Wills Vs. Revocable Trusts

If you are a resident of Wisconsin and die without estate planning documents in place, state law mandates the manner in which your estate will be distributed, regardless of your wishes. Our attorneys are familiar with the complex federal estate tax laws and work with you to create an estate plan that will maximize the use of credits and exemptions, while at the same time distributing your assets in accordance with your wishes. Two estate planning options are as follows.

Wills

A Will allows you to determine

•    Who will receive your assets upon your death
•    Who should act as guardian for any minor children
•    Whether your beneficiaries receive their gifts from you outright or in trust
•    Who will serve as a personal representative (executor) or trustee and assume the responsibility to pay bills and distribute your estate

A Will may also be used to minimize death taxes by creating trusts to take advantage of various credits and exemptions, such as the Marital Deduction.

Revocable Trusts

Revocable trusts, also known as living trusts, are becoming more popular as a way of managing your assets during your lifetime, including during a period of incompetence or incapacity. Revocable trusts are also preferred for distributing your assets at death while avoiding the probate process.  Many revocable trusts provide that the persons who establish the trust also act as trustee and as beneficiaries of the trust during their lifetimes. 

A revocable trust can be a very effective estate planning tool. Some benefits to creating a trust may include the following.

•    Avoid probate
•    Avoid or reduce death taxes
•    Control the manner in which assets are distributed
•    Maintain family privacy — wills are probated and made public, trusts are not

FAQ

I’m young to and don’t have much money. Do I really need to create a Will?

We all hope to live long and happy lives, but sometimes circumstances are beyond our control.  If you have assets, you should have a Will. If you have minor children, you should have a Will.  A Will helps to protect the loved ones you leave behind in the event the unthinkable happens.

I created a Will years ago. Do I need to update it?

We recommend that you review your estate plan, including your Will, at least every 3 to 5 years.  Wills should be updated periodically to keep pace with the changes in your life, such as the death of a spouse or other close family member, having a baby, buying a house, the divorce of you or a beneficiary, or any other life-changing events.

I am a new resident and have a Will that was drafted in a different state. What should I do?

Each state has its own statutes and tax laws.  Therefore, it is essential that you contact an attorney to have your Will reviewed.  Since Wisconsin is a marital property state, you may need to create a new Will.  Furthermore, if you are currently a Wisconsin resident and are moving out of state, you should contact an estate planning attorney in the state of your new residence to discuss the provisions of your Will that may need to be updated.

If I transfer my assets to my revocable trust, do I still need a Will?

Yes.  Everyone should have a Will.  Even if you have transferred all your assets to a revocable trust, there may be something you have missed.  A “pour-over” Will complements a revocable trust by distributing all of your assets to the revocable trust upon your death.  Also, if you have minor children, a Will allows you to name a guardian in the event something happens to you.

Does a revocable trust save taxes?

Perhaps.  If the trust is active when you die, these assets are includable in your taxable estate.  However, if your estate is large enough to be subject to the federal estate tax, the trust can incorporate tax-saving provisions, such as the creation of a credit shelter trust.