Living Trusts In Michigan
10 Things To Know About Living Trusts When Estate Planning
What Is A Living Trust?
A Living Trust in Michigan, also known as a Revocable Trust or Revocable Living Trust, is one of the best, simplest, and most commonly used methods for passing assets to your loved ones after you’re gone and avoiding financial disaster.
A Living Trust is a legal document which outlines who you’d like to receive your property after your death, and who should manage that property.
If you suddenly become seriously ill and incapacitated…
Who will pay your mortgage?
Who will pay your bills and file your taxes?
Who will move money around your bank accounts or apply for benefits on your behalf?
Will your family even be able to access your bank accounts?
If your family can’t access your money, will they have enough funds to pay for their living expenses?
Being prepared with a Durable Financial Power of Attorney can alleviate some of the financial stressors and prevent your family from having to go to court to get permission to access and manage your finances.
This is an important consideration with the courts closing or operating at limited capacity.
When you create a Financial Power of Attorney, you assign an agent who can act legally on your behalf to do the following:
- Sign your checks
- Make deposits
- Pay your bills
- Contract for medical or other professional services
- Sell your property
- Buy insurance for you
Another really important document you need to consider if you have children under the age of 18 is a Guardianship.
You place property into the Trust and manage it yourself while you are alive – just as you do now.
When you die, a person you’ve chosen will start managing the property according to the strict directions you’ve outlined in the Trust.
Does A Living Trust Avoid Probate In Michigan?
Unlike a Will, a Living Trust avoids the need to go to Probate Court.
A Living Trust is a private document that doesn’t require court authority or oversight.
This means that if you have a properly funded Living Trust in place, your family will be saved from the costly and time consuming Probate Court process.
It can also be used to reduce death taxes and fees, maintain family privacy, prevent disinheritance, preserve needed benefits, make sure beneficiaries attend college, and protect children from creditors, divorce, bankruptcy issues, and substance abuse.
Most of all, it gives you the peace of mind that your loved ones will be taken care of even after you pass.
Why Should I Have A Living Trust Instead Of A Last Will And Testament?
One of the major Advantages of a Living Trust is that it allows you to avoid Probate Court.
A Last Will and Testament on the other hand is your ticket to Probate Court.
It’s, in many ways, a letter to the court of who you’d like to receive your assets, but it requires court approval and oversight.
Probate can take years and can potentially cost your family $10,000s in court costs and legal fees.
We like to say that Probate is Public Pricey, Protracted, and Preventable
When you have a Living Trust the proceedings remain private while still giving you the ability to maintain control of when and how your beneficiaries receive their inheritance.
How Does A Trust Avoid Probate And Prevent Court Control Of My Assets If I'm Incapacitated?
After you set up a Living Trust, you transfer your assets from your name to the name of your Trust, but you control the Trust – just like you do now.
This means you remain in total control of your assets too. Almost nothing changes for you in your day to day life.
However, because everything now belongs to your Trust – there is nothing for the courts to control when you die or become incapacitated.
The person you’ve selected in the document can immediately take over, without the government getting involved.
The concept is simple, but this is what keeps you and your family out of the courts.
It’s a legal and financial loophole that’s available to everyone.
Will I Lose Control Of My Assets?
Absolutely not! You keep full control of all of the assets in your Trust.
As Trustee of your Trust, you can do anything you could do before – buy and sell assets, gift them away, mortgage them out, and you can still change or even cancel your Trust altogether.
That’s why it’s called a Revocable Living Trust.
You even file the same tax return.
Nothing changes but the name on the titles.
Is It Hard To Transfer Assets Into My Trust?
No, it’s actually quite simple and your Estate Planning Attorney or financial planner can help.
Typically you will change the titles on real estate, stocks, CDs, bank accounts, insurance and most investment accounts.
Most Living Trusts also include jewelry, clothes, art, furniture and other assets that do not have titles – don’t worry the lawyer will take care of these – we usually use a one page “assignment”
Some beneficiary designations may also be changed to your Trust (for example, insurance policies) .
Are The Contents Of My Living Trust Ever Made Public?
The contents of your Trust remain private because a Living Trust in Michigan avoids Probate Court.
A Last Will and Testament and its contents, on the other hand, are made public only when they enter Probate Court, usually within a few weeks after there has been a passing.
Since the Trust avoids Probate, the contents of the transfer stays private.
In fact, in general, the only people who will ever see the Trust, are the beneficiaries that you name.
And even then, only after you pass.
If I Make A Trust, Do I Still Need To Make A Will?
A Living Trust is often combined with a “Pour Over Will” to make sure that all of your bases are covered.
It acts like a “safety net”.
If you acquire new assets after your Living Trust was written – but you forget to place it in the name of your Trust.
The “Pour Over Will” makes will pick up those assets give them the Trust to be managed according to its terms.
This prevents these new assets from going to relatives you did not intend to receive them.
If you don’t have a “Pour Over Will” in place, the assets will be apportioned according to the laws of your state which may distribute the funds inconveniently or create issues for the family.
Is it Expensive to Create a Trust?
A Trust is relatively inexpensive when compared to the cost of going to Probate Court.
We usually expect about 10% of your Estate to be eaten up in Probate court through legal fees, inventory fees, court costs etc.
For smaller estates, the percentage can be much larger – sometimes leaving little behind for your loved ones.
Moreover, some probates can last years in court and cause huge amounts of stress for the family.
In general, a Living Trust is actually less costly than the alternative.
How Do I Set Up A Living Trust?
If you’d like to set up a Living Trust, it is usually best to consult with an experienced Estate Planning Attorney.
Over the past decade, we’ve helped 1,000s of clients set up all manners of living trusts, wills, powers of attorney, and Estate Plans.
We’d be happy to answer any questions you have about Living Trusts.
Just give us a call at (248) 613-0007 to schedule your complimentary consultation.
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Written By Chris Atallah - Founder, Rochester Law Center, PLLC
Written By Chris Atallah - Founder, Rochester Law Center, PLLC
Chris Atallah is a licensed Michigan Attorney and the author of “The Ultimate Guide to Wills & Trusts – Estate Planning for Michigan Families”. Over that past decade, Chris has helped 1,000s of Michigan families and businesses secure their futures in all matters of Wills, Trusts, and Estate Planning. He has taught dozens of seminars across the State of Michigan on such topics as avoiding the death tax, protecting minor children after the parents’ death, and preserving family wealth from the courts and accidental disinheritance. If you have any questions, Chris would be happy to answer them for you – just call at 248-613-0007.