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living trust wisconsin

Estate planning is incredibly important, yet it remains a bit of a mystery to many people. How exactly should you go about protecting your assets so your family is in the best position when you die? There are many ways to do it, but one way is to create a living trust.

This guide will take Wisconsin residents step by step through how to make a living trust in the state, plus look at what situations might be best served by a living trust. If you’re making a living trust or doing any sort of financial planning, it might make sense to work with a financial advisor. SmartAsset’s free financial advisor matching service can help you find an advisor who is right for you.

How to Create a Living Trust in Wisconsin

Here’s how to create a living trust in the Badger State:

  1. Figure out which type of trust you need. If you’re a single person, a single trust is probably the best choice. If you’re married, you might be better served by a joint trust. Both you and your spouse will be able to put your own property into a joint trust, plus it can be used to store jointly owned property, like cars or homes.
  2. Take stock of your assets. Know exactly what you own and what you want to store in your trust. Much of what you own can go in the trust, including stocks and bonds. Also take the time now to gather relevant property documents, like car titles and home deeds.
  3. Decide who will be your trustee. This is the person who will manage the trust assets and transfer the trust property to your beneficiaries after you’ve died. You can pick yourself as trustee for now, but you’ll need a successor trustee who will take over when you die or if you become incapacitated. Also take this time to decide what you want to pass on to which heirs.
  4. Draw up the trust document. You can use an online program to do it yourself or get the help of an attorney.
  5. Sign the trust document before a notary public.
  6. Put your property into the trust, a process known as funding the trust. You can also do this yourself, but it does take some paperwork, so a lawyer may be helpful.

What Is a Living Trust?

A living trust is a legal framework into which property and assets can be placed. It is established by a document, and it has a trustee who is in charge of managing the trust property and distributing it to the proper beneficiaries. You can make yourself the trustee or pick someone else.

One type of living trust is an irrevocable living trust, which is permanent and cannot be easily modified. Property can’t be taken out of it without first getting permission from everyone named in the trust. The trust wholly owns the property placed in it, and taxes are paid on the trust’s property through the trust.

A revocable living trust, by contrast, offers some flexibility. It can be modified at will and property can be taken out at the discretion of the person who created the trust, also known as the grantor. The grantor maintains ownership of any property stored in the trust and pays taxes on it as usual.

How Much Does It Cost to Create a Living Trust in Wisconsin?

The amount you’ll spend to create a living trust depends on the method you use. The first option is to write the document yourself, likely using an online program. This option will likely cost a few hundred dollars or so. The other option is to hire an attorney, which will probably cost more than $1,000.

It is definitely cheaper to write the document yourself, but there are some dangers to DIY estate planning. There are a lot of details and moving parts involved that you’ll have to be aware of. This requires significant time and research. If you’re not confident in your abilities, hiring an attorney may be a preferable solution. Just make sure you find a lawyer who is a trust specialist, not just an estate planner, and that you know the attorney’s fees upfront so there are no surprises.

Why Get a Living Trust in Wisconsin?

living trust wisconsin

The most common reason you’d get a living trust in Wisconsin is to avoid going to probate court. Probate is a process that most estates must go through to establish the validity of a will. It can take a lot of time and be an invasion of privacy. Wisconsin has not adopted the Uniform Probate Code, which in some states greatly simplifies the probate process. For this reason, a living trust may be especially useful in Wisconsin.

A living trust can also make it easier to specify when you’ll leave property to a minor child, as the property can stay in the trust under the stewardship of the trustee until the child reaches legal age. Also, if you have a living trust and become incapacitated, the presence of a trustee makes conservatorship unnecessary.

Who Should Get a Living Trust in Wisconsin?

Many people think that living trusts are just for the wealthy. But because Wisconsin has not adopted the Uniform Probate Code, even smaller estates may benefit from using a living trust in the Badger State. That said, estates in Wisconsin that are worth less than $50,000 undergo a simplified probate process, so a living trust may not be worthwhile for those estates.

A living trust does cost more and take more time to set up than simply writing a will. It also could cause more complications after you die, as it provides a longer window of time for legal challenges. Be sure to take these downsides into account when deciding whether or not you should get a living trust. If you decide against a living trust, remember that you’ll still need an estate plan.

Living Trusts vs. Wills

Even if you create a living trust, you’ll still need a will to direct any property that’s not placed in the trust. Additionally, a will is capable of the following items that a living trust is not:

  • Designating an executor
  • Providing instructions on how to pay taxes and debts
  • Naming managers for children’s property
  • Establishing guardianship for children who are minors

Here is a more in-depth comparison of the abilities of living trusts vs. wills:

Living Trusts vs. Wills
Living Trusts Wills
Names a property beneficiary Yes Yes
Allows revisions to be made Depends on type Yes
Avoids probate court Yes No
Requires a notary Yes No
Names guardians for children No Yes
Names an executor No Yes
Requires witnesses No Yes

Living Trusts and Taxes in Wisconsin

living trust wisconsin

A living trust likely will not impact your taxes, but it can’t hurt to know about the Wisconsin estate tax and the Wisconsin inheritance tax as you plan your estate.

There is no estate tax or inheritance tax in Wisconsin. The federal estate tax may come into play, but it only applies to estates that are worth at least $11.18 million, or $22.36 million for couples.

The Bottom Line

For Wisconsin residents, making a living trust requires some work, but it may be worth it. The state has not adopted the Uniform Probate Code, so having a living trust could be very useful for your heirs after you’ve died, as it will allow them to avoid a potentially lengthy and costly probate process.

You can create your living trust yourself, but, like any estate planning activity, it can get tricky. Finding a lawyer may be the most responsible course of action.

Estate Planning Tips

  • Estate planning is important, so it may be a good idea to find a professional to help you out. Finding the right person is key though. SmartAsset can help you do just that with our free financial advisor matching service. All you have to do is answer a few questions about your preferences and financial situation and we will find match you with up to three suitable financial advisors in your area. We have fully vetted all of the advisors on our platform and ensured they don’t have any disclosures. Each of your matches will then reach out to you to talk about your financial planning goals and how they might help.
  • A 401(k) plan can’t go directly into your living trust, but you can name the living trust as a beneficiary. If you do this, your benefits will pay directly into your trust after you die.

Photo credit: ©iStock.com/PeopleImages, ©iStock.com/LPETTET

Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, Mic.com and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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