Having worked hard to build your wealth and planning to transfer your wealth to your children, you may be concerned about the possibility of how your children's spouses, without prenuptial or postnuptial agreements, may mismanage your children's inheritance if there is a divorce. Fortunately, there are legal means to protect your wealth and ensure that only your children benefit from their inheritance. This blog will focus on leaving assets to your beneficiaries (i.e., children) and not their spouses in a revocable living trust in Wisconsin.  

Issue

When you transfer your wealth as an inheritance or bequest to your children, those assets belong to them. But, in a community property state like Wisconsin, your children's spouses may be entitled to a share of the inheritance if your children are married when you made the bequest and later divorced. Even without a divorce, you may be concerned that your children's spouses may squander your children's inheritance. Creating revocable living trusts for your children is one of the most common and effective ways of shielding your assets from your children's spouses.

Solution: A Revocable Living Trust

A revocable living trust is a legal entity that holds and manages your assets for the benefit of your beneficiaries. Creating a revocable living trust will enable you to transfer and control your assets in the trust, instead of transferring them directly to your children and giving them control. Moreover, you can give specific instructions in the trust document that the assets in the trust must only be used for your children's benefit—and that those assets must not be distributed to your children's spouses if there is a divorce. For instance, if you have just one child and his name is John Doe, you will name the trust "John Doe's Trust."

Additionally, because you are the grantor (i.e., the person or entity that created the trust), you may be the trustee, name one of your children a successor trustee, and continue to control and update the trust during your lifetime. You will automatically relinquish control of the trust when you die, at which point the trust becomes irrevocable and the successor trustee takes control of the trust.

Further, a revocable living trust can protect your children's inheritance from creditors, lawsuits, or bankruptcy claims because the assets held in the trust are not considered your children or their spouses' property. A revocable living trust offers several advantages.

Advantages of a Revocable Living Trust

The following are some of the numerous benefits to creating a revocable living trust for your children:

1. You, the grantor, can maintain control and update the assets and instructions in the trust during your lifetime;
2. The assets in the trust avoid probate, which will save time and money;
3. The trust remains confidential;
4. The trust, based on your specific instructions, can prevent your children's spouses from interfering with the assets in the trust; and 
5. The assets in the trust are protected from your children's creditors, lawsuits, or bankruptcy claims. 

In conclusion, creating a revocable living trust is probably the best option for you if you plan to transfer your assets to your beneficiaries and not their spouses in Wisconsin. 

To learn more about updating or creating a new revocable living trust, contact Prestige Law Office, LLC. The firm handles estate planning for Wauwatosa, Pewaukee, Brookfield, Waukesha, Kenosha, Racine, Whitefish Bay, and the greater Milwaukee area. Contact the firm to schedule a consultation.

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