Trying to figure out what your estate plan is going to look like? People often rely on a will, but what about a trust? Trusts are useful tools for nearly any estate plan, and the most common form of trust used in estate planning is a revocable living trust. What are the pros and cons of revocable living trusts? Collins Law can help you out there.
What Are the Advantages of a Revocable Living Trust
Wills are nice and are the bare minimum that you should be doing, but a good well-rounded estate plan will also have a trust in place, and the trust type that is most commonly used is a revocable living trust.
The living part means that you are still alive when you create it, and the revocable part means that you can potentially dissolve the trust and regain control of the assets after you create it, but there are other benefits as well.
- Avoid Probate—Many people want to avoid probate court. This means assets go to loved ones faster and potentially with less cost. A trust will avoid probate.
- Incapacitation Protection—If you become incapacitated a trust will allow a successor trustee to continue to manage assets during your incapacitation.
- Simplify Out-of-State Property—Out-of-state property can make estate planning messy, but a trust can clean that up and ensure that your assets don’t have to go through multiple probate courts.
Is Probate Required in Wisconsin?
Drawbacks to a Revocable Living Trust
There is never a perfect solution for everybody, and there are some minor drawbacks to a revocable living trust that you should be aware of.
- No Tax Benefits—Just like with wills, a revocable living trust doesn’t help you avoid estate taxes. Other trusts can but are subject to further restrictions that will be unfavorable to some.
- You’ll Need Help—The trust will have to be managed separately from your other assets, and you’ll also want an experienced lawyer to help you set up your trust in the first place. Of course, a good will should also have the help of a lawyer too. For this reason, we still strongly recommend a revocable living trust to most people who are building their estate plan.
What is the Difference Between a Will and a Trust in Wisconsin?
Should You Ever Consider an Irrevocable Trust?
We’ve been talking about revocable living trusts, but what about irrevocable ones? Are they ever a thing you should consider? The problem with an irrevocable trust is right in the name. Once the assets are put into an irrevocable trust, then they can’t come out. They will be under full control of the trust. Some changes can be made but they are limited.
This type of trust is useful however if you want to lock in estate taxes, protect your assets from creditors, or become eligible for specific government programs. An irrevocable trust is often used alongside revocable trusts in larger estates. An experienced estate planning attorney like those at Collins Law will be able to help you determine the right path for your estate plan.
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