What is a Trust?
A revocable living trust (also known as a "living trust" or "intervivos trust") is a legal relationship in which assets are transferred to a trustee (usually you are the trustee during your lifetime) to be used for the benefit of one or more beneficiaries. It does not prevent you from continuing to use your property as you wish during your lifetime. A trust ensures that your assets are managed in the way that you intend after your death or in the event you become incapacitated. By using a trust, you can arrange for the management of your assets after death or during incapacity. It also alleviates the burden on your loved ones of dealing with complex administrative, legal, and investment issues during already difficult times. A trust has several other advantages including avoiding the delays and expenses of probate, maintaining privacy, saving estate taxes, and ensuring that your assets continue to be managed properly. A revocable living trust avoids probate because your property is owned by the trust, so technically there is nothing for the courts to administer.
Do I Really Need a Trust?
There are many benefits to having a revocable living trust "trust" but a trust is not the best estate planning vehicle for every client. Our firm evaluates each client's individual needs and goals and formulates an estate plan best suited for their specific needs.
The primary reason people create trusts are: to provide for the management of their property if they become incapacitated; to avoid probate of assets after death; to keep their financial affairs confidential (probate court documents are open to the public; whereas trust documents are not); to provide for the disposition of their assets after death to their designated beneficiaries either outright, over a period of time, or for the life of one or more beneficiaries; and to provide more options than a simple will.
A trust is not just for the rich. A trust can help anyone protect his or her family from unnecessary probate fees, attorney's fees, court costs, and federal estate taxes. In certain circumstances even individuals with very small estates can derive meaningful benefits. While you are alive, you may act as trustee of your trust. For married couples, either one or both spouses may act as trustee or co-trustees. The successor trustee is an individual or corporate fiduciary whom you designate to be in charge of your trust in the event of your disability or upon your death.
While you are alive and mentally competent, you have complete control over your property. You can buy, sell, improve, spend, change investments, or give away property just as you would without a trust. The trust can be modified in any manner you desire or it can be completely revoked if you wish.
Upon your death, the trust becomes irrevocable so that no one can change your testamentary wishes. Upon your incapacity, your financial durable power of attorney comes into effect. For married couples, the surviving spouse still has total control over his or her share of the property after its transfer to the survivor's trust, and the trust becomes irrevocable only as to the deceased spouse's share.
Check out the following link for a publication from the Probate and Estate Planning Section of the State Bar of Michigan: