Many people think of trusts as estate planning tools for the very rich, but the fact is that a trust can serve many different purposes for people at all income levels. Depending on your individual circumstances, a trust may be an essential part of your comprehensive estate plan.
The most common type of trust is a revocable living trust, or an “inter vivos” trust. During the lifetime of the grantor, who is the person making the trust, he or she will maintain control over the trust, both in terms of what property is put into the trust and what property is withdrawn from the trust. With a revocable living trust, the grantor also has the right to revoke or terminate or change the trust at any time. If you establish a revocable living trust, or another type of trust, any assets in the trust at the time of your death will automatically be distributed as you provided in the trust document. These assets do not become part of your estate. In the typical case, your estate must go through probate, which is a legal process that can be both expensive and lengthy. By creating a trust, you may be able to eliminate any need for your estate to go through probate following your death.
A less commonly used type of trust is an irrevocable trust. As the name implies, once a grantor establishes an irrevocable trust and places assets in that trust, he or she can never remove them from the trust. In essence, the grantor’s assets now exclusively belong to the trust, and, after the grantor’s death, to the trust beneficiaries. One typical reason to create an irrevocable trust is to protect a grantor’s assets from a court judgment or a creditor. Once assets go into the irrevocable trust, the creditor cannot do anything to use those assets to satisfy its debt.
Another benefit of establishing any type of trust is that the grantor can maintain greater control over the trust assets and its beneficiaries. For example, if the grantor is concerned about children receiving large lump sums of money and assets as part of their inheritance, the grantor can specify in the trust how and when the children receive certain amounts of money. Distribution can occur over time, instead of all assets being immediately distributed at the same moment. Furthermore, if a grantor wants to use some trust assets to donate to a charity, he or she can make very specific guidelines as to how the funds are to be used.
Trusts are often an essential component of any comprehensive estate plan, but there also are other legal strategies that may fulfill your needs. Estate planning is an important issue for all individuals, but especially those who want to preserve assets for the next generation. At Legacy Law Center, our goal is to ensure that you have an effective estate plan in place to meet your loved ones’ needs and protect their assets from the steadily rising costs of long-term care. We have the skills and knowledge that you need to make the appropriate decisions about estate planning. Call your Michigan long-term care attorneys at (734) 995-2383 and schedule an immediate appointment.
© 2021 Legacy Law Center