When planning for one’s estate questions sometimes arise as to whether a trust, rather than a will, is the best estate preparation tool. To answer that question it is important to know what a living trust is and how it may work for you.
A living trust is a trust created by a person while they are alive. The person will ordinarily fund the trust and serves as the trustee. This kind of trust allows the creator, or grantor, to receive payment from the trust as a beneficiary while they are alive. Additionally, these trusts can be revocable meaning that the grantor can make changes to the trust at their discretion. If the grantor becomes incapacitated, they will remain a trust beneficiary, but the trust will then be managed by another named trustee (called a “successor trustee”). If the grantor were to die the named trustee would continue in their role as trustee.
One of the main advantages of having an estate in a living trust is that when the grantor dies, the estate will remain as part of the trust rather than having to go through probate. This allows beneficiaries to receive their trust benefits more quickly than they would if they had to receive an inheritance from a probated will. Another benefit is that a trust allows the grantor to control how assets will be distributed and used by beneficiaries. Further, the trust can be devised in a manner which can protect assets from the debts of beneficiaries such as those as a result of divorce or legal actions.
Living trusts also provide those in a position of owing estate tax an opportunity to pass assets to their beneficiaries with minimal tax consequences. However, this will depend on how the trust is structured. Living trusts also offer discretion for those who wish to keep their estate distribution as a private matter. Unlike a will which is a matter of public record, a trust is not a public document and therefore will be an effective means of keeping estate and asset matters confidential.
A living trust has its advantages as does a last will and testament. It may be that both estate planning tools are beneficial for you. In examining your estate planning options it is crucial that you seek the advice of an attorney who is experienced in this area and can provide you with the necessary information.
Our office has experienced attorneys who understand and can help you examine your options and assist you in understanding your estate planning options so you can make informed choices. Please contact us online or by phone if we may be of assistance. https://www.michiganestateplans.com/contact/