Trust Planning and Setup

estate planning attorney

By setting up a trust as part of your estate plan, you help ensure that your loved ones have the financial resources they need after your death. You can use a trust to hold assets including cash, investments and property, which are distributed to beneficiaries according to your wishes.

A trust also can help you reduce your estate taxes. And since trusts typically are not subject to probate, your heirs may be able to access the assets held in the trust more quickly than with a will alone. Trusts can provide a number of additional advantages, including:

  • A higher level of protection of assets from lawsuits and creditors.
  • The ability to specify when and how your assets are disbursed following your death.
  • The ability to designate a successor trustee to manage the trust after your death or in the event of your incapacity.

Revocable and Irrevocable Trusts

Various types of trusts exist, with most falling into the categories of either revocable or irrevocable. A revocable trust, also referred to as a living trust, is a flexible estate planning tool that helps you avoid the probate process even as you keep control of your assets. You can dissolve a revocable trust whenever you wish; however, revocable trusts usually are irrevocable after your death.

Once you establish an irrevocable trust, you will not have the ability to alter it. Assets in the trust typically are moved out of your estate. You lose control of the assets, and you do not have the option to change terms of the trust or dissolve it.

If your main objective is reducing the portion of your assets subject to estate taxes, an irrevocable trust does so by essentially moving the assets out of your estate. Because the assets are no longer part of your estate, you also are not liable for taxes on income generated from the assets. In some cases, irrevocable trusts can protect assets from legal judgments. But in most cases, revocable trusts can also protect most, if not all, assets from estate taxes for most individuals and married couples.

Living Trusts as Estate Planning Tools

A living trust is established during your lifetime rather than upon your death. Different forms of living trusts exist and can serve as tools for lowering estate taxes, avoiding probate or establishing a means for long-term management of property.

Revocable living trusts have grown in popularity in recent years, especially among individuals approaching retirement age. A living trust may be a beneficial estate planning tool for you, depending on your individual circumstances. Your attorney can assist you in determining whether this type of trust should play a role in your overall estate planning.

Differences in Wills and Trusts

Trusts serve as tools for avoiding probate and controlling your assets after your death. In addition, a trust can help keep at least some of your personal financial affairs out of the public record, and it can provide a high degree of flexibility.

However, a trust also can be more complex to establish than a simple will. In addition, to reap the full benefits of a trust, you’ll need to complete the process of funding and changing titles for assets the trust owns. Trusts also typically allow for a higher level of control over the disbursement of assets, and they can help you achieve specific goals like paying for college or contributing to charities.

For some retired individuals, a will may suffice for estate planning needs. Wills are simpler to set up and manage, and — unlike trusts — they’re easy to dissolve if circumstances change. Wills also typically cost less to create than do trusts.

How to Set up a Trust

To establish a trust in Michigan, work with an experienced estate planning attorney to create the trust document. Your attorney will take into account a number of factors — including your age, marital status and the size of your estate — in structuring the trust appropriately for your needs.

The trust document will specify the beneficiaries of the property held in the trust, and they will name you as the designated trustee as well as name a successor upon your death or incapacity.  Once the paperwork is complete, you’ll transfer property into the trust.

The trustee will be responsible for administering the trust based on the terms of the trust, for the benefit of the beneficiaries you’ve named. If you need to amend or alter the trust at any point in the future, your attorney can assist you with completing the proper paperwork.

Creating an estate plan is a complex and important endeavor that can affect your loved ones for many years to come. To ensure that you make the right choices, work with a qualified estate planning attorney. Contact Gold & Associates, P.C., for a free consultation.

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