked at any time. There are three parties named for management and distribution of the assets: a settlor, trustee, and beneficiary (or beneficiaries). The settlor is the individual who owns the assets. The trustee manages those assets when the guarantor is alive or becomes unable to do so. The beneficiaries are the parties designated to receive those assets. A trust can be established with the assistance of an experienced estate planning lawyer. Even with a trust, a will should still be drafted to detail the distribution of other assets not included in the trust.

Myth 3: During probate, the court is responsible for every part of estate distribution

This common estate planning myth is partially true. Probate is a court-supervised proceeding, but the distribution of assets is executed by a personal representative usually named in the will. If a personal representative is not named in the will, the court appoints an executor.

The will can designate any party as the personal representative. The personal representative can be a friend, family member, or organization. A personal representative can also consult a lawyer to assist with the process. The personal representative is charged with compiling a list of assets, managing creditor claims, and distributing assets. Because this is a multi-step process, the probate process may take a year or more.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.

What is a warranty deed in Wisconsin?

Wisconsin property deeds, the documents used to legally transfer property between two parties, fall into a few different categories. Two of them are: Warranty Deed and Quit Claim Deeds. Both types of deeds include a legal description of the property (beyond just the address), grantor (current property owner), and grantee (new property owner). Most Wisconsin property deeds need a signature.

The Wisconsin property deed needs to be filed in the county where the property is located. The difference between the deeds are the guarantees included the Wisconsin property deeds. To determine the type of deed that suits the situation, contact a local real estate attorney that can offer advice and draft a legally-sound deed.

Warranty Deeds

A Warranty Deed offers the most guarantees of all the Wisconsin property deeds, meaning that the grantor is responsible for transferring clear title. The Warranty Deed offers guarantees or covenants to the grantee, such as:

  • The grantor guarantees that they are the lawful owner.
  • The grantor guarantees that the property is lien-free and is not subject to any claims by third parties.
  • The grantor guarantees that the title is clear.

Quit Claim Deeds

A Quit Claim Deed is a Wisconsin property deed with no guarantees. Because of the lack of protection for the grantee, Quit Claim Deeds are typically used in situations where there is some degree of trust. These situations could include the transfer of interest during a divorce, when property is transferred to a living trust, or during a transfer from an individual to a corporate entity. Under a quit claim deed, the grantor transfers their interest in the property to the grantee.

A warranty deed and quit claim are the two most commonly used Wisconsin property deeds. Other types of Wisconsin property deeds might be useful to the situation; contact anexperienced real estate attorney to get legal advice specific to the situation. In addition to advising on the right type of Wisconsin property deed, an experienced real estate attorney can guide the parties through the process and ensure that every document and step is legally sound.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.

What is an irrevocable trust?

grandparents with family they set up irrevocable trust forRevocable and irrevocable trusts are important estate-planning tools. Basically, these trusts are legal documents that detail specific assets and the distribution of those assets. However, the specific situation and intended purpose are what dictates what type of trust (revocable versus irrevocable trust) is appropriate for every situation; a local attorney can give advice on the right type of trust and draft a legal document custom to the specific situation.

What is the purpose of an irrevocable trust?

The purpose of an irrevocable trust is to set aside an asset for the benefit of another party. This party can be an organization or individual. Different types of assets can be placed in a trust, such as life insurance or a financial account. Because an irrevocable trust applies only to a specific asset (or assets), other estate-planning documents should be drafted to address other situations, such as designating a guardian for minors.

The benefit of an irrevocable trust is that because the asset is in the trust, it is not subject to estate taxes (because an irrevocable trust is separate from the estate), the probate process, and legal action and judgments. An irrevocable trust can save a significant amount of funds and expedite the process at the time of effect (when the guarantor passes). An irrevocable trust can also be drafted so that even though the asset is set aside, interest from the asset in the trust is still received as income.

What makes an irrevocable trust different than a revocable trust?

A revocable trust can be modified; once an irrevocable trust is established, for the most part, the trust cannot be altered. Unlike a revocable trust, an irrevocable trust is not set up for situations where the guarantor is incapacitated, such as from an illness or accident. An irrevocable trust doesn’t usually take effect until the guarantor’s death.

What goals can an irrevocable trust accomplish?

The specific type of irrevocable trust that should be drafted depends on the financial goals and circumstances surrounding the beneficiaries. An irrevocable trust can provide for another entity, such as a charitable trust. A spendthrift trust can be set up for situations where the beneficiary should only receive a set amount of the asset over time. To determine what is the correct irrevocable trust for the situation, contact an experienced estate planning attorney that can assist with process from the start to the finish.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.