February 23, 2019
Do I Need a Will If I Have a Living Trust?
Living trusts have several benefits for estate planning. Many estate planning attorneys suggest utilizing this estate planning tool as an important part of a comprehensive estate plan. However, living trusts are not a substitute for a will.
Our Michigan estate planning attorneys explain the differences between a living trust and a will in this blog to help you understand how they work and why you may want to use both of these tools in your estate plan.
How Does a Will Work Under Michigan Law?
A will becomes effective upon your death. Until that time, your will is a legal document that serves no purpose in your day-to-day financial matters. If this is true, why would anyone take the time to draft and execute a will? Let’s take a closer look at why you need a will.
A will is the most basic form of estate planning and is essential in ensuring your property is distributed according to your wishes after your death. When you die, your estate takes possession of all property you owned at the time of your death. Through your estate, your final debts are paid, and your property is distributed to your heirs. If you drafted a will, you are in control of how your property is distributed to your heirs. You choose who your heirs will be, including friends and charities, and you choose how the property will be divided among those heirs.
However, if you do not have a will, the state is in control of how your property is distributed, and who can inherit your property. Michigan’s intestate laws govern estates in which a person did not have a valid will.
The intestate laws dictate who can be an heir and how much property that heir can receive. Surviving spouses and children typically inherit all property because the intestate laws do not recognize friends and charities as heirs. Therefore, without a will, your desires may not be respected after your death by your family members, even if they know about your wishes. The only way you can control how your estate is distributed is to draft a valid will before your death.
Also, a will can name a guardian and trustee for minor children. If you die without a will, a family member or other interested person must petition the court to be appointed as your child’s guardian. To retain control of who raises your child and manages his or her inheritance, you need a will.
How Does a Living Trust Work in Michigan?
In contrast, a living trust is effective during your lifetime. After drafting a living trust agreement, you transfer assets to the trust. The trust becomes the owner of that property. You may serve as the trustee so that you retain control of the assets during your lifetime. A revocable living trust can be modified and revoked as you see fit during your lifetime.
Upon your death, the trust becomes an irrevocable trust and cannot be changed. A successor trustee assumes the responsibility of managing the trust, according to the terms of the trust as of the date of your death. The property within the trust is distributed to the trust’s beneficiaries. In this regard, a living trust is much like your will. However, a living trust offers several benefits that a will does not.
- A living trust avoids the necessity of probate. The property can be distributed directly to the beneficiaries quickly because the court is not involved.
- The property owned by the trust is not taxable as part of your final estate. Therefore, living trusts may be a way for some individuals to avoid paying estate taxes.
- Trust agreements can also protect property from creditor claims.
- Within your trust, you can direct your successor trustee to establish new trusts to hold property for minor children, adults with special needs, or adult children who may not be skillful in managing money.
Taking the Next Step – Consulting a Michigan Estate Planning Attorney
Both a will and a living trust serve important roles in an estate plan. They each have unique purposes and provide different benefits. If you are unsure whether adding a living will to your estate plan is right for you, a Michigan estate planning attorney can help.
The lawyers of The Elder Care Firm of Christopher J. Berry, CELA are well-versed in all matters related to estate planning, including trust agreements and other estate planning tools.
Call 888-390-4360 or use the contact form on our website to schedule an appointment with one of our attorneys.