What You Need To Know About Living Trusts
Living trusts can be the foundation for any estate plan when implemented properly. Before you move forward with the process though, two questions exist that every person should ask to protect themselves, their family members, and their assets:
- What would happen to your assets and minor children if you did not wake up tomorrow?
- Who would make decisions for you if you become incapacitated; what decisions would they make?
More than 60% of people don’t have answers to these difficult questions, but they can ensure that their wishes are met by creating an estate plan. The team of professional estate planning attorneys at The TGQ Law Firm is here to help make sure you have these questions answered with living trusts or wills.
What Are Living Trusts and What Are the Benefits?
A trust is one option for designating where assets and children will go if you pass away. With a trust, assets are distributed among trustees according to your desires in the event of your death. When you create a trust, you record your preferences for asset distribution, child custody, and other essential decisions.
Revocable living trusts are the most common trusts and act as living documents. You can make changes to a revocable living trust if, for example, your financial circumstances change, you attain or get rid of an asset, you want to change how beneficiaries will share your assets, or you want to add or remove a trustee. Opting for a revocable living trust often proves beneficial as situations and relationships change over time.
Irrevocable living trusts, on the other hand, can’t be altered or changed once the document is signed.
Creating a living trust as part of your estate planning process provides the following benefits:
- Avoid the lengthy probate court process
- Prevent your assets from being frozen during probate
- Avoid probate court legal fees
- Keep your asset distribution private
Although living trusts are more complex to set up than wills, these benefits make it worth it for many people who don’t want to put their families through probate court.
What Happens if You Don’t Have a Living Trust?
When people pass away without living trusts, the court handles validating the will (if there is one), assigning an executor, valuing and distributing assets, and assigning guardianship of minor children if needed. This system is called probate court.
The specific factors handled during the probate court process depend on the state and what the decedent established before their passing. For example, the court assigns an executor for the estate if no one was named in the will or no will exists. This representative, whether appointed by the will or the court, becomes responsible for:
- Collecting all assets of the estate
- Having the assets valued if necessary
- Paying funeral expenses, creditors, debts, taxes, and other relevant expenses
- Distributing the remaining assets to beneficiaries according to the will or state laws
Although the probate court process is often necessary to honor the wishes of someone who has died, some disadvantages exist. Going through probate takes a long time, sometimes years, if there are disputes between beneficiaries.
Probate also involves many high costs and puts the estate in the public eye. You can avoid these disadvantages of probate by connecting with a Michigan estate planning law firm to discuss the benefits of living trusts and implementing one into your personal estate plan.
Are Trusts Only for the Wealthy?
The idea that only wealthy individuals benefit from living trusts is popular but untrue. Not every estate needs a trust, but living trusts allow people to have the peace of mind that their families won’t have to go through the probate process after their deaths.
Some people genuinely don’t need a trust and would likely benefit more from creating a will instead. A living trust may suit you if you have a large, complex estate, want to avoid publicity, or suspect beneficiary disputes may tie up your assets in probate.
Get professional advice if you’re unsure whether you would benefit from creating a trust. No one-size-fits-all solution to estate planning exists, but an experienced estate planning lawyer can help you make the best choice for your situation. Sit down with an attorney, and let your situation dictate the estate planning process instead of misconceptions.
Michigan Estate Planning Attorney | The TGQ Law Firm
Learn more about living trusts when you contact The TGQ Law Firm. We’ll connect you with an estate planning attorney in Ann Arbor, MI, and discuss your estate planning needs. Not in Ann Arbor? No problem. Our firm helps clients throughout Michigan.
Our estate planning professionals can help you decide whether a living trust or a will is right for you and help you through the estate planning process. Schedule a 15-minute no-cost consultation today or contact us at (734) 707-3232.
Disclaimer: This article is not intended to be legal advice. Everyone’s situation is different and legal advice is only properly given after having reviewed your specific situation.
thanks for info
I like that you said that property and other assets that would go to a designated recipient are called the trust process. The other night, my best friend mentioned he was planning to start his will documentation planning for his future retirement goal. He asked if I had opinions on the best option to gather property advice. You did a perfect job explaining the importance of planning. I’ll consult an estate planning lawyer as they can help with the living will documentation strategy.
I like what you said about sitting down with your attorney to dictate the terms. My will needs to be updated. I’ll have to hire someone who specializes in estate planning.