Ensuring that the ones you care for most are taken care of is an important goal for many people – particularly those with substantial assets. You want to pass on your possessions in a way that protects those possessions and makes certain that they wind up in the hands of those you specify. While wills are one tool to accomplish such a goal, using a will requires going through probate, which can be an unnecessary burden on your loved ones. In contrast, a trust allows you to avoid probate – and to protect your assets from excessive costs and taxation.
What Is A Trust?
A trust is a document that instructs your friends and family on what you want to happen to your possessions. Like a will, a trust gives instructions about your possessions and describes the party who will be responsible for the distribution of those possessions. The key distinction between a trust and a will is that in addition to the above functions, the trust is carefully designed to avoid probate and also to possibly minimize the taxation that may be levied against your possessions. Considering how substantial probate costs and taxes can be, the financial benefits of a trust make it the preferred choice for those who want to protect what they worked so hard to earn.
The individual who establishes the trust is referred to as a settlor, grantor, trustor or creator. The creation of a trust requires assigning the duties of overseeing the trust to a specific party, who is known as the trustee.
Revocable And Irrevocable Trusts
A revocable trust is often referred to as a living trust. It is a trust that can help transfer your possessions without going through probate. You can keep control over your assets – even naming yourself as the trustee – which means that you can alter your plans at a later time if you choose to do so. If you do pass away, in most cases the revocable trust will change to an irrevocable trust. Keeping control of your assets may be necessary in some circumstances, however, it is important to remember that a revocable trust will not usually shield your assets from creditors.
Unlike a revocable trust, with an irrevocable trust you lose control of your assets after the trust is created. Even with the loss of control, an irrevocable trust is often desirable because you can protect your assets from creditors and estate taxes. Probate is also avoided using an irrevocable trust. An irrevocable trust can often protect assets from legal judgments as well.
With either a revocable or an irrevocable trust, you also gain the benefit of privacy. While probate is public record, a trust bypasses probate and therefore keeps your estate planning decisions private. You also have the ability to protect your assets from the creditors of your heirs, and provide stability for heirs who are not skilled at managing finances or are disabled.
Helping You Choose A Trust
The laws regarding trusts, wills and estate taxation vary by state, which is why it is important to speak with an estate planning attorney before you finalize your decision on a trust. Our law firm has worked with numerous estate planning clients in the creation of trusts. In fact it is the largest part of our practice and we have an in-depth understanding of what is required to create effective trusts throughout the State of Michigan.
We can help you in the creation of a variety of trust types including:
- Marital Trusts
- Bypass Trusts
- Testamentary Trusts
- Charitable Trusts
- Irrevocable Life Insurance Trusts (ILIT)
- Generation-Skipping Trusts
At Gold & Associates, P.C., we offer informed, knowledgeable estate planning services that will ensure your interests are protected. We offer a free initial consultation where you can discuss your circumstances and clarify your objectives. Please contact our firm today . We are standing by to help you understand your options and choose the estate planning tools that will help you protect your legacy and your loved ones.