In the realm of estate planning, it’s crucial to understand the various tools available to protect and distribute your assets upon your passing. Two common instruments that often come to mind are Wills and trusts. While both serve similar purposes, they possess distinct characteristics and implications. Below, we review the details in the differences between a Will and a trust, and how they work to protect your assets.
What is a Will?
A Will, also known as a last will and testament, is a legal document that outlines how your assets and property should be distributed upon your death. It designates beneficiaries who will inherit your possessions, appoint an executor to manage your estate, and may include other provisions such as guardianship of minor children and charitable bequests.
In Michigan, to create a valid Will, you must be of sound mind and at least 18 years old. The will must be in writing, signed by the testator (the person making the Will), and witnessed by at least two individuals who are not beneficiaries or related to the testator. While it’s not legally required in Michigan, notarizing your will can add an extra layer of authenticity and streamline the probate process.
Understanding Probate:
Upon the testator’s passing, the Will must go through a legal process called probate. Probate involves validating the Will, paying debts and taxes owed by the deceased, and distributing the assets according to the testator’s wishes. Michigan’s probate laws govern this process and ensure a fair and orderly administration of estates.
While the governing laws ensure a fair and orderly process, probate is typically a time-consuming and expensive process. You can expect to sometimes more than 20% of the estate’s value and often as long as 18 months to complete the process. The court oversees the process, which can lead to delays and potential conflicts among beneficiaries. Additionally, probate is a public process, meaning the details of your estate and the distribution of assets become a matter of public record.
What is a Trust?
A trust is a legal arrangement that allows you (the grantor) to transfer your assets to a trustee, who then manages and distributes them to the beneficiaries according to the terms specified in the trust document. The trust can be established during your lifetime (living trust) or through your Will (testamentary trust).
In Michigan, trusts offer several advantages. First, they bypass probate, allowing for a more efficient and private transfer of assets. Trusts can also provide continuity and management of assets if the grantor becomes incapacitated or unable to manage their affairs. Additionally, trusts offer greater flexibility in terms of asset protection, tax planning, and provisions for special needs beneficiaries.
Choosing Between a Will and a Trust:
Deciding between a Will and a trust depends on various factors, including the size of your estate, your goals for asset distribution, privacy concerns, and the need for flexibility. While Wills are generally suitable for smaller estates and straightforward distribution plans, trusts are favored for larger estates or when specific provisions are necessary, such as planning for incapacity or protecting assets from potential creditors.
Ultimately, consulting with an experienced estate planning attorney is important to assess your unique circumstances and develop a tailored plan that aligns with your goals and ensures a smooth transition of your assets to your loved ones.
Estate planning is a vital aspect of securing your legacy and protecting your loved ones. While Wills and trusts share the common goal of asset distribution, they differ significantly in their implementation and implications. Understanding the distinctions between a Will and a trust in the state of Michigan empowers you to make informed decisions that align with your wishes.
Remember, estate planning is a complex matter, and our article provides only a brief overview.
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Rutkowski Law Firm | Asset Protection, Estate Planning, Elder Law & Probate
40950 Woodward Avenue, Suite 130
Bloomfield Hills, MI 48304
(248) 792-9193
https://rutkowskilawfirm.com/
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About Michael L. Rutkowski
Mike’s Passion Is Helping People.
Whether it’s his career in estate planning, business coaching, or the gym he runs out of his garage, helping others gets him out of bed everyday (at 4:30am!). Mike’s legal career started in workers’ compensation insurance defense, where he would focus the majority of his practice until 2010, when many people in Mike’s life began having children. Out of this change, bore his love for estate planning, where he was able to use his skills as an attorney to help others plan for the future. From there, Mike’s passion expanded into Elder Law, where he has been successful in using legal techniques to protect his clients’ hard-earned life savings from the tremendous expense of long-term care.
Recognizing his expertise in the area of estate planning, the State Bar of Michigan has asked Mike to speak about Trusts and other estate planning topics. He has been a featured speaker throughout Metro Detroit at numerous events, from corporate engagements to university forums. Mike also regularly educates the public about the necessary elements of estate planning through monthly educational workshops, where he provides answers to questions from those in attendance. A networker by nature, Mike also regularly hosts events for business professionals, and his Meet Up group has grown to include over 1,100 members and is ranked 2nd in the Detroit area.
Mike was born and raised in Rochester, Michigan, where he now lives with his wife, three daughters, and two Labrador Retrievers. Mike devotes his time away from the firm to being with his family. He truly commits himself to being around for his kids, taking them to various activities, soccer practices, etc. after work daily. (So please don’t keep him too late on a weeknight!) He also enjoys golfing, CrossFit, skiing, and running. Mike has completed four marathons, three triathlons, and numerous CrossFit competitions around South East Michigan.
