Do You Actually Need a Trust?
You may have heard that a trust can protect your family, avoid probate, and make it easier to pass property to the people you love.
But does that mean everyone needs one? No.
A trust can be a useful estate planning tool, but it should solve a real problem or help accomplish a specific goal. For some families, a will and other basic estate planning documents may be enough. For others, a trust can provide more control over how property is managed and passed to beneficiaries.
At Margerie Law, we help individuals and families in Milwaukee, Wauwatosa, Brookfield, Elm Grove, and nearby Wisconsin communities understand whether a trust makes sense for them.
You do not need to decide which type of trust you need before you call us. We can start with your family, your property, and what you want your estate plan to accomplish.
What Is a Trust?
A trust is a legal arrangement that holds property for one or more beneficiaries.
The person who creates the trust is often called the grantor. The trustee manages the property held in the trust. The beneficiaries are the people or organizations who benefit from the trust.
One person can sometimes fill more than one of these roles.
For example, with a revocable living trust, you may create the trust and serve as the initial trustee. This allows you to continue managing the property during your lifetime.
You can also name a successor trustee who can step in later. After your death, the successor trustee follows the instructions you included in the trust.
That basic structure can give you more control over how and when certain property passes to the people you choose.
Why Would Someone Create a Trust?
There is no single reason to create a trust.
One family may be concerned about probate. Another may want to provide for young children. Someone else may own property in more than one state or want a clear plan for managing assets if they become unable to do so themselves.
A trust may be considered when you want to:
- Provide for minor children
- Control how certain assets are distributed
- Plan for a beneficiary who should not receive an inheritance all at once
- Provide continued management of trust property
- Keep certain trust matters more private
- Reduce the amount of property that must pass through probate
- Plan for property located in another state
- Create a clear process for managing trust assets if you become incapacitated
The important question is not whether trusts are useful. It is whether a trust is useful for you.
We believe your estate plan should be as simple as it can be while still accomplishing what you need it to do.
What Is a Revocable Living Trust?
A revocable living trust is one of the most common trusts used in estate planning.
“Living” means you create it during your lifetime. “Revocable” generally means you can change or revoke it while you have the legal capacity to do so.
Many people who create a revocable living trust continue to control the trust property themselves. They can serve as trustee and manage the assets much as they did before the trust was created.
You also name a successor trustee.
That person can take over according to the terms of the trust if you can no longer manage the trust property or after your death. This can create continuity.
Instead of leaving your family without instructions about what should happen to the trust property, the trust provides a plan for who takes over and what happens next.
Does a Trust Help Avoid Probate?
This is one of the biggest reasons people ask about living trusts.
Assets that are properly transferred into a revocable living trust generally do not have to pass through probate simply to transfer under the trust after your death.
But there is an important word in that sentence: Properly.
Creating a trust document by itself is not always enough. Property that is intended to be controlled by the trust generally needs to be properly connected or transferred to it. This process is often called “funding” the trust.
If important assets remain outside the trust, those assets may still need to be handled through other estate planning documents or legal processes.
This is why we do not want clients to walk away thinking, “I signed a trust, so everything is finished.” The trust needs to work with the property you actually own.
What Does It Mean to Fund a Trust?
Funding is one of the most important parts of creating a living trust. It is also one of the easiest parts to misunderstand.
Funding a trust generally means transferring ownership of appropriate assets to the trust or otherwise arranging those assets so they work with the estate plan.
Different types of property may need to be handled differently. Real estate, bank accounts, investments, insurance, retirement accounts, and personal property do not necessarily follow the same rules.
That is why you should not simply start changing ownership or beneficiary forms without understanding how those changes affect the rest of your plan.
We can help you identify which assets should work with the trust and explain the steps involved. A well-written trust that is never properly funded may not accomplish everything you expected it to accomplish.
Who Should You Choose as Trustee?
Your trustee has an important job.
Depending on the trust, a trustee may manage property, keep records, make distributions, handle expenses, work with financial or tax professionals, and eventually distribute assets according to your instructions.
For a revocable living trust, you may serve as your own initial trustee. The harder decision is often choosing the successor trustee.
Ask yourself who you trust to handle financial responsibilities carefully. The person should be responsible, organized, honest, and willing to follow your instructions.
You should also think about family relationships. The person who is closest to you emotionally is not automatically the best person to manage money or handle disagreements between beneficiaries.
You can also name backup trustees in case your first choice cannot or does not want to serve.
How Can a Trust Help Parents With Young Children?
Parents often focus on who should receive their property.
There is another question that matters just as much: When should they receive it?
Leaving a large inheritance directly to a young person may not be what you want. A trust can provide instructions for how property should be managed for children or other beneficiaries.
For example, you may want funds available for a child’s health, education, support, and other needs while they are young. You can also discuss when and how the remaining property should eventually be distributed.
This gives parents an opportunity to create more guidance than simply saying, “Everything goes to my children.” A trust can help manage the money.
However, parents should remember that a trust does not replace the need to address guardianship for minor children in a will. Your estate planning documents need to work together.
Do You Still Need a Will If You Have a Trust?
Usually, a trust does not make a will unnecessary.
A will can handle important matters that a living trust does not. For parents, one of the biggest examples is nominating guardians for minor children.
A will can also address property that was not properly transferred to the trust before death.
Estate plans involving living trusts commonly include what is known as a pour-over will. Its purpose is to direct certain property remaining in the estate into the trust.
However, relying on a pour-over will is not the same as properly funding a trust during your lifetime. Property passing through the estate may still require probate before reaching the trust.
This is why we look at the entire estate plan rather than treating a trust as a stand-alone document.
Does a Trust Replace a Power of Attorney?
No. A trust and a financial power of attorney can serve different purposes.
A trustee generally has authority over property that is held in the trust. But what about financial matters outside the trust?
You may still have assets, accounts, taxes, contracts, or other responsibilities that require someone to act for you.
A Durable Power of Attorney can give a trusted agent authority to handle financial matters according to the document. A Healthcare Power of Attorney serves another purpose by addressing healthcare decisions.
A complete estate plan may use several documents together because no single document solves every problem.
What Is an Irrevocable Trust?
An irrevocable trust is different from a revocable living trust.
As the name suggests, an irrevocable trust generally cannot be freely changed or revoked after it has been created and funded.
These trusts may be used for specific estate planning goals and can involve more complicated legal and tax considerations. Giving up control over property can have significant consequences.
That is why an irrevocable trust should not be created simply because someone heard that trusts “protect assets” or reduce taxes.
You should understand exactly what the trust does, what control you are giving up, and why the strategy makes sense for your situation.
For many families looking for a straightforward estate plan, a complicated irrevocable trust may not be necessary.
What Doesn’t a Revocable Living Trust Do?
Trusts are useful, but they are sometimes marketed as if they solve every estate planning problem. They do not.
A standard revocable living trust does not automatically protect your property from every creditor. It does not automatically reduce your income taxes. It does not replace your will, Healthcare Power of Attorney, or Durable Power of Attorney.
It also does not eliminate every responsibility after death.
A successor trustee still has work to do. Property needs to be managed. Bills and valid obligations may need attention. Records may need to be kept. Tax matters may need to be addressed. Eventually, property must be distributed according to the trust.
A trust can make certain parts of an estate plan work differently. It does not make estate administration disappear.
Understanding these limits can help you decide whether the benefits of a trust are valuable for your family.
What About a Special Needs Trust?
Some families need a different type of trust because a beneficiary has a disability and receives, or may receive, means-tested public benefits.
A special needs trust can help families plan for additional financial support while taking those benefit rules into account. These trusts require different considerations from a standard revocable living trust.
The source of the money, the beneficiary’s circumstances, public benefits, trustee decisions, and the type of trust can all matter.
If you are planning for a child or other loved one with disabilities, special needs planning should be discussed separately rather than assuming a standard living trust will address those concerns.
Frequently Asked Questions About Trusts
Does everyone need a trust?
No.
Some people have very good reasons to create a trust. Others can accomplish their estate planning goals with a will, powers of attorney, beneficiary planning, and other documents.
We can help you compare the options based on your actual situation.
Is a trust only for wealthy families?
No.
Wealth is not the only reason someone may use a trust.
Families may consider trusts because of young children, probate concerns, privacy, property ownership, or the need for continued management of assets.
The value of your estate is only one factor.
Will I lose control of my property if I create a revocable living trust?
A properly structured revocable living trust can generally allow you to continue managing trust property during your lifetime while you are able to do so.
This is very different from certain irrevocable trusts, where giving up control may be part of the arrangement.
Can I change my living trust later?
A revocable living trust is generally designed so it can be amended or revoked while the person who created it has the legal capacity to make those changes.
Your attorney can help you update the trust when your family, property, or wishes change.
Can I be my own trustee?
With many revocable living trusts, the person creating the trust also serves as the initial trustee.
A successor trustee is then named to take over when required under the trust.
Can my children be beneficiaries?
Yes.
A trust can be created for children and can include instructions about how trust property should be managed and distributed for them.
This can be especially helpful when children are still minors or when you do not want an inheritance distributed all at once.
Can I put my house in a trust?
Real estate can often be part of a trust plan, but the property needs to be handled correctly.
Before transferring a home or other real estate, discuss the transfer with your attorney so you understand how it affects ownership and the rest of your estate plan.
What happens to my trust if I become incapacitated?
A properly prepared and funded revocable living trust can provide instructions for a successor trustee to manage trust property if you can no longer do so.
Other assets and decisions may still need to be addressed through powers of attorney and other estate planning documents.
Is a trust private?
A living trust can provide more privacy than property passing through a probate proceeding because the trust itself does not generally become a public probate record simply because the person who created it dies.
However, that does not mean every trust matter is guaranteed to remain private in every situation.
Does a trust protect my assets from nursing home costs?
Do not assume a standard revocable living trust protects assets from long-term care costs or Medicaid rules.
Long-term care and Medicaid planning involve separate legal and financial considerations.
If this is your concern, tell us before moving assets or creating a trust.
Can a trust own property in another state?
A trust may be useful when planning for real estate located in another state.
How property should be titled and whether a trust helps depends on the property and your overall estate plan.
What happens if I forget to put something in my trust?
Assets outside the trust may need to pass according to beneficiary designations, ownership arrangements, a will, or Wisconsin law, depending on the property.
This is one reason trust funding and periodic estate plan reviews are important.
How often should I review my trust?
Review your trust after major changes involving your family, finances, property, or the people you selected for important roles.
It is also smart to review an older trust periodically even when nothing major has happened.
Can I create a trust online?
An online service can produce documents, but creating the document is only one part of trust planning.
You also need to decide which type of trust fits your goals, choose trustees and beneficiaries, coordinate the trust with your will and powers of attorney, and properly address your assets.
Those decisions are where legal guidance can be especially valuable.
A Trust Should Have a Clear Purpose
You do not need a trust simply because someone told you that everyone should have one. You also should not dismiss trusts because you think they are only for wealthy families.
Start with your goals.
Do you want to provide long-term financial management for your children? Are you concerned about probate? Do you own property that creates additional planning needs? Do you want a successor trustee to be able to manage trust property if you cannot?
Once we understand what you want your estate plan to accomplish, we can determine whether a trust helps.
Sometimes the answer will be yes. Sometimes a simpler estate plan will accomplish everything you need. Either way, you should understand why you are creating each document and how it helps your family.
Talk With a Milwaukee Trust Attorney
A trust can be an important part of an estate plan, but the right plan starts with your family and goals—not with a particular document.
At Margerie Law, we help individuals and families throughout Milwaukee, Wauwatosa, Brookfield, Elm Grove, and nearby Wisconsin communities understand their trust and estate planning options.
We can help you decide whether a trust makes sense, choose a trustee, plan for your children, coordinate your trust with your other estate planning documents, and make sure you understand what needs to happen after the trust is created.
You do not need to know whether you need a living trust before contacting us. Tell us what you are trying to accomplish, and we can help you understand your options.
Call Margerie Law at (414) 254-4784 to talk with a Milwaukee trust attorney. Our offices are located in Wauwatosa and Elm Grove, Wisconsin.
About Us
Hi, I'm Paul and I believe I'm the best estate planning attorney in Brookfield, WI. I help my clients understand their options and put a plan in place to protect their most valuable assets for future generations. Working closely with top financial professionals I help families of all sizes and types plan for tomorrow in order to enjoy today. I proudly serve clients in Milwaukee, Brookfield, Elm Grove, Wauwatosa, and throughout SE Wisconsin. If you need Estate Planning help, a Will, a Trust setup, or are just looking for some life planning advice, give me a call today.
