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Do I Need a Trust? | Estate Planning 101

Attorney Thomas B. Burton answers the following question: "Do I Need a Trust?"

Watch Attorney Thomas B. Burton provide an excellent summary of the benefits and reasons why someone might use a revocable living trust as part of their estate plan.

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Hello and welcome!

I'm Attorney Thomas Burton, I'm an Estate Planning and Asset Protection Attorney here in Wisconsin and this is the question I get asked frequently in my practice - "Do I need a trust?" I was perusing online articles and in fact, it's a question posed to CNN Money, in a retirement series, they have on this topic.

Now I've given my opinion before to people that at my practice, in my law practice, I favor using a trust to avoid the time, expense, and delay of probate but I thought it would be interesting for you to hear how CNN Money discusses this, in a short form, in their retirement planning guide.

They say, "You don't have to be a Rockefeller to need a trust. A trust can be a useful estate planning tool for lots of people but given the expenses associated with opening one, it's probably not worth it unless you have a certain amount of assets", I would say that's a very reasonable explanation but I think the first thing they do there is, make clear that when we talk about trust in the estate planning world, for the vast majority of people the type of trusts we're talking about are not the type set up to avoid estate taxes, like the Rockefellers might have where you have millions and millions or billions of dollars and the planning was done many years ago, primarily for tax reasons.

When we talk about trust for middle-class Americans, we're talking about avoiding the time, expense, and delay of probate because currently in the United States, any person can die and leave up to $11 million in change to someone without estate tax being imposed and that will go up to $12 million in change in 2022 and it's pegged to inflation until 2025.

Just because you're not a Rockefeller and have $100 million dollars, doesn't mean there's still no reason for a trust.

CNN Money says, "Here's a good rule of thumb - if you have a net worth of at least a hundred thousand dollars and you have a substantial amount of assets in real estate or have very specific instructions on how and when you want your estate to be distributed among your heirs after you die, then a trust could be for you! Trusts are also great for minimizing estate taxes or protecting your estate from lawsuits and creditors. Trusts are flexible, varied, and complex; each type has advantages and disadvantages which you should discuss thoroughly with your estate planning attorney before setting one up."

So that does a good job there, I think, in just two short paragraphs discussing trust, and like I mentioned, they even mentioned there can be a trust set up to avoid estate taxes but for the vast majority of middle-class Americans, that's not the type they need.

It's more about thinking about having your assets get to your heirs you choose, in an easy process, without the time, expense, and delay a probate court and as they touched on, if you have real estate, this is often one asset that pulls you into probate and many people who have real estate would prefer to avoid that so that their heirs can administer or sell the property immediately.

CNN Money says, "take note, Assets you want to be protected by the trust must be retitled in the name of the trust. Anything that is not tiled to the trust, when you die, will have to go through probate."

That I think is also very good advice at the end and that's why we focus here, at my office, if we're setting up a trust, we try to get your real estate into the trust right away by re-titling it via deed and then we discuss with you, the process to retitle your bank account into the trust and your other assets and or if you're younger, you can make the assets payable on death to the trust. My preference is to be titled during life and get it all taken care of but of course, the choice is up to you.

CNN Money gives that number of a hundred thousand dollars, if you have at least a hundred thousand dollars in a substantial amount of assets in real estate.

So that, I think, is a reasonable number you can think about using. In Wisconsin, the small estate limit is $50,000, so if you have over $50,000, I don't have a way to avoid probate for you, if you're between fifty and a hundred thousand dollars but I can still see if you're between fifty and a hundred thousand, you maybe think to yourself, I need this money now, I don't want to spend the extra money to set up a trust. I'll just use a will, and pay more to go through probate but the money will come out after I'm gone, out of my estate and I need that money while I'm alive. You know that's reasonable, that's a decision you can make if you're between that fifty and a hundred thousand. Just be aware that in Wisconsin, and by law, the limit is $50,000, so if you have $50,000 of equity in your house, we can't use that transfer by affidavit method to avoid probate. Simplified probate, I should say. You got to go through the full probate but the hundred thousand dollar number, I think, makes good sense for when you should really start thinking about it and then the more money you have, the more trust can save you on the time, expense and probate fees of the probate court because the probate court applies the fee based on the total amount of assets flowing through that they have to administer and that's how they pay the people, at the courthouse to work in the probate office.

Like many things, nothing is free in life. You choose do you want the government to administer your estate or you want to do it privately and I thought this short summary here from CNN Money did a nice job of laying out the things to consider.

Do I need trust, it's a question I get asked all the time, I made this video, hopefully, it's helpful to you. If it has been helpful, please consider giving it a LIKE, so that others can see and benefit from this information.

As always, thanks for watching and we'll see you next time!

© 2023 Burton Law LLC. All Rights Reserved. Transcript and captions provided for ease of access for the hearing impaired. For questions about this topic, or to suggest a topic for a future blog post, please contact the office.


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