A trust is one element a Michigan resident can include in an estate plan. A trust essentially owns the assets funded to it, and the person who creates a trust assigns a trustee to manage the assets according to instructions provided. When people consider adding a trust to their estate plans, it is often because they are looking for a way to avoid probate or reduce the tax burdens of the estate. However, there are a number of other benefits to this estate planning tool.
Since the trust, not the beneficiaries, owns the assets, those assets may not be included as part of any judgment against the heirs, such as a personal injury lawsuit or divorce. In the same way, someone wishing to leave assets to a child who received federal benefits because of special needs can do so without fear that those assets will jeopardize the child's eligibility for those benefits. A trust is often a wise choice for a beneficiary who is a minor or who may otherwise be unable to manage an inheritance.
Trusts can be established to motivate or encourage certain behaviors in heirs. The trustor may require an heir to complete college, perform some humanitarian task or maintain a healthy lifestyle before receive funds from the trust. Finally, a trust is a common way for families to protect their wealth for generations, even through divorces and remarriages.
While a trust is certainly more complex than a will, it is also more versatile. A trust can be adapted to meet the unique needs of any family. With the help of an estate planning attorney, those in Michigan can learn of the best options for their estate plans.
Source: Forbes, "6 Things A Trust Can Do That You May Not Realize", Mark Eghrari, Oct. 27, 2017