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Having a baby changes your perspective on everything, making you pay close attention to protecting your family. In addition to installing a baby monitor, testing the bath water temperature, and baby-proofing your home, it pays to think about your child’s long-term future. At Borakove Osman LLC in Madison, Wisconsin, our estate planning attorneys are well-

prepared to assist you in planning for your family’s security, even in the face of unexpected events. One of the best ways to do this is to establish a trust as part of a comprehensive estate planning strategy.

Understanding Trusts

While many believe that trusts are only for the wealthy, the fact is that trusts are multi-purpose estate planning tools that can be extremely useful for those with moderate assets as well as those of high net worth. 

A trust is created by the grantor (aka settlor) to put their assets into the hands of a trustee for safekeeping to be managed by the trustee and then distributed to a designated beneficiary. It is critical to realize that the trustee is a fiduciary, bound by law to follow the rules set by the grantor and to prioritize the best interests of the beneficiaries. 

How Establishing a Trust Can Benefit Your Child and Your Family

There are several advantages to removing assets from legal ownership by putting them in a trust. Among other things, this action can protect your child’s inheritance, save money on taxes, and avoid probate. Let’s examine the benefits of a trust individually — trusts can:

Make Sure Your Child Doesn’t Inherit Prematurely

A trust ensures your child will not manage an inheritance before they are ready. Instead, a person in whom you have confidence will be assigned the role of trustee, and that individual will follow your carefully thought-out instructions. You decide at what age your child will inherit the assets directly or stipulate a milestone they must reach before the trust will be terminated, such as getting a college degree.

Avoid Probate

Probate is the legal process through which a deceased person’s will is validated and their assets distributed. The reason probate has a bad reputation is that it can be a prolonged and costly public process, especially for large, complicated estates. If your assets are in a trust, however, you ensure that your child’s inheritance will not be delayed or expensive to process. Instead, funds are directly transferred to your heirs per your instructions.

Potentially Reduce Estate Taxes

For Wisconsin families with significant assets, a trust can be an effective way to minimize estate taxes. By placing your assets in a trust, you have effectively removed them from your ownership, and they are no longer part of your estate. Doing so lessens the value of your estate and potentially reduces your estate tax burden. Ultimately, your child will receive a larger inheritance. 

Potentially Reduce Gift Taxes

Like estate taxes, gift taxes can lessen the amount you pass on. You may want to give your child monetary gifts as they grow up, but if these gifts exceed annual exclusions, they would be subject to federal gift tax. Our attorneys can structure a trust to help you provide gifts to your child in a tax-efficient manner.

Protect Loved Ones with Special Needs

If your child has special needs, it is critical to create a special needs trust (SNT). This trust will provide resources to enrich your child’s life without jeopardizing their eligibility for government benefits like Medicaid, SSD, or SSI. 

Offer Protection from Lawsuits or Creditors

A trust can protect your child’s financial future by shielding their assets from creditors, scam artists, lawsuit settlements or verdicts, or even a divorcing spouse’s claims. By creating a trust, you will insulate your child’s inheritance from these threats.

Contact Our Experienced Wisconsin Trust and Estate Attorneys

At Borakove Osman LLC, we have extensive experience creating trusts for our estate planning clients. Now, when the vulnerability of your new child has you thinking about more than just peek-a-boo and baby wipes, is the right time to contact our capable professionals. We will customize a trust to fit your needs precisely and help protect what is most precious to you.