Trusts vs. Wills in Wisconsin Estate Planning: What’s the Difference?

When it comes to estate planning in Wisconsin, understanding the differences between trusts and wills is essential for effective asset management and distribution. Both legal tools serve to specify how an individual’s assets will be handled after their passing, yet they do so in distinct ways. Here, we will explore the key differences between trusts and wills, helping you make informed decisions for your estate planning needs.

Understanding Wills

A will is a legal document that outlines how you want your assets to be distributed upon your death. It allows you to name beneficiaries, choose guardians for minor children, and specify funeral arrangements. In Wisconsin, a will must be signed in front of two witnesses to be valid.

One of the primary characteristics of a will is that it goes through a legal process called probate. This process can take several months and may require court approval, which can add to the complexity and expense of settling the estate.

Understanding Trusts

Trusts, on the other hand, are legal arrangements where a trustee holds assets on behalf of beneficiaries. There are various types of trusts, but the most common for estate planning are revocable living trusts. Unlike wills, assets placed in a trust bypass the probate process, allowing for quicker distribution to beneficiaries.

A trust provides greater privacy as it does not become a public record when a person passes away. Additionally, trusts can include specific instructions for managing assets, which is particularly beneficial for minor children or beneficiaries who may not be financially responsible.

Key Differences Between Trusts and Wills

• Probate Process: Wills must go through probate, while trusts allow for direct asset distribution.
• Privacy: Trusts maintain privacy, whereas wills become public documents.
• Management During Incapacity: Trusts can manage assets during a person's lifetime if they become incapacitated, while wills only take effect after death.
• Cost and Complexity: Establishing a trust can be more complex and expensive initially but can save on probate costs in the long run.
• Flexibility: Trusts can be altered or revoked during the grantor's lifetime, while a will is generally fixed once created unless amended.

When to Use a Will