What Is The Difference Between a Will and Trust in Michigan
Most people have heard of a “Will” or a “Trust”. Both involve transferring or protecting assets, so often we find that most people assume they are the same thing. But, both of these documents serve different purposes.
What is a will?
A will is a legal document that instructs how you want your assets (financial and material) distributed after your death. In it you can appoint your executor/executrix/personal representative, name your beneficiaries, designate legal guardians for your children, and leave specific instructions as to how and when your beneficiaries receive their inheritances. A valid will also gives the person you choose as your executor – who has the legal right to oversee your estate, which will allow them to move forward with things like settling outstanding financial obligations and the distribution of your assets to your beneficiaries.
What is a trust?
A trust is a legal arrangement through which one person or an institution (trustee) holds the legal title to property for another person (beneficiary.) A living trust allows you to manage your assets both before and after death and you remain in complete control of your assets and can move them in and out as you wish, as the trustee. Should you become incapacitated, a trust will allow you to nominate someone to take care of your medical and financial needs. Similar to a will, a living trust details your desires regarding your assets, dependents and heirs, but unlike a will, you can include a “no-contest clause” that will cause a contesting beneficiary to forfeit his/her share, therefore making contesting or challenging less likely.
One of the major differences between a will and trust is that a will only goes in to affect after you pass, and it must go through probate court. A probate judge will confirm the will is legal and valid. These fees can be costly and the process can be time-consuming and stressful. Trusts take effect as soon as its created, ensures privacy and will also bypass probate court. A will allows you to name a guardian for children and to indicate funeral arrangements, and a trust does not. Wills and trusts have their advantages and disadvantages, speaking with an Estate Attorney will help you assess your individual needs and how to best use a will and a trust in your estate planning.
What Happens If You Don’t Have Either?
With no preparation, your estate MUST go through Probate Court who will determine how your assets are distributed and who distributes them. This can create conflict among your loved ones, who may not agree about what you would have wanted in the event of your passing. When you die without a will or trust in place (intestate) your state laws determine who will inherit your assets. A problem with this that, for example, you are not married but have a long time live-in partner who has a child that you love as your own, but you have not adopted. You have no biological children and your parents have already passed. You do, however have 2 siblings that you have had a falling out with and have become estranged from. Without a will or a trust, in some states your estate would go to your siblings, leaving your partner and child with nothing and no legal right to anything, despite the situation.
We know that no one really likes to think about their death, but unfortunately, it’s going to happen. We might as well leave something behind that ensures that your last wishes and intentions for your assets are carried out the way YOU wanted. This will also make the process easier for the loved ones you leave behind so they can grieve without having any additional strain.
It is important to know all the options that are available to you and make an informed decision on what would work best for your specific situation and needs. Please feel free to reach out if you have any questions. You can contact the Estate Planning experts at My Estate Plan Michigan at 248-744-4434 or email us at firstname.lastname@example.org.