Most people know if they want to control what happens to their money, possessions, real estate, and minor children when they die, they need to make a will. This is a legal contract that spells out what your wishes are regarding the distribution of your property and any minor children. A will is not your only option, however. A revocable living trust may be the right choice for you.
What Is a Revocable Living Trust?
A revocable living trust is a legal entity created by a grantor or trust maker. This trust will hold your assets once you transfer them to the trust. These assets are typically invested, and the proceeds are used by the beneficiary. The trust is deemed revocable as the grantor can make changes at any time.
The trust also has a trustee, who is initially the trust maker. The grantor or trustmaker will usually name a successer trustee as well. This person will manage the trust should you become mentally incapacitated and can no longer manage the trust yourself. The successor trustee will also manage the trust upon your death, either dispersing your assets and closing the trust or continuing to manage it, depending on how you set it up.
Is a Living Will and a Revocable Living Trust the Same Thing?
No. A living will only addresses your medical wishes when you are near death. For example, you may give the directive you do not want life support measures to keep you alive if you are in a vegetative state and not expected to recover.
A revocable living trust only deals with the distribution of your assets; however, the successor trustee can easily take over if you become mentally incapacitated. Therefore, you may wish to have your attorney prepare both a living will and a revocable living trust.
What Are the Advantages of a Revocable Living Trust Over a Will?
There are a few key advantages of choosing a revocable living trust rather than a will.
Even when a Wisconsin resident has a will, their estate will likely still need to go through probate — unless their estate is valued at less than $50,000. Probate is the legal process of ensuring a will is valid and finalizing someone’s estate.
Depending on the size of the estate, whether the court decides if an informal, unsupervised, or supervised probate is necessary as well as other factors, the probate process may be lengthy. Even with smaller estates, the probate process in Wisconsin may take six months, with larger or contested estates sometimes taking two years or more.
With a revocable living trust, your beneficiaries can skip the probate process as long as you have legally transferred all your assets to the trust before your death. Your assets will immediately transfer to your heirs.
Protect Your Privacy
With a will, when you die, the will becomes public. This means anyone can go to the courthouse and request to see the document. If you prefer to keep your financial affairs as well as your heirs and their bequeathments private, consider a revocable living trust instead.
Avoid Court Challenges
While both wills and revocable living trusts may be legally contested, a revocable living trust is generally considered by the public to offer more protection from the courts overturning it and deviating from your final wishes.
What Are the Limitations of a Revocable Living Trust?
If you have minor children, you will still need a will if you want to choose a guardian for said children should you and your spouse die before they come of age. Also, with a revocable living trust, you name a successor trustee. However, this is not the same as an executor, the person appointed in a will to finalize your affairs upon your death. For these reasons, you should always have a will in addition to a trust.
Like most legal issues, deciding whether to create a revocable living trust, will, or both can be complicated. Contact us today to schedule an appointment to discuss your estate planning options.