"Let's keep things simple." This phrase is not only common, but also it is often good advice. Unfortunately for many Michigan residents who are thinking about strategies for protecting inheritance and solidifying tax planning, simplicity is often the last thing they think will come into play. When many people hear the terms "estate planning" and "living trust," they most likely think that things are about to get complicated. Fortunately, a recent article acknowledged this possibility and attempted to explain the benefits of considering a living trust as part of an estate plan.
The article pointed toward two primary concerns: first, a living trust can often be used in place of a will. This is done in order to avoid the probate process. Second, a living trust is most often recommended for individuals or couples who have over $100,000 in assets. The larger the estate, the more likely a living trust would be among the recommendations for an estate plan.
A living trust a form of revocable trust, which thereby means that the appointed trustee can make changes as needed. The most popular option for a living trust's appointed trustee is the estate planner himself, with a successor named "just in case."
Probably the biggest consideration with a living trust is exactly what type of assets can be placed in the trust's name. And that may also be the biggest advantage of the living trust: as the article points out, almost anything can be placed in the trust's name - anything that is not in the trust's name will remain outside of the trust. When the time comes for the ultimate purpose of the trust to take effect, there is more good news: assets in the trust will avoid the probate process. However, they will still be subject to taxation.
Source: The Community Voice, "A living trust can simplify estate planning," Ken Weise, June 14, 2013