I have been a Michigan living trust attorney for over 25 years.  One of the most common questions I get asked is “Do I really need a living trust?”  And the answer is:  “It depends”.  But that answer doesn’t really help you, so let me be a little more specific.

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Living Trust Michigan – Attorney Glenn Matecun

First, let’s make sure we are on the same page as to the type of trust we are talking about.  There are different types of trusts (for example, revocable trusts and irrevocable trusts) that are used for specific purposes.  The trust we are talking about here is the most common trust used for estate planning purposes – you will often here it called a “living trust”, a “revocable trust”, or a “revocable living trust”.  Here are a few definitions to help you understand what this trust is and how it works.

  • The “grantor” is the person who creates the trust.  This is you.
  • The “trustee” is the boss of the trust – that is, the person who can write checks and deal with your day-to-day financial life.  This is also you to start.  The trustee will change to a trusted person of your choice only when you become incapacitated or after you die.
  • There are two types of “beneficiaries”.  During your lifetime, you are the beneficiary of the trust, which means you will get all the income and principal distributions.  After you are gone, you name beneficiaries (family or other loved ones) who will receive your assets.
  • A “trust” is a binding arrangement under which you give money or property to a “trustee” (usually you) to hold.  I like to think of a trust like a bucket.  You put your assets in the bucket.  If you need something, you take it out of the bucket.  If you get something new, you put it in the bucket.  You are totally in control.
  • A good trust plan avoids probate court.  This is different from a Will (or Last Will & Testament) which must go through the probate process.  Michigan probate can often be expensive, time-consuming and emotionally draining.

Your trust will clearly spell out your intentions, both while you are alive and after you are gone.  With the above definitions in mind, let’s look at some of the benefits of a trust:

  • A good trust plan avoids probate court.  This is different from a Will (or Last Will & Testament) which must go through the probate process.  Michigan probate can often be expensive, time-consuming and emotionally draining.
  • Setting up a living trust in Michigan means you can leave money to a minor child or young adult who is not ready to handle that money, and use it for the beneficiary’s education or other benefit until certain ages when the money is distributed outright (or the money can be held in a “lifetime beneficiary trust” if there are reasons to do that).
  • Setting up a trust means you can leave money to a beneficiary with a problem (creditors, divorce, substance abuse), in a way that the money will not be “attacked” by the creditor, soon to be ex-spouse, or beneficiary with a substance abuse problem.  Your trustee watches over the money, uses it for the beneficiary when necessary, and keeps it protected.

Does everyone need a trust?  Probably not.  If you have limited assets that will avoid Probate Court, you may be able to get by with a basic Will plan.  Here are three other things to remember, regardless of the plan you choose:

 

1.  Your plan (whether Will or Trust) should also include a good Michigan Power of Attorney (for financial decisions) and a good Patient Advocate Designation (for medical decisions).

 

2.  Never use a basic “quit claim deed” to transfer your property during your lifetime as a substitute for proper estate planning.

 

3.  Never put your kids’ names on your bank accounts or other financial assets.

 

More on the above three issues in future blogs.  If you have questions about your own estate plan in Michigan, we offer no cost, no strings attached (yes “Free”) consultation to talk about your estate plan: where you are, where you want to be, and the best way to get there.  You can also click on this Free Case Analysis to tell us about your legal issue and we will respond within 24 hours.

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