A big question pondered by many in Lansing and surrounding areas of Michigan is how to set up a trust. You may believe only the wealthy need a trust as part of an estate plan, but this isn’t always the case. If you own personal property, real estate, life insurance, or even have brokerage accounts, you may want to set up a trust. Consider every single thing you own; it may actually be more than you realized.?
While there are dozens of types of trusts each with their own purpose, the best way to determine how to reach your goals is to speak with a qualified Michigan estate planning lawyer.
As the “grantor” or “settlor,” you must have the intent to create your trust now, not at some point in the future. The wording in your trust must be concise and clear; it cannot be interpreted in more than one way. The language used must establish that you intend to transfer your property into your trust for a specific beneficiary or beneficiaries.?
You must designate a trustee, the individual who will have the responsibility of managing the assets in your trust and honoring its provisions. Without a trustee, there is no trust. An appointed trustee must have a good grasp of managing investments, taxes, and other finances and be someone familiar with you, your selected beneficiaries, and your financial situation. Substantial time is necessary in supervising a trust, meeting tax deadlines, and making required distributions, so the trustee should be willing and capable of devoting the time needed to oversee the trust.
Fund the trust. Whether with real estate, money, securities, life insurance policies, or other assets of value, the trust must be funded. As the grantor you must transfer assets into the trust and take the necessary steps to change the title of those assets in order for the trustee to oversee the trust’s assets. A trust that is not funded will fail.
Identify the beneficiaries. The intended beneficiaries must be specifically named in order for the trust to be valid. A beneficiary could be a family member, friend, charity, or even yourself (the grantor) in the case of a revocable grantor trust. The assets in your trust must benefit someone who can be located.
What is the legal purpose of the trust? There must be a valid reason for your trust. Perhaps you want complete control over the assets in your trust to ensure they will be distributed to your family and loved ones according to your wishes upon your passing. You may want to make it easier on your children, spouse, or other loved ones by helping them avoid the long, drawn-out process of probate. A trust cannot be against public policy, so make certain yours has a legal purpose.
In addition to helping your family avoid probate and all of the headaches and expenses that go along with the process, a trust helps provide tax savings. When going through probate, private family matters are no longer private; all of your business is laid out for the public to see. For those with substantial assets, the estate taxes that would need to be paid upon your death could be considerable. While a trust won’t necessarily mean your family can avoid all taxes, the savings would be significant. All around, a trust helps ease some of the burden and provide for your family’s future as they go through the grieving process.
A trust is a legal instrument that gives you and your family peace of mind so you want to make sure it does not fail. It sounds complicated, and it can be in some cases. If you are interested in learning more about how to set up a trust or even whether you should, contact an experienced Michigan estate planning attorney today.
We will call you back as soon as possible