Trusts can be very useful, but they are not for everyone. If you are thinking about opening a Trust, already have a Trust and have questions, or are simply unsure of what a Trust is, here are a few frequently-asked questions and answers.
What is a Trust?
A Trust Agreement is a detailed document that specifies the relationship between parties to manage and distribute assets for the benefit of the beneficiaries. The Trust Agreement sets forth the rules, such as which assets go to whom, when, and how they should be used.
There are three roles in a Trust: the trustor (also known as the grantor or settlor) is the person who creates the Trust and the rules for distributing the assets; the trustee is the person who has control over the assets if the trustor has passed; and the beneficiaries are the people who receive the assets held in the Trust.
Different Types of Trusts in Michigan
There are several types of trusts designed for various situations, including:
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Revocable Trusts – can be changed or revoked by the trustor at any time
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Irrevocable Trusts – cannot be changed or revoked
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Charitable Trusts – for distributing assets to a charity or nonprofit organization
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Special Needs Trusts – to support beneficiaries with any disabilities
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Spendthrift Trusts – to limit financially-irresponsible beneficiaries' access
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Testamentary Trusts – are established through a Will after the testator's death
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Gun Trusts – allow the transference of ownership of firearms
Do I Need a Trust in Michigan?
Despite the belief that a Trust is only accessible after somebody passes away, a Trust can be used at any age for many reasons. First, if you have inherited a generous sum of money or property, putting any assets in a Trust will keep them safe from things such as creditors and estate taxes. Additionally, you can place your own assets in a Trust to protect your children's inheritance. Next, if there is a member of your family with special needs, a Trust will ensure that the assets designated for their care will be used appropriately. Finally, a Trust is a private entity, so its details cannot be made public.What are the Advantages of a Trust in Michigan?
Advantages of a Trust include protecting assets, avoiding the probate process, keeping assets judgment-proof, and receiving tax benefits.
What are the Disadvantages of a Trust in Michigan?
Disadvantages of a Trust include the inability to change the terms if it is an Irrevocable Trust, the amount of paperwork involved, and the costs associated with creating and managing it.
How Do I Terminate or Modify a Trust in Michigan?
Terminating or modifying a Trust depends on the Trust's terms. Some terms make the process easy, and the trustor may retain the ability to terminate or amend the trust up until the moment of their death. Other terms require a complex process for termination or modification and the Trust may not be eligible.
If I Have a Trust in Michigan, Do I Still Need a Will?
Even if you have a Trust, it is advisable to also have a Will for a few reasons. First, you cannot name guardians for any minor children in a Trust; guardians are designated in a Will. Next, if you have assets that haven't been placed in the Trust, a Will helps ensure they go where they were intended, and their disbursement will not be challenged in probate court. A Will also specifies how personal items that may not be in the Trust are distributed.
How Much Does it Cost to Set Up a Trust in Michigan?
The cost to set up a Trust is minimal, but it depends on the extent of the legal services you need. The more complex the Trust, the likelier the cost will increase. In addition, some estate-planning lawyers charge by the hour while others charge a fixed rate. Knowing what is included and excluded in those rates will also help inform you of the total cost.
Do I Need a Trust Attorney in Michigan?
Setting up a Trust is a sound strategy whether you are doing it for financial reasons or to ensure your beneficiaries have all the resources they will need when you are gone.
For simple Trusts, you might be able to use do-it-yourself software or an online service, but to make sure the process is undertaken in a way that the Trust cannot be challenged in court, it is recommended to have an estate-planning attorney prepare it for you.
For a Trust with many assets, multiple beneficiaries, or complex instructions, an attorney experienced in estate planning is necessary to draft, review, and execute it. The laws can be confusing, and anytime you deal with finances, it is advisable to have an experienced professional involved. In addition, an attorney can help you choose an appropriate trustee, update documents as needed, protect assets, avoid probate, and achieve your overall estate-planning goals.
Contact a Trust Lawyer in Michigan
At Blue Chip Estate Planning, our attorney will help identify which Trust works best for your unique circumstances. To schedule a consultation, fill out our online form or call us at (248) 873-3244.
More Estate Planning Information:
Estate Planning - Charitable Trusts
Estate Planning - Irrevocable Trusts
Estate Planning - Spendthrift Trusts
Estate Planning - Special Needs Planning
