In the past few years we’ve had more clients in our Wisconsin offices asking about revocable living trusts and whether or not a living trust is right for their estate planning. While we can’t answer the latter question here (make an appointment to find out if a living trust is right for your situation), we can give you a basic overview of revocable living trusts and wills.
The will is the most common estate planning document. A will is a legal document (find tips for drafting a legal will here) that details your wishes, such as guardianship of minor children, distribution of assets, and who the executor is that carries out your wishes. Other than drafting a will and other important estate planning documents, no other actions may be necessary during the estate owner’s lifetime.
Revocable Living Trust
A revocable living trust is a legal document that outlines your assets and distribution. The living trust is revocable at any time. In a living trust, all assets are placed in a living trust and a trustee is appointed to manage the assets. Typically, the trustee is the estate owner during their lifetime and is transferred to another party or parties when necessary.
A revocable living trust shares similarities to a will. Both legal documents dictate the distribution of your assets and should be established during estate planning prior to one’s death. Also, estate taxes are the same for estates with a will and living trust.
There are some key differences between these estate planning documents, however. A revocable living trust is not a public document, making all matters private. When an estate is in a living trust, the estate does not have to go through probate. All wills have to go through probate, which can take longer (in some cases months or years) and incur more expenses to the estate. Overall, it is easier to create and make changes to a will than it is to a living trust. A living trust has more initial costs during set-up than a traditional will.
What is right for you
Your lawyer can discuss whether a will or revocable living trust, or a combination of both (a “pour over will”), is right for your situation. Make an appointment to get the process started and determine which legal option is right for your estate and your family.