LIVING TRUST …is it right for you?

A Revocable Living Trust is simply an estate planning document whose Grantor (who may also be the Trustee) retains the right to alter or amend the trust at any time. Assets can be transferred to the trust at anytime during the Grantor’s lifetime or upon his death.

Upon the death of the Trustee, a successor Trustee will distribute the assets of the Trust to the beneficiaries according to the instructions contained in the Trust document. Since this document does not require court supervision, probate can be avoided, provided all of the Grantor’s assets have been placed in the Trust.

Make a Difference in your Future . . . Today!
The Living Trust is an effective and valuable method of transferring wealth and minimizing administration expenses. This Trust is an instrument that you create during your lifetime that is effective immediately upon creation. Conversely, a Will is only effective at the time of the Grantor’s death. All assets, such as real estate, stocks, bonds, bank accounts and the like should be transferred into the Living Trust.

The Grantor may name himself as the Trustee, or a third party if so desired. Usually, if the Grantor acts as Trustee, there is no additional requirement for filing a separate income tax return. The Grantor may also appoint a successor Trustee to the Living Trust to carry out the duties of the Trustee if the Grantor was not able to do so because of disability or inability to act. Since this Living Trust is revocable, the Grantor may amend, alter or terminate the trust at anytime during his or her lifetime.

If a person decides to set up a Living Trust, an attorney may draft the terms in a trust agreement to fit the client’s particular needs and desires.

What Does a Living Trust Provide For?
The Trust provides that during the Grantor’s lifetime, the Trustee shall pay to the Grantor all of the Trust income during the course of a year, together with any amount of principal that the Grantor may wish to remove from the Trust from time to time. The Grantor continues to report the income on his own individual tax return, as long as he is acting as the Trustee.

The Trust will provide that upon the Grantor’s death, distribution will be made to the beneficiaries designated in the Trust. The advantage of this arrangement is that if all or most of the Grantor’s property is placed in the Trust, there would be no probate administration necessary to facilitate the transfer of assets to the Grantor’s beneficiaries. Very often, Living Trusts may facilitate a more prompt distribution of assets than if transferred by Will under probate procedures. In some cases, the Trustee may be named beneficiary of life insurance policies, IRA accounts and/or other types of retirement plans. We will discuss with you the tax advantages and disadvantages.

Can the Living Trust Substitute for a Will?
No. While the Living Trust has many of the characteristics of a Will, it should not be considered a substitute for a Will.

The “pour-over” Will is a companion document and transfers whatever assets may be in the name of an individual at the time of death to the Living Trust. For example, inheritances, gifts and the like given to named individuals and not yet transferred to his Trust would be “poured” over to the Trust by the terms of his Will. Indeed, a “pour-over” Will serves to provide that there will be “insurance” that the Living Trust will ultimately distribute all of the Grantor’s property.

In Wisconsin, married couples may use a Revocable Trust to hold assets classified as individual property in order to prevent mixing it with marital property.

What Other Documents Should You Have?
In addition to a Living Trust you should consider a Durable Power of Attorney for Financial Affairs or Power of Attorney for Health Care, as well as a Marital Property Classification Agreement. These may all be used to compliment the Living Trust estate plan.

What are the Other Advantages of the Living Trust?
In addition to the simplification of administration procedures, a major advantage is that during your lifetime should you become disabled, a successor Trustee can step into your shoes and carry on your business on your behalf. Very often this may eliminate the necessity of cumbersome and expensive guardianship proceedings.

Since a Living Trust is not subject to the provision of a public record, such as a Will, a Living Trust may maintain confidentiality with respect to one’s estate, its size, contents and distribution. A Living Trust, under certain circumstances, may also help minimize federal estate taxes.

We suggest that you avoid sales people who call or invite you to attend free seminars with the thought in mind of “selling” you a Living Trust. Remember, there is no single, simple Living Trust adaptable to all people. Your estate plan should be customized to your personal desires. An improperly drafted Living Trust can cost you or your loved ones a great deal of unnecessary taxes, expenses and delays.

To determine whether a Living Trust is suitable for your particular estate plan, we invite you to contact one of our attorneys at Clair Law Offices, S.C. We would welcome the opportunity to review your existing estate plan and make suggestions. The attorneys at Clair Law Offices have many years of experience in estate planning and probate matters.

For more information or specific questions you have, please contact us.

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This information which is based on Wisconsin law is issued to inform and not to advise. No person should ever apply or interpret the law without the aid of a trained expert who knows the facts, because the facts may change the application of the law.