The Advantages of a Trust
Many people believe that if they have a Last Will and Testament, their estate planning goals have been accomplished. If their goal is solely to express their wishes onto where their assets go when they die, then they may be right. If their goal is to accomplish this while also making it as easy as possible for their family and friends, with the least amount of expense, then they might consider a Revocable Living Trust. A Revocable Living Trust is a legal document that acts similarly to a Will, but does much more. There are many advantages to using a Trust.
A major advantage of a Revocable Trust is that it avoids probate. When a person just has a Will, their family has to obtain a lawyer and go through the probate system in order to transfer and distribute their assets to the beneficiaries. The probate process in Michigan can be expensive and time-consuming. When correctly using a Trust, the probate process can be avoided all together. This means that the family does not have to pay a lawyer, wait for the completion of all the court deadlines, and get judicial approval for every action that they need to take.
A Revocable Trust is also advantageous in that it keeps your wishes and affairs private. A Will has to be deposited with the clerk of court. This means that the Will becomes part of the public record. Anyone who wants to see your Will is able to. Probate and court proceedings are also public. This could invite those who you want to exclude to come forward and contest the Will. The assets in the estate also become public knowledge. A Trust does not have to be recorded with the Court. This can help ensure that the only people involved in administrating the Trust are those that you want to be involved. It makes it more difficult for unwanted people to come forward and try to contest. A Trust allows you to put your affairs in the hands of the people that you trust and there is no need for the court system to get involved.
Another positive aspect of a Trust is that it accelerates the process of estate administration so that your family does not have to wait such a long period of time before they receive their inheritance. A probate proceeding can take anywhere from a few months to many years to complete. There many steps involved and it can be time-consuming for the Personal Representative or Executor. Distributions of the assets to the beneficiaries cannot be accomplished until the end of the probate process. This could create hardship for those in your family who need the assets the most and may also make beneficiaries antsy. Often times, this can lead to arguments and even litigation.
A Trust makes the administration process less expensive. This means all of the assets you own at your death actually go to the people you intend them to go to, instead of going to others. The probate process requires payment to lawyers and court costs. This can add up quickly. By statute, a lawyer can charge up to three percent (3%) of the entire estate as a fee for the probate administration. All of these fees would be things that your Executor would have to pay out of your estate before any of your beneficiaries would be allowed to receive their shares.
Using a Trust also gives you flexibility in how you want to plan your estate. You can customize the document to fit your family’s particular needs and concerns. A Trust allows you to hold money in trust for a child who is a spendthrift or a minor, make sure no money goes to a specific son or daughter in-law, or ensure that a family member with special needs will be provided for throughout the rest of his/her life, even after you are gone.
A Revocable Living Trust can be an extremely useful estate planning tool. Nevertheless, a Trust is a legal document that should be prepared by a proper estate planning professional. It requires knowledge of the law and how particular assets should be handled. When used correctly, it accomplishes all of the goals that most people have in estate planning while additionally making it as easy as possible for their family after they pass away. Most importantly, it allows your estate to completely avoid the probate process.