How do you ensure that each family member receives their due inheritance without entering probate or disclosing what each beneficiary gets? Protect your assets from probate and your family from infighting by establishing a trust.
There are many types of trusts to consider for your estate planning. Contact us at the Bassett Murray Law Group, PLLC, for help creating trusts in Ann Arbor, MI.
What Are Trusts?
A trust is an asset management and distribution legal document, often executed by a trustee when you pass away. The two most common types are a revocable living trust and an irrevocable trust.
If you pass away without a will or trust, called “dying intestate,” the state of Michigan would divide up your assets, with your surviving spouse receiving the lion’s share of your property. With a trust and a pour-over will, your beneficiaries will receive inheritances according to your wishes.
Revocable Living Trust vs. Irrevocable Trust
A revocable living trust is malleable. You often name yourself the trustee (the trust manager), then name a successor trustee to distribute the trust assets according to your instructions when you pass away. You can move assets into or out of the trust during your lifetime, alter terms for your beneficiaries, and even cancel or revoke the trust if you wish.
An irrevocable trust does not allow you to make changes to the trust once you have created the trust. That is because you do not name yourself the trustee for an irrevocable trust, and you place assets in the name of the trust, which has its own EIN. According to the state, you no longer own those assets—they belong to the trust entity.
A revocable trust becomes irrevocable upon your death. Your pour-over will adds any assets not included in the trust to the trust assets, so they don’t enter probate.
Do Trusts Offer Asset Protection?
An irrevocable trust offers asset protection as the state recognizes that you no longer own those assets and that those assets are the property of the trust entity.
Revocable trusts do not offer asset protection while you are alive and a trustee of your revocable trust. As a trustee, you have access to those assets, making them vulnerable to creditors and lawsuits.
Some industry professionals need asset protection trusts because their jobs make them vulnerable to losing assets through lawsuits. Some careers include doctors, engineers, architects, and similar professions with high standards for duty of care.
Creating a Trust Agreement
You will be the grantor of the trust, meaning the creator and funder. Your trustee will be the person who manages and distributes the trust according to your instructions. You will also need to name beneficiaries of the trust, such as your surviving spouse and any family member you wish to inherit your property.
Contact a Trusts Attorney With Bassett Murray Law Group, PLLC
For help creating trusts as part of your estate planning or for asset protection, contact us at the Bassett Murray Law Group, PLLC, in Ann Arbor, MI. Call today at 734-930-9200 or contact us online to schedule an initial consultation.