The Importance of Having a Trust
June 9, 2023
When you reach a certain age, you might begin to think about whether or not you need an estate plan. Whether it’s to ensure the passage of property to beneficiaries or to protect assets from estate taxes, hiring an estate planning attorney is a wise step when planning for the future. The creation of a living trust is one of the most important parts of estate planning, as a trust can ensure your loved ones receive their inheritance without extensive legal interference.
Family law and estate planning attorney Steven L. Rotenberg of Steven L. Rotenberg, PLLC—based in Bingham Farms, Michigan—helps bring peace of mind to individuals and families. You and your loved ones deserve skilled guidance in crafting an estate plan that fits your needs.
If you’re interested in setting up a trust or other elements of your estate plan in Michigan, set up a consultation today.
What Is a Trust?
A revocable living trust functions much as a will does in that it grants property to beneficiaries after death, and the settlor (or person granting the trust, who can also be called the grantor, or trustor) can amend the trust at any point. However, any property in the trust is not subject to probate, unlike property in a will. Instead, a trustee is appointed after the death to transfer the assets of the trust to the beneficiary.
All trusts become irrevocable (or unable to be changed) when the settlor dies. However, you can set up an irrevocable trust while you are alive. Irrevocable trusts usually cannot be amended without a court order. They are useful for people with large estates, as assets in an irrevocable trust are not subject to estate tax.
What Are the Benefits of Having a Trust?
A trust allows you to administer your property to any beneficiary you wish while avoiding probate. You can distribute the property however you’d like—over a period of several years, for example. You can even attach a “spendthrift clause” to protect the principal of the property from a beneficiary who might spend it irresponsibly, and/or that beneficiary’s creditors.
Organizing Business Affairs
If you own a business, a trust will allow a smoother handover of that business to your chosen beneficiary than a will would upon your death. A trust can ensure that the business can still operate without being entangled in probate.
Managing Assets if You Were to Pass Away or Become Incapacitated
If you have a large estate, you might want an extra level of protection to ensure that disagreements after your death—and ensuing probate costs—are kept to a minimum. Trusts also allow for your beneficiaries to use the assets in the trust should you become incapacitated. This will save your loved ones the anguish and expense of petitioning the court for these assets if you can no longer make decisions.
Paying Medical Bills or Providing a Scholarship
There are several specific types of trusts. For example, you can set up an irrevocable Special Needs Trust for a child who may need extensive medical care. You can put money into the trust for medical bills and they will not be considered when determining eligibility for government programs such as Medicaid. You can also set up an Education Trust for a beneficiary to guarantee that the money can only be spent on education. Like the Special Needs Trust, an Education Trust is usually irrevocable.
The Benefit of Privacy
When a will is filed, it goes into the public record. A trust ensures that you, your trustee, and your beneficiaries have privacy when setting up and administering the trust.
Distributing Assets Faster to Beneficiaries
Trustees can distribute assets held in a trust to the beneficiaries within a few months or even weeks, unlike in the probate process, which might take a year or even longer.
As outlined above, many of these benefits involve avoiding probate, and for good reason. Probate can be an expensive, time-consuming, stressful, and contentious process for a grieving family. Setting up a trust will ensure that passing assets to your chosen beneficiaries is as hassle-free as possible. It is important to have a trust if you believe that any part of your property is likely to cause fights among your heirs during probate.
An Attorney Can Determine Which Is Right for You
It’s vital to reach out to a skilled attorney. An estate planning attorney can help you figure out which type of trust will fit your needs. Your lawyer will base their recommendations on your budget, your marital status, your age, your net worth, the complexities of your estate, and how difficult the probate process might be for your loved ones should you pass away.
Prepare for the Future of Your Loved Ones Today
Planning for the future can seem overwhelming at first, especially during uncertain times. It’s important to have someone on your side during the process. Steven L. Rotenberg understands how to help you craft a well-rounded estate plan that works for you and your family when you need it the most. If you live anywhere in Bingham Farms, as well as Monroe, Pontiac, Mount Clemens, and the metro Detroit area, contact Steven L. Rotenberg, PLLC today.