A trust is a legal structure where one person (the grantor or settlor) transfers assets to a third party (the trustee) to manage for the benefit of others (beneficiaries). Trusts are vital estate planning tools. They help control how assets are distributed, protect wealth, avoid probate, and care for loved ones or charitable causes.
Because each trust type available to individuals in Royal Oak serves different purposes, it’s important to work with a knowledgeable trust administration attorney who can help you choose and properly structure the right one for your goals.
Trusts can be either revocable or irrevocable, with several specialized types used for different estate planning goals. The best trust option will depend on your specific needs.
A revocable trust is one of the most common estate planning tools you can utilize. You transfer your assets into the trust while you are alive, and as the trustee, you maintain full control over the assets.
This type of trust can be amended or revoked at any time. Upon your death, a successor trustee distributes the assets to your beneficiaries without the need for the involvement of a Michigan probate court.
However, because you retain control, assets in a revocable trust are still considered part of your estate for Medicaid eligibility and tax purposes.
An irrevocable trust cannot be changed or terminated after it is created. There are specific rules which dictate when and if an irrevocable trust can be terminated or amended. You transfer assets into the trust and give up control over them. Because the assets are no longer considered yours, they are generally protected from creditors and can be used to minimize estate taxes for larger estates.
This specialized trust owns a life insurance policy on your life, keeping the death benefit outside your taxable estate. It ensures the proceeds pass directly to your beneficiaries and remain protected from creditors or claims.
A special needs trust provides financial support for an individual with a disability without jeopardizing their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).
A charitable trust enables you to give back while receiving tax advantages.
A Medicaid Asset Protection Trust is an irrevocable trust used by individuals to protect assets from being counted by Michigan Medicaid for long-term care eligibility purposes. To be effective, assets must typically be transferred into the trust at least five years before applying for Medicaid.
A qualified personal residence trust is an estate planning tool for a resident to transfer a personal residence (like a primary home or vacation home) to beneficiaries for reduced gift and estate taxes.
What Are the Benefits of Executing Various Types of Trusts? Trusts can offer substantial advantages beyond a traditional will, such as:
A Royal Oak attorney can help ensure the type of trust you choose fits seamlessly with your will, powers of attorney, patient advocacy, and overall estate plan.
In addition to helping you understand the types of trust available, our Royal Oak attorneys can help you choose the right person or entity (such as a family member or a professional corporate trustee) to manage the trust. We will ensure the trust is a cohesive part of your broader estate plan, working in conjunction with your Will and other estate documents.
Knowing that your trust reflects your wishes provides the peace of mind to know that your loved ones will be taken care of in the future.
At The Probate Pro, we help clients design trusts that protect their families, preserve wealth, and reflect their personal values. Whether you’re creating a new trust or updating an existing one, we’ll ensure it’s structured to comply with Michigan law and achieve your goals.
Contact The Probate Pro today.