What is a Trust: Defined
A living trust in Michigan is one of the most common estate planning tools because of the flexibility and protection it provides.
When you draft a living trust, you are known as the grantor and you appoint yourself as the trustee.
This means that you manage all of the assets inside of the trust just like you do now.
If you want to add or remove assets or beneficiaries from your trust, you can do so no problem.
You also select a successor trustee.
When you die, your successor trustee will take over the management of the trust and ensure that your assets are distributed to your beneficiaries.
Additionally, your successor trustee can step into manage the trust if you become incapacitated before you pass away.
While a trust has many advantages, there are also some you should be aware of.
Although, the disadvantages are relatively minor and should not keep you from creating a living trust, you should still be aware of them so that you can accurately compare this document with other estate planning tools.
Before we get to the minor disadvantages of the document, here are some of the advantages.
Advantages of a trust
- Probate court avoidance
- Maintain financial privacy
- Control over your finances even after your death
- Avoid a conservatorship
As stated earlier, a trust is a popular choice for an estate planning tool because of its flexibility and protection.
The benefits above illustrate this.
A living trust is flexible because it can be changed or revoked at any point during your lifetime.
Additionally, you can add or remove assets and beneficiaries as you please.
Furthermore, it allows your family to avoid probate court, which means your assets will be transferred in private.
A trust also helps you plan for incapacity by assigning a successor trustee to manage your affairs if anything should happen to you.
Now that we have covered some of the major advantages of a trust, here are some of the disadvantages.
Disadvantages of a trust
One major disadvantage is the extra paperwork involved.
For a trust to work, you have to make sure the ownership of your assets is transferred to the trust.
This is called funding the trust, and it requires additional paperwork.
While it sounds like a lot of work, an experienced trust attorney will be able to help you through this process.
It’s worth the extra time and paperwork because this step is what allows you to avoid probate court so you can pass your assets onto your loved ones in the most efficient way possible.
Some people are concerned with the cost of a trust when trying to decide which estate planning tool is best for them.
Most of the time people are comparing the cost of a last will and testament to that of a living trust.
On the surface, a last will and testament is a less expensive option because it is a simpler document to draft.
However, a last will does not provide the same level of protection as a living
In fact, it is your ticket to probate.
Probate court can be long and expensive because of the court fees and attorney fees that may be required to settle your estate.
Often times, these additional fees cost much more than investing in a living trust from the start.
A living trust is an excellent choice as the cornerstone of a comprehensive estate plan because of the flexibility and protection it provides.
It helps you avoid probate, maintain your privacy, keep control over your finances, and plan for situations of incapacity.
Some of the disadvantages of a trust include the additional paper work and additional cost due to the complexity of a trust.
While there are some disadvantages, they are far outweighed by the benefits.
If you are interested in drafting one of these estate planning documents, you should consult with an experienced trust attorney.