A transcript, lightly edited for readability, of a Real Life Law segment from Gardiner Koch Weisberg & Wrona, originally broadcast on 96.1 WLKG in Lake Geneva, Wisconsin.
Transcript
People tell me they don’t have enough money for a trust and shouldn’t have one. That may be so. But there are plenty of reasons to have a trust beyond financial ones. And sometimes people think they have a trust for tax reasons when they really don’t.
A trust is simply a vehicle, a legal entity that holds property. It holds that property based on what is essentially a contract setting out the terms of how the property should be held.
Why do people have trusts? Because it’s a separate entity, and to avoid probate. Probate is going to court to divide up assets. You don’t have to go to court if you have a trust and your assets are in it.
One of the biggest problems people run into is that they set up a trust but don’t fund it. They don’t put their assets into it. If the assets aren’t in the trust, you go to probate anyway.
Another common misperception is that a trust will save on taxes. Complicated trusts can help with taxes and allocate things in tax-favorable ways. But for most people, a trust isn’t a tax-saving vehicle. It’s a way to avoid probate and make things easier for their heirs and relatives.
This segment is general information, not legal advice for your situation. Laws change, and every case depends on its facts. To talk with an attorney, call (312) 362-0000 in Illinois or (262) 812-0864 in Wisconsin, or send us a message.
Related: Estate Planning · More Real Life Law segments