This is the time of year when many Michigan residents are finding out whether or not they have taken the right approach to tax planning. Withholding too much or too little in taxes from a paycheck will often make the difference between receiving a refund and owing money to Uncle Sam. But what about long-term tax planning? How do Michigan residents make sure that they have the right structures in place for protecting inheritance and guaranteeing the distribution of their estate in the manner they desire?
Anyone familiar with previous posts here knows that a will is essentially the bedrock of any good, comprehensive estate plan. But what if more is needed? Some people may what to consider the advantages of including trusts in their estate plan.
A recent article explored some of the reasons that an individual may want to include a certain type of trust in an estate plan. Many of our readers may think that trusts only come into the picture for people with a large amount of assets - rich people, in essence. But this is not always true. Trusts can be key in making sure that certain assets are passed on to certain beneficiaries. For example, a man who has children from a previous marriage but now has a second wife after a divorce may want to ensure that his new wife is taken care of in the event of his death, but he actually wants ownership of the property in his estate to pass to his children from the previous relationship. In this scenario there is a specific type of trust which will allow the subsequent spouse to enjoy the use and distributions from the estate for the remainder of her life, but upon her death the estate would pass to the deceased husband's children.
There are so many different scenarios in which a trust could be the best option for an estate plan, whether the trust is a revocable trust, irrevocable trust or a trust for children with special needs, for example. Knowing when to consider trusts in an estate plan could make the difference in seeing the assets in an estate pass to the intended recipient - with minimal tax implications.
Source: nj.com, "Your Legal Corner: Trusts," Victoria M. Dalton, March 24, 2013