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Hello, I'm Attorney Thomas Burton and today's question is the following:
“Are revocable living trusts necessary?”
So this is a good question and the answer to this is going to be, it depends upon your situation and your mix of assets. Whether a revocable living trust is necessary or appropriate for your situation is going to depend on what type of assets you have. So in my practice I say there's no one-size-fits-all answer to this question. I don't believe everyone’s situation requires a trust or that, there's no situation that requires a revocable living trust. The best use of a revocable living trust is what we call a will substitute, meaningly use the trust instead of the will as the main vehicle to get all the assets from the person who died to their heirs. The upside to using a trust is you can completely avoid probate on those assets and avoid the time, expense and delay in a probate court which in Wisconsin at a minimum is 6 months and a maximum of two years, but can go even longer in cases where there's a contested probate. The other thing I mentioned is, a trust helps you avoid probate fees. These are fees the Probate Court imposes on your estate to administer your affairs. As you may know the court system is overburdened as it is and a lot of it is dealing with criminal law matters. So they do not really want to deal with your stuff after you die. However, if you do no other planning, they will deal with it, if they have to but in turn, they charge a fee to administer all your assets. So one way you can avoid this is by setting up a revocable living trust to avoid probate upon your death.
Now, revocable trust generally cost a bit more to put together than a will plan, so you will spend a little more upfront to put your trust plan together. That's why in my opinion it's worth it If you save money on the back end by avoiding probate. If you have a very small estate, perhaps it's not worth it to you or if you have assets that can be avoided and by small estate I should say, in Wisconsin $50,000, is the probate limit. If you have above that amount, you're going to have to go through probate with probate assets, but below that, it may not be worth it to you to spend the money, to do the trust type planning. There are other ways to avoid probate which you can discuss with a good estate planning attorney such as using beneficiary designations on certain accounts and this can work well as long as it's part of your comprehensive estate plan.
So again, your question of ‘Are revocable living trusts necessary?’, I would say it depends on your situation, but they can be a great part of a comprehensive estate plan. If you're wanting to learn more about the difference between a will and a trust you can check out my free one-page guide will versus trust decision-making guide, is the one-page guide that kind of walks you through the steps of your assets of what's important to you and helps you decide whether a will or a trust is best for you. I'll put a link to the guide in this video.
Great question and thank you for asking.
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