Marital Property Agreement: Funding a Revocable Trust Without Probate

November 1, 2016

In Wisconsin,a marital property agreement enables married couples to fund a trust at death while avoiding the need for probate. Unfortunately, this entitlement applies only to married people as it is part of Wisconsin’s Marital Property Code. Nonetheless, it offers a powerful estate planning tool and bears consideration by married couples.

A Trust Alone Is Not Enough

As estate planning lawyers, we spend a significant amount of time with our clients reviewing asset information, discussing trust funding, and avoiding probate. (Trust funding involves the process of transferring titles of assets to the trust name or updating beneficiary designations to name the trust, where appropriate and recommended.)

Our experience is that a trust by itself will not avoid the need for probate at death. An analysis and discussion of assets and goals is important to make sure your estate plan is complete, accomplishes your goals, and avoids probate.

Transfer of Property at Death Without Probate

One item often overlooked by many inexperienced attorneys, almost all non-attorneys, and even some established estate planning attorneys is funding a revocable trust upon death without probate through the use of a Marital PropertyA law for married persons with respect to ownership and rights in and to assets, property, and income during life and upon death of a married couple. Marital Property law is unique to the State of Wisconsin, but is a form of and based upon many principals contained in Community Property law. Agreement.

When creating a Revocable Trust at Wokwicz Law Offices, we routinely include this important document for our married clients, where appropriate. More importantly, we include this important document at no additional charge or cost when preparing revocable trust plans for our married clients. Although a Pour-over Last WillA written document that sets forth and names the personal representative who will be in charge of overseeing the probate process and names the specific bequest and residual beneficiaries of property who are to receive and inherit assets and property through probate. A Will does not avoid probate, and must be properly drafted and executed to be legal. A Will can also avoid the use of a surety bond in many instances and can help utilize an “informal” Wisconsin probate process if it has the proper clauses and attestation clause. and Testament is still a routine part of a trust estate plan, the non-probate marital property agreement will normally step in before a pour over will is required.

Wisconsin Law Provides for Non-Probate Funding to Revocable Trust

Wisconsin law provides for non-probate funding in Section 766.58(3)(f) of the Wisconsin statues, through the use of a properly drafted non-probate martial property agreement. As such, we make sure our clients take advantage of this probate avoidance statute when creating Revocable Trust plans.

Through a properly drafted non-probate marital property agreement, we know that our clients who create a revocable trust will normally avoid probate, except for some narrow exceptions (such as funding real property owned outside of Wisconsin.)

In cases where our clients do not want to take the time or effort to fully fund a trust prior to death, the use of this “non-probate agreement” to fund a Revocable Trust after death is essential for avoiding probate.

What Does a Non-Probate Agreement Generally Cover?

In Wisconsin, a non-probate marital property agreement will generally enable the following asset transfers:

• assets that would have been probate assets, such as Wisconsin real property, bank accounts, stocks, and other assets, at death to a joint Revocable Trust or to each married person’s individual trust;
• marital property and individually owned property, without probate, upon death;
• property on the first spouse’s death and on the second spouse’s death; and
• property owed at the time the trust is created, and property acquired after the trust has been created.

Peace of Mind

A non-probate funding marital property agreement offers peace of mind for married couples where trust funding is not fully achieved during lifetime and avoiding probate is a goal. They can rest assured that probate will be avoided except in very limited cases (as detailed above and as analyzed during the estate planning process).

When the goal is avoiding probate and funding a revocable trust, our estate planning lawyers normally prepare a probate avoidance marital property agreement. Such an agreement sets forth that any assets that would normally go to probate on the death of the first spouse and second spouse will instead go to the revocable trust after death without probate.

Even if a client fully funds a trust during lifetime, a marital property agreement can still avoid probate where a mistake is made or assets change in the future and are not properly funded.

Marital Property Agreement: Not a “One Size Fits All” Form

As with most estate planning, the use of this form still requires an analysis of our client’s assets and goals. Certain assets require funding of the trust during lifetime to avoid probate. Assets such as real estate, condominiums, and time shares owned outside of Wisconsin may have to be funded prior to death to avoid probate. When our clients move to another state, we suggest that the trust be funded as other states do not recognize Wisconsin’s non-probate funding marital property agreement laws.

Disadvantages of Not Funding a Trust During Lifetime

Funding a trust during lifetime makes the process easier on the survivors and saves some future attorney fees and costs. Wisconsin real estate is easily transferred to a trust following the death of a spouse or both spouses through the use of the non-probate marital property agreement. However, other assets such as stocks, bank accounts, and investment accounts may require some additional work. Those other assets may even incur a filing fee if the asset holder requires a “summary confirmation” order. At our law firm, we always discuss with our clients the process and the advantages of funding a trust during lifetime.

Let Us Help You

At Wokwicz Law Offices, we serve our clients by preparing the right estate planning solution for their needs, assets and goals. We welcome you to get in touch with us to discuss if a marital property agreement is right for you.