It is a major mistake to not have any legal instrument in place organizing what will happen to your estate if you pass. But it is a major mistake not to have a living trust. As you’ll see after reading this post, a living trust is a versatile estate planning tool that has a something to offer for everyone.
What’s Worse Than No Living Trust in Michigan? Answer: No Will, Landing Your Estate in Probate
The only thing worse than not having a living trust is to not even have a will. If you don’t have a will then the state gets to decide what happens to your money, home, other real estate, bank accounts, car, and other valuables. That is because neither your family nor a court has any way of determining what your personal wishes would have been about how your estate should be divvied up. A will goes through a court-governed process called probate, and before your heirs ever see a penny, your estate must fork over court fees and higher legal fees, before your heirs see one penny. Many people mistakenly believe that by having a will you avoid probate. This is not true: if you have assets in your individual name then your assets have to go through probate whether you have a will or not.
If people think about this for even a second, they realize that they don’t want the state to make decisions about their hard-earned possessions. And you don’t have to.
Plan Ahead, Take Control: Get a Revocable Living Trust in Place
Many people don’t know what a revocable living trust is, and they have preconceived notions that it is only for rich people. This cannot be farther from the truth. A living trust can avoid many of the federal and state laws that can make probate so costly, and planning carefully ahead can ensure you maximize the amount of your estate that actually gets distributed to your loved ones.
The beauty of a revocable living trust is really about control:
“Revocable”: This means that you have control over your assets because you can change the terms and nature of your trust anytime. Once you make it, you can still change it. Say you want to change the who the trustee or beneficiary is or you want to make different arrangements to dispose of your assets. You can do this; it’s possible to revoke or amend a part of it or all of it.
“Living”: This means the trust is created and funded during your lifetime and provides benefit to you during your lifetime. Again, this is about taking control of your estate while you are alive. Imagine if you become disabled. Instead of having a conservatorship, or “living probate”, which would entail selling your assets, you can simply just change the title of the trustee for your property. A great, savvy estate planning attorney can help you properly draft this.
How Badly Do I Need a Revocable Living Trust in Michigan? Let Me Count the Ways
There are many reasons why you should consider setting up a revocable living trust. Just consider the following:
- Eliminate costly and lengthy court probate process: Your estate goes directly to your heirs.
- Minimize need for attorneys: lower legal costs mean distributing more of your estate to loved ones.
- Minimize taxes: In some cases, you can avoid federal taxes, such that you can pass on most of all of your estate without worrying about being taxed on it.
- Control: Again, you can change your trust and make sure your estate is disposed of as you wish.
- Change trustees at any time. If you become unable to serve as a trustee, or you name your spouse and they cannot serve, then the trustee title can be given to someone else as needed.
- Out-of-state real estate: If you own a summer home, cabin, or vacation home, then you can say money with a trust.
- Privacy: Going through the courts means your finances become public record. A trust keeps it private.
- Protect your loved ones from their own disability (special needs), inability, and their creditors.
If you or a loved one is thinking about how to organize your estate so that everything is in order when you pass, contact our BRMM estate planning attorneys for a confidential consultation at (248) 641-7070 or complete our online form. Remember that behind every great estate plan is a great estate planning attorney. If you want a well-crafted, accurate, and effective estate plan, you need the experience of an attorney who knows the nuances and ins and outs of creating a unique plan specifically for your particular situation. And don’t forget that every Michigan estate plan should be a dynamic estate plan that you revisit over the course of your lifetime so that it as up to date as possible.