One error that Wisconsin parents might make in creating an estate plan is passing on assets directly to adult children who might be irresponsible with them. While it is not uncommon for parents to place assets in a trust for the benefit of minor children, they might not think to do so for adult children.
However, many people may lack the knowledge needed to manage a sudden inheritance. This means they might also not be knowledgeable enough to pick the right financial adviser. Others might be spendthrifts. Some people might even struggle with addictions such as gambling or drugs. In any of these cases, a trust can be set up to manage how assets are distributed to beneficiaries in a way that preserves the wealth.
For example, the beneficiary might receive annual distributions from the trust based on a percentage of its value. Distributions could be tied to a certain milestone such as the beneficiary’s age. A trustee might be given the discretion to decide when and whether distributions happen. Trusts have other uses as well. They might protect assets if a beneficiary gets a divorce or from creditors. A trust is not the right choice for every estate plan, but people should take a clear look at their beneficiaries and consider whether it might be useful.
An estate plan may have a number of other elements. For example, a person might want to create a plan in case of becoming incapacitated. Tools such as financial and health care powers of attorney can appoint people to make those types of decisions if the principal is unable to do so. With these as well as with the will or trust, a person may want to consider discussing specifics with family members. This helps ensure that a person’s wishes are clear to loved ones.