Trusts are not only for the rich and famous. They are quite useful in planning out how an estate will be used after a person’s death regardless of the dollar value of the estate. But end-of-life divvying up of assets is not all a trust does.
A trust is simply where one person legally holds assets (money, real estate, etc.) on behalf of another. Several types of trusts are available, and you would have numerous reasons to set up a trust. At Milwaukee Law, we can help you create a trust that meets your individual needs, protects your assets, and protects your family.
Trusts for a Minor Child
Many people leave money to their children or grandchildren in a trust as part of an inheritance. This type of trust is set up to ensure the money is there for the minor’s benefit and covers expenses such as support, education and medical expenses. Once the minor reaches a certain age or achievement level, they may receive money from the trust to do with as they please.
Martial trusts are often set up for tax purposes or for property protection. This type of trusts allows for tax exemption under certain circumstances and can also protect property from or for a spouse should there be adult children from previous unions on the deceased’s side.
Revocable Living Trusts
Revocable living trusts are legal documents that work in conjunction with a will, but are separate from a will, to ensure the wishes of the deceased are carried out. This type of trust is usually set up when property is located in different states and/or to avoid probate attorneys Milwaukee.
Irrevocable Life Insurance Trusts
Irrevocable life insurance trusts (aka ILIT) can be used to move the deceased’s life insurance proceeds outside his or her estate for estate tax purposes.
These trusts typically have an independent trustee who has complete discretion over the distribution of assets of the inheritance. They are set up to provide asset protection for beneficiaries from creditors and/or themselves.
Special Needs Trusts
A special needs trust is a tool that enables a person to leave an inheritance to a person with special needs. Many individuals with special needs receive government benefits. If a special needs individual suddenly were to inherit a large sum of money, it could disqualify them from receiving government benefits to which they are entitled until the inheritance is spent. A special needs trust protects those government benefits while allowing the person to have money from their inheritance.
Most people have a basic understanding of what a will is and may download an online fill-in-the-blanks will to name the recipients of their worldly possessions upon their demise. But naming who rightfully becomes the owner of your assets after you pass on is not a one-size-fits-all form; this type of will may not be the best fit for you. With extensive experience, at Milwaukee Law, we will guide you through this important step in your life planning.
Who Gets What?
The most common use for drawing up a will is to make a legal and binding list of who gets what after the owner’s death. A will states your intentions as to who gets what and how much. It makes divvying up the estate easier for loved ones during the time of grieving. Often disputes arise among the living about inheritance. A will gives all parties involved a legal leg to stand on should that dispute end up in court.
Who Will Raise My Children?
In the event that parents die and leave behind minor children, the parents can go to their untimely graves knowing their children will be well cared for by someone of their own choosing and legally named in their will. Typically, a first and second choice will be named to raise their minor children to cover the unfortunate event that both parents and first-named guardians are involved in the same fatal accident. The second-named guardians may also have the opportunity to step up and raise the minor children in the event that the first-named guardians are unable to fulfill their duty at the time of the parent’s death.
A will can set boundaries and limitations on the time an inheritance is received and for how long it may be used. A parent may wish for their children not to receive their portion of assets until they turn 21. Even then, the parent may want the 21-year-old to receive a set amount in monthly or yearly increments. If there is one vacation home, one boat or one of another asset that the whole family enjoys using, an established trust outlined in the will can divvy up the set time each party has access to the desirable asset.
Various trusts can also be set up via a will to avoid paying inheritance tax—state or federal taxes that can take a chunk out of the inheritance money before your loved ones can enjoy it.