Who Needs a Living Trust? Smart Planning Moves for Your Future

who needs a living trust

Only 40 percent of Americans have a will or living trust.

More than half of the population has no legal control or protection over their assets in the event that they die or become incapacitated. Frighteningly, nearly a third of older adults have never even discussed their end-of-life wishes with their families. 

But the entire subject is often a source of confusion. Who needs a living trust? Who can get by with just a will? How do you know which category you fall into? 

Keep reading to learn what a living trust can do for you and if you or a loved one should create a trust as part of your estate planning process.

What Is a Living Trust?

While most people have a decent idea of what a will is and does, many wonder, “What is a living trust?” 

Like a will, a living trust is a legal document that designates control or ownership of one’s assets. Unlike a will, a living trust goes into effect immediately upon creation rather than upon the creator’s death. This means it can be used to:

  • Protect or control assets in the event of dementia or incapacitation  
  • Distribute assets in ways wills cannot 
  • Avoid probate 

Under a living will, an individual legally becomes the “trustee” of his or her own assets.

Types of Trusts

Living trusts should not be confused with testamentary trusts. Living trusts are established and take effect while the creator is alive. Testamentary trusts are created upon an individual’s death in accordance with his or her will. 

There are two kinds of living trusts:

  • Revocable
  • Irrevocable

In revocable trusts, individuals may add to, alter, or dispose of the covered assets at their discretion. 

Under irrevocable trusts, no changes may be made to the covered assets once the trust is established.  

The exact rules over what a trust may cover and how it is structured can vary from state to state.  

Who Can Create a Living Trust?

Anyone with assets of any kind can create a living trust. 

Many people mistakenly believe that only the wealthy need wills or trusts. This is untrue. Even individuals with modest estates benefit from clearly outlining their desires for themselves and their assets via the appropriate legal documents

Primary Benefits of a Living Trust

Individuals questioning “do I need a will or a trust?” often find the decision easier to make when they understand the numerous benefits living trusts can afford them. 

Protection Against Incapacitation

As of 2019, 14 percent of Americans 71 years of age and older have some form of dementia. That number is only expected to increase as the population continues to age. 

Living trusts protect both individuals and their assets in the event that they develop dementia or are otherwise incapacitated. With a living trust, incapacitated individuals can:

  • Restrict access to and control of their finances to the person(s) of their choice
  • Ensure that their assets are used according to their wishes
  • Prevent themselves from being assigned to conservatorship

Creators can also safeguard assets they wish to pass along to their families that might otherwise be sold to fund their care. 

Probate Avoidance 

Probate is a court-led process that typically occurs when an individual dies. It involves the assessment and distribution of the deceased’s assets. 

Whether or not its reputation is deserved, probate exists as something of a nightmare in the public consciousness. Living trusts can place assets outside of probate, thereby sparing survivors the pain and stress of that process. 

Granting Assets to Minors 

Technically, individuals can bequeath assets to minors via their wills. However, in those situations, a court-appointed adult is assigned to control the assets in question. They may continue to control them until the beneficiary is 18 or 21, per state rules. 

Living trusts enable individuals to specify:

  • Who controls the assets until the minor is of age
  • When the minor qualifies to receive their assets (e.g. upon graduation from high school or college)
  • What purposes the assets may be used for (college tuition, a vehicle, housing, etc.)

Secondary Benefits of a Living Trust

Living trusts also offer additional benefits that may be of interest in some situations. 

Pack-Up Plans

Living trusts can also allow creators to implement back-up plans. For instance, one might specify a primary beneficiary for an asset as well as a secondary beneficiary. This can ensure that precious items remain in the family instead of becoming subject to secondary assignment if the first beneficiary dies. 

Privacy

Legal wills become public documents upon an individual’s death. Living trusts remain private, allowing people to mask their finances and decisions from open view.

This can be particularly valuable in situations involving:

  • Large sums of money 
  • Blended or second families 
  • Business assets 

Who Needs a Living Trust?

“Do I need a trust?” is a common question among individuals exploring their estate planning options.

While only you can decide if a living trust is right for you, these guidelines can help you make an informed choice.  

Property Ownership

If you own property that you wish the bequeath to specific members of your family, a trust may be a valuable investment. This is particularly true if:

  • Complicated family dynamics are involved
  • Both primary and secondary requirements are needed
  • Property is owned in multiple locations

Marital and Family Status

Married individuals can often easily pass shared property to their spouses. Unmarried couples may need a living trust to keep property out of probate and bequeath it as desired. 

Trusts can also be important for individuals whose legal next of kin are not willing or able to properly handle their finances in the event the creator dies or is incapacitated. Trusts can designate an alternate, more appropriate party instead. This can be particularly relevant for single individuals who would prefer their assets not be left to parents or siblings who do not share their values.

Age and Health 

Living trusts are especially valuable to individuals who are:

  • Older
  • Of any age but in poor health
  • Recently diagnosed with early-onset or chronic health conditions

Wealth

The more assets you have, the more likely you are to need a living trust.

The types of assets matter, as well. Real estate, businesses, and other legally complicated assets may be a much stronger reason to invest in a living trust than simple net worth. 

Parents or Guardians of Minors

As noted, anyone who wishes to leave assets to minors and have control over how those assets are handled likely needs a living trust. 

How Do I Set up a Trust?

Always seek out a qualified legal professional to assist you in creating a living trust. 

“Why do I need a trust lawyer?” you may ask. “Can’t I write my own using online tools?” 

Although online sites may claim to enable you to quickly and cheaply write your own, this is rarely a good plan. 

  • Trusts must be carefully written to accomplish your goals
  • Exact rules governing trusts vary from state to state
  • Individuals with assets or beneficiaries in different states or countries face extra legal complications 
  • Items you forget to include are not folded into the trust and remain subject to probate

Before meeting with a professional, it can be helpful to make a list of your assets and your preferences about how they should be handled. Is it also important to consider what steps you would want to be taken if you were to become incapacitated. 

Start Planning Your Trust Today

If you read the guidelines on who should have a living trust and saw yourself in them, don’t wait. Now that you know all about who needs a living trust and why contact the experts today and get the help you need to protect yourself and your family. 

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 a revocable living trust?

Estate planning worksheet for writing a willA revocable living trust in an estate planning document used to list the assets and express wishes for distribution. An experienced lawyer can draft a revocable living trust with specific instructions provided by the guarantor. Unlike an irrevocable living trust, a revocable living trust can be revoked at any time by the guarantor.

In a revocable living trust, certain assets are placed into a living trust. There are three parties named for management and distribution of the assets: a guarantor, trustee, and beneficiary (or beneficiaries). A guarantor is the owner of the assets. A trustee, either corporate or individual, is named to manage the assets. Beneficiaries are parties named to receive assets. Typically, while the owner of the assets is alive and competent, the guarantor is designated trustee. If the owner would become incapacitated, such as from a serious illness, a living trust contains specific directions for the trustee to manage the assets.

When the guarantor passes away, the living trust contains directions for the trustee to distribute assets to beneficiaries. In Wisconsin, a living trust incurs the same estate taxes as a will. If only certain assets are placed into a living trust, a guarantor may need to draft a will in addition to a living trust. Instructions for guardianship of minors should also be included in a will; detailed wishes for support of those minors can be included in the revocable living trust document. Unlike a will, a living trust does not need to go through the court-supervised probate process and is a private document. The biggest benefit of a revocable living trust, when compared to a will, is that all assets named in the trust do not have to go through probate, which can take longer for distribution and incur more costs.

A revocable living trust can be modified or revoked after drafting. Contact a lawyer for information on how to modify the living trust, and what is needed for the change. Typically, changes cannot be made when the estate owner passes away.

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.