Formulating a map for how you want your estate to look like is a smart choice at any age or stage of life. Before dipping a toe with an attorney for estate planning Madison WI, it is a good idea to have an idea about some of the common elements that make up such a plan.
One device lawyers may recommend is starting a trust. While there are a few different trust avenues to explore, understanding the differences between a joint and primary trust before your estate planning meeting may help you formulate a plan on how you wish to proceed.
Joint Trust
After you wed, your estate may look a lot different than it did prior. When a couple decides to establish a joint trust Madison, WI, it means their names are both listed. In this type of financial tool, money and property are pooled and combined. Marital property, in its totality, is held within the trust. The tax benefits extend beyond either spouse to both. Therefore, anything deposited in this type of stronghold can be withdrawn by either party. This also means that if a couple chooses to divorce, the trust will be considered community property and split according to the marital division rules of your state.
Primary Trust
Spouses may further benefit from holding primary or individual trusts. These would be two different trusts, one in each spouse’s name. This separation allows one spouse to stash away more property, thus, reaping more tax benefits. When filing taxes jointly, if the spouse who makes more income has an individual trust, the property within is safe from being taxed. In doing this, it may lower the amount of total income before taxes, putting them in a lower tax bracket. Couples who come into the marriage with significant individual asset holdings can use an individual trust Madison, WI, to keep the property separate. If the couple divorces, these trusts remain with the person who holds them. This may help in the case of second marriages and keeping the property sheltered for first-marriage beneficiaries like natural children.
When embarking on estate planning Madison, WI, having a basic understanding of trusts is helpful.
