In Wisconsin, irrevocable trusts allow beneficiaries to avoid probate and different types of taxes after the grantor dies. The grantor's assets are transferred to a trustee while he is alive. The trustee is responsible for managing the assets. Wisconsin law states that in most circumstances, once placed in a trust, the assets cannot be taken out.
Wisconsin laws state that once an asset is placed in an irrevocable trust, it is no longer considered the grantor's property. Examples of assets are property, stocks, bonds, pension plans and life insurance policies. This means that creditors cannot go after the money in the trust. After the grantor dies, the assets will not be publicly disclosed because the estate will not go through probate. So, outside of the beneficiaries and the trustee, no one will know what assets the person had.
The grantor's estate is not subject to estate taxes in Wisconsin. Legally, the grantor does not own any assets or have assets in his possession at the time of his death. Assets also are not subject to capital gains taxes -- taxes on the profits from the sale or exchange of assets. The estate will bypass probate and the courts. Transferring certain assets into the trust may be considered gifts. Gifts in excess of $1 million are subject to gift taxes.
Wisconsin irrevocable trusts revolve around the concept of transferring assets to the care and management of independent trustees. Wisconsin law imposes strict rules on trustees. The trustee is not allowed to use the trust for direct or indirect personal gain. She must operate in the best interests of the beneficiaries and the grantor. She must show proper care and supervision of the trust and act prudently at all times. If she does not and the trust fund suffers losses, she will be held liable for breach of trust and have to compensate the beneficiaries.
Many people are uncomfortable with the idea of giving up control of their assets to an outside party. Wisconsin allows grantors to add a safeguard to their trust funds to prevent trustee mismanagement. The grantor can appoint an independent trust protector to supervise the trustee. The trust protector has the right to fire and hire trustees at will. The grantor can set limits to how much the trustee can spend without the trust protector's signature.