Revocable trusts, which are sometimes referred to as revocable living trusts, offer many benefits with the primary one being the ability to control your assets during your lifetime. Of course, the other main benefit is the ability to dissolve the trust if and when necessary. There are, of course, other advantages as well as some disadvantages that you should consider.
At the law office of Andrew Byers, we want you to make the best decisions about your assets and estate planning. During a consultation, our revocable trust lawyer will listen to your wants and expectations and will advise you accordingly. Contact us either online or at (248) 469-4261 to learn more about the opportunities trusts can offer you.
Understanding Revocable Trusts in Michigan
A revocable trust is a trust that allows the creator of the trust (the settlor) to change its terms, or even revoke it in full, while the settlor is alive. Once the settlor passes away, the trust is distributed by a successor trustee according to its terms. You, as the settlor, designate one or more successor trustees when you create the trust. It is a way for a person to manage and control their assets while they are living and have those assets pass to their loved ones when they die.
The types of that can be transferred to a trust include but are not limited to:
- Real property (e.g., homes, cottages, vacant land)
- Deposit accounts
- Investments (e.g., mutual funds, stocks, bonds, money market accounts)
- Business interests
- Collectables, art, antiques
- Life insurance policies
- expensive vehicles
Pros of Revocable Trusts in Michigan
There are distinct advantages to using a revocable trust as an estate planning tool. Below are brief descriptions of the most common advantages. Not all may apply in your unique situation. Likewise, there may be other advantages not listed below. It is important to seek the advice of an estate planning attorney to ensure the trust you choose is the right one.
Probate Avoidance
The ability to avoid probate is the main reason people consider placing assets in a revocable trust. Probate is the process where a decedent's estate is administered through the court system. It can be a tedious and time-consuming procedure. Assets placed in a revocable trust typically do not have to go through this court-supervised process.
Flexibility
While there are other types of trusts, the revocable living trust remains a popular choice due to its flexibility. The settlor of the trust is able to make changes to the trust up until the time of their death.
Incapacity Protection
A trust provides protection in case of the settlor's incapacity. In other words, if the person that creates the trust later becomes incapacitated (develops dementia, for example), a new or successor trustee can take over the management of the trust. The successor trustee is designated by the settlor when they create the trust. This can be the same person who settles the trust after the settlors death. The successor trustee will also be required to administer the trust according to its terms. Married couples with adult children often appoint their spouse as the first trustee and one or more of the adult children as alternate trustee in the event that the spouse cannot act.
Privacy
If maintaining privacy over your assets is important to you, a revocable trust is an option worth considering. Assets placed in the trust are administered to beneficiaries privately, unlike assets administered through the probate process, which is public.
Cons of Revocable Trusts in Michigan
There are some disadvantages to revocable trusts. Below are brief descriptions of the most common disadvantages, which must be weighed against the advantages and your specific needs.
Time and Money
Going through the process of setting up a revocable trust can take significantly more time and money than simply executing a simple Will. It requires that the trust be funded by changing deeds, titles, and other documents to transfer assets into the trust. This can involve a lot of paperwork. However, by funding the trust while you are alive, you make your estate easier to settle after you pass away because the trust continues to hold title to the property you transferred to it. Then, your successor trustee can take over and distribute the assets in the trust as you specified. Estate planning attorney Andrew Byers assists his clients in funding their trusts by drafting their deeds for them and by providing a comprehensive set of Trust Funding Instructions as part of the estate plan package. The funding instructions explain how to transfer each type of asset to the trust.
Lack of Asset Protection
Some types of trusts of shield assets from the reach of creditors and judgments. A revocable living trust, however, does not provide this protection, and assets are still within the reach of creditors. However, if you just hold title to your assets as an individual, you also do not have any asset protection from creditors, so using a revocable living trust does not lead to any less asset protection.
Changing a Revocable Trust in Michigan
The good news, and the reason most people choose to use a revocable trust, is that the settlor retains the right to change the trust, including who the successor trustee is and who inherits the property in the trust after your death. If the law changes after the trust is made, the settlor can also update the trust to include new legal provisions. The trust can also be completely revoked if the settlor chooses to do so. The steps you need to take to terminate the trust vary by jurisdiction and the terms of the trust.
Contact a Revocable Trust Lawyer in Troy, Michigan Today
A revocable trust can offer many benefits. They can be used as a way to provide for management of your assets for your benefit in the event of your incapacity and for the efficient settlement of your estate after death. You can also include provisions to help family members or other individuals or organizations that you care about. To find out if a revocable trust is right for you, and if so, which type of revocable trust best aligns with your interests, contact our estate planning attorney in Michigan by using the online form or call Andrew Byers directly at (248) 469-4261. We will schedule a consultation, at which time we will listen to what your wishes and concerns are, explain the options, and develop a customized estate plan that works for you.