Many people, perhaps even some of our Michigan readers, have a will that sets out their wishes for after they die - and they believe that is all that they need. While it may be true in a limited amount of cases that just having a will is enough - and, granted, that is better than nothing - the fact of the matter is that most people will need to have more documents drafted to ensure that every possible eventuality is discussed and planned for to maximize their efforts in protecting inheritance. As mentioned in a recent article, for those with a more significant amount of assets, a living trust could be the best option.
Trusts in general can be perceived as complex by the average person, and many people will avoid considering trusts as part of a comprehensive estate plan because of the perception that they can get into murky territory. However, a living trust is actually intended to make things easier for an individual and their family members, both while the person is still alive and after death.
First and foremost, a living trust can be established while a person is still alive and that person can still benefit from that trust. In essence, the person transfers assets - which can include everything from real estate to business interests - into the trust. Thereafter the assets are effectively owned by the trust instead of the person, but the person who establishes the trust still benefits from the trust while they are alive. Upon death, the transfer of assets can avoid the probate process completely, in most cases. This can be an especially useful tax planning strategy.
Taking a first step in estate planning by having a will drafted is a good start. However, many people will need to consider other legal mechanisms to protect their estate - and a living trust can be a good option.
Source: Investing Answers, "Your Will May Not Be Enough -- Here's What You Can Do Instead," Miranda Marquit, July 24, 2013