There is all of this talk about trusts and using trusts to create an estate plan.  But what is a trust and how is it created?

Great questions.

At its essence, a trust involves:

• a settlor(s) who have an intention to create a trust and who fund the trust; and
• a trustee who has a fiduciary obligation to manage the assets of the trust for the benefit of current and future beneficiaries of the trust.

Again, a “settlor” is a person who creates a trust or contributes property to a trust.  In order for a trust to be validly created under Wisconsin law, the settlor(s) of the trust must be of sound mind and 18 years of age or older, and the settlor(s) must indicate an intention to create a trust.  In order to be validly created under Wisconsin law a trust must also generally have an ascertainable beneficiary/beneficiaries, the trustee must have duties to perform, and the same person may not be sole trustee and sole beneficiary.

After meeting these requirements a trust is created if:

• a settlor transfers property to another person as trustee;
• an owner of property declares that he or she holds certain property as trustee (provided the owner of property is not sole trustee and sole beneficary); or
• a declaration by any person that they intend to create a trust accompanied by an expectation that property of the person or others will be transferred to the trust.

Again, once a trust is created and funded by the settlor(s), the essence of a trust is a trustee who has a fidicuary obligation to manage the assets of the trust for the benefit of current and future beneficiaries of the trust.  Put another way, a trust involves the management of trust assets by the trustee on behalf of the trust’s beneficiaries.

[Legal advice not only involves an understanding of the law, but the application of the law to a particular set of circumstances or facts. Typically blog posts are imperfect tools to address the subtlety and exceptions of the law that may apply in particular situations. As a result, the information in this blog post does not represent legal advice. If you are in a situation where you need or desire legal advice, we would be happy to help. Check out our Contact Us page, and feel free to set-up a no-charge initial consultation.]