5 Things to Consider Before You Create a Trust

setting up a living trust

You’ve worked hard to build up your property and your savings. What’s the best way to protect your estate and pass it on to your heirs?

You could write a will, but a will has its drawbacks. An estate can be tied up in probate for months, with fees eating up some of the inheritance. People concerned about these issues have another option: creating a revocable trust.

Here are 5 things to consider when setting up a revocable trust.

1. What Is a Revocable Trust

A revocable trust is a legal arrangement in which an individual (the settlor) shifts ownership of personal property into the legal ownership of the trust. This property can include all types of assets, including land, bank accounts, houses, jewelry, or intellectual property. A revocable trust can be set up at any point and can also be changed or dismantled if desired.

The trust is overseen by a trustee, who may be a family member or friend, a corporation, a bank, or the person who originally created the trust. 

The trust agreement documents the settlor’s instructions, including how the assets are to be managed, who receives income from the trust, and who the beneficiaries are.

The trust names the beneficiaries that will inherit at the termination of the trust, such as when the settlor passes away. The beneficiaries could be individuals, such as friends and family members, or organizations, such as charities.

2. Differences Between a Revocable Trust and a Will

When choosing whether to create a revocable trust or a will, there are many aspects to consider.

Going Through Probate 

The main reason people chose to establish a living trust is to bypass probate, the process through which the courts oversee the distribution of property from a will. Since a revocable trust does not go through probate, it can sometimes be settled faster, and can save the costs of the probate process.

When a will is executed, going through probate can take a year or longer, and the personal representative in charge of the will might need to report regularly back to the courts. The estate must also pay probate costs, such as fees owed to executors, attorneys, or accountants. These fees can add up to 5-10% of the total estate.

Fees

Since the creation of a revocable trust requires a property to be listed and then transferred to the living trust, the process of setting up a living trust can be much more expensive than writing a will.

Creating a Will and a Trust

In most situations, you will need to create both a will and a trust.

A will created in addition to a revocable trust can address the distribution of all assets not included in the trust. In one simple type of will, a “pour-over will,” everything that hasn’t been assigned to the trust gets “poured” into it, including property that was not originally transferred to the trust, or property that was acquired after the trust was created.

3. Revocable versus Irrevocable Trusts

There is another type of trust commonly used in estate planning: irrevocable trusts.

A revocable trust transfers ownership of estates and assets to the trust, but the settlor keeps the power to change or terminate the revocable trust.

An irrevocable trust permanently transfers ownership of assets to the trust. The settlor cannot revoke the trust or control the property. For this reason, most people choose a revocable trust instead. However, some people favor an irrevocable trust because it can assist in nursing home planning.

4. Transferring Assets to the Trust

Since a revocable trust holds the estate and assets of the settlor, it takes a lot of paperwork to set up a trust. 

When creating a trust, make a list of all the assets you own. This can include the land you own, large items like your home or car, small items such as your jewelry, or financial assets such as stocks and life insurance properties.

Once you have listed your assets, you will need to find paperwork for all the assets, including automobile titles, property deeds, stock certificates, or life insurance information. Some of this paperwork will need to be redone as you transfer your assets to the trust. For instance, after you set up a living trust you will need to get a new deed for your house, showing that the house is the property of the revocable trust.

After the assets have been placed in a trust, the settlor can allow a trustee to manage the estate and administration work. This is one reason people choose revocable trusts.

5. Providing for Minor Children

If you have children who are under 18 years old, you must create a will to name legal guardians for your children in the event of your death. You cannot name a legal guardian for a child in a revocable trust. 

However, you can set up a child’s subtrust within a revocable trust. In this case, the successor trustee would manage the property you leave to the child. 

Setting up a Revocable Trust

If creating a revocable trust seems like the best way to protect your assets, our team can advise you on all the details that go into the creation of a trust. Contact us to learn more.

Future Financial Security: How to Set Up a Trust Fund in 7 Simple Steps

how to set up a trust fund

In the United States, less than 2% of the population receives a funds by a trust designation. 

Typically trust funds are inherited by the children when a parent dies.  

Passing down your money and property can be a difficult thing to deal with. However, preparing for this step can help you manage where it all goes and how you can help others. 

Continue reading to discover how to set up a trust fund in 7 simple steps! 

1. Choose Your Trust Fund 

There are a variety of trust funds that you will have to choose in the beginning stages of learning how to set up a trust. 

Revocable trusts allow you to control all of the assets and can make changes at any time. Irrevocable trusts happen when you give control of assets to a beneficiary. Other common trusts can be for educational purposes only while others can help people with disabilities.

Think about the purpose of your trust fund during this stage and consider charities during this step.

2. Select a Trustee

The trustee of your trust fund is the person that you will appoint to have power over your assets.

Some people use financial institutions as a trustee. Most people, however, assign a trusted friend or family member as the trustee. Whoever the trustee is, they will have power over your assets. They must be a person that you can rely on to make payments and help others, if necessary. 

If you don’t have a strong relationship with someone or can’t rely on them with basic responsibilities, you should look for another option. Some people use their attorneys to help find a trustee that can pursue your wishes. 

3. Include What’s Necessary

After you have identified the correct type of trust fund for your assets, you must write down a couple of details.

For a trust fund to work, you will need a trust creator, which is typically your role. You will also need to identify the property and assets in the trust along with the beneficiaries. This part will help family members get exactly what you intended them to. 

Throughout all of this, you will need a trustee to administer the entire process. You can take on this role for the remainder of your life or appoint someone else. Typically the person you appoint can only execute your wishes once you’ve passed away or become incapacitated.  

It is important to keep in mind that the distribution of your assets will depend on your spouse and children. 

4. Solidify the Details and Make It Official

Figuring out the details mentioned above may take some time, especially if you have never considered them in the past. 

After you have identified who will get what once you pass on, you will have to make it official. Typically a professional estate or trust attorney delegate this process. Our company has a team of excellent attorneys that can help you in the Wisconsin area. 

Finding a local attorney is crucial because they are well versed in local and state laws. With an attorney by your side, your trust fund can be completed. 

5. Put Away Your Money 

Now that you’ve gotten the details finalized, you can begin putting your money where your mouth is.

For someone to inherit wealth from a trust fund, there must be funds available. You can take your documents to a financial business or trust fund bank account. You can either deposit money into the fund over time or put a lot of money away at once. 

When putting away your money you should also consider your retirement plans. Overlooking retirement may leave you short on money in the future. Talking with your attorney can help you determine the best funding method for your lifestyle. 

6. Register With the IRS

Putting your money into an account will require a bit more documentation.

When you put money into an account, you must register it for tax reasons. Some trust funds that you create will need to have a unique taxpayer identification number. You must have this when filing taxes and taking care of legal work. 

7. Talk With Your Trustee

Throughout the process of setting up a trust fund and even beyond, you should be communicating with your assigned trustee.

Talking with your trustee can help them get a better understanding of your wishes and what you want your assets to go towards. Having an honest relationship is important if you don’t want your money and property to go elsewhere. 

After a death, handling wills and trust fund information can become overwhelming. Talking to your trustee beforehand can also enlighten them as to how the process works and what is expected of them. Helping your trustee along the way is recommended for smooth transitions during tough times.  

Learning How to Set up a Trust Fund Is Easy 

There will come a point in time when your children will inherit your money.

Learning how to set up a trust fund now can ensure that they receive the money and you know exactly where it is going. 

If you have property or money that you want to give to charities or family members, you must appoint a trustee to carry out your wishes. Typically, trustees consist of family members and trusted friends. You should talk to them about what is expected of them and where you want your assets to go. 

Don’t be afraid to get guidance from an attorney. They can help make this process go by quickly and stress-free.  

Be sure to check out our blog and contact us for all of your legal needs in the future! 

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.

Can I make changes to my living trust?

Estate planning worksheet for living trustEstate planning comes with a lot of questions; after all, estate planning is an important and beneficial action for the sake of the estate owner and their family and friends. Drafting legal documents, deciding what legal documents are right for the situation, modifying the estate planning documents…estate planning is a continual process that fluctuates as your life changes.

When those changes occur, the question “can I make changes to my estate planning documents?” is the typical response. Since a will is the most common estate planning document, it is common knowledge that the document can be altered. A revocable living trust is a less commonly used document and comes with its own set of questions—especially when modifications are needed.

What is a revocable living trust?

A revocable living trust is a legal document that outlines your assets and distribution. In a living trust, all assets are placed in a living trust and a trustee is appointed to manage the assets. Typically, the trustee is the estate owner during their lifetime and is transferred to another party or parties when necessary. Any adult or corporation can be named trustee in a revocable living trust.

Unlike a will, a revocable living trust is a private document. The biggest benefit of a revocable living trust 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.

Should I have a will even if I have a revocable living trust?

A will should be drafted even in situations where a living trust is in place. A will can detail instructions for any assets not covered under the revocable living trust and appoint a guardian for minors. Detailing instructions for support of those minors can be included in the revocable living trust.

Can I make changes to a revocable living trust?

A revocable living trust can be modified or revoked after drafting. Contact a lawyer for information on how to do so, 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.