Almost everyone over the age of majority should have an estate plan to make sure that his or her property is appropriately distributed and other affairs properly managed at death. Wills and trusts are vehicles for disposing of property at death. In Michigan, there are several types of will and trust available that serve different purposes. An estate planning attorney can help you determine which types of will or trust are best for your individual circumstances and can prepare the necessary documents to ensure your peace of mind.
A will provides for the transfer of a testator’s property upon his or her death. It designates beneficiaries, whether individuals or organizations, who will receive ownership of specified items of the decedent’s property. A will should also appoint a personal representative who takes charge of administering the will and distributing the property at death. If the testator has children, the will may also designate a person to take care of the children, in the event that the testator dies before the children become self-sufficient.
In Michigan, wills must go through probate, which is a process in which the court supervises the administration of the estate. Probate is a public process, so for some, the use of a trust may be preferable.
A trust is a relationship between a settlor, a trustee, and one or more beneficiaries. The settlor, sometimes known as a trustor, deposits assets into the trust. The trustee of the trust then owns and manages the assets for the benefit of the beneficiary, in compliance with a standard set forth in the trust, for example, for the education, care, and maintenance of the beneficiary. A trust is generally accompanied by a pour-over will, which disposes of any assets that have not been put into the trust by the time of death.
Trusts have many benefits, including:
- Minimizing estate and income tax liability;
- Protecting a spouse or children;
- Managing assets for young or irresponsible family members; and
- Avoiding the public probate process.
There are many different types of trusts available in Michigan, including inter vivos trusts, life insurance trusts, special needs trusts, charitable trusts, spendthrift trusts, marital trusts, and credit shelter trusts. An experienced trusts attorney can help you determine which types are appropriate for your situation and your goals.
Inter Vivos Trusts
An inter vivos trust is created during the settlor’s lifetime, and is a tool for avoiding probate. It often acts almost like a bank account. The settlor may appoint him or herself as trustee, then deposit assets into the trust. The settlor-trustee may then withdraw funds in accordance with the set standards of the trust, for example, for the care and maintenance of the settlor. The settlor should also appoint a successor trustee to manage the trust if he or she becomes incapacitated. This avoids the necessity for appointing a conservator in probate court.
If you do not have an estate plan already in place, it is vital that you take care of this important issue as soon as possible. Please contact Royal Oak wills and trusts attorney John Little for a free phone consultation at 248-865-3455.