For Michigan residents considering which estate planning instruments are the right ones for their unique situation, the wide variety of options can be daunting. However, for the most part, the basic building blocks of a good comprehensive estate plan are, at the very least, a will, powers of attorney and an advanced medical care directive. These documents will provide directions on how to distribute assets, appoint the right people to make crucial decisions if needed by the incapacity of the planner and express wishes as to what type of care the planner wants in an end-of-life medical situation. But what about trusts?
As noted in a recent article, many people may overlook the benefits of a trust because they think trusts are only for wealthy people. But that’s not the case. There are many reasons why a trust may fit an individual’s wishes. Some people take advantage of trusts for tax planning purposes. Others establish trusts because their main goal in an estate plan is protecting inheritance. But one particular reason may be the driving force for many trusts these days: remarriage.
When a person has children in one relationship that is then dissolved, and then remarries a subsequent spouse, oftentimes the desire is to pass on assets to the children of the first marriage. This is where establishing a trust can help. Specific assets can be used to establish the trust, with the children named as the beneficiaries of the trust. This will ensure that those designated assets pass directly to the desired party. Even better, those assets will pass outside of the probate process.
Many Michigan residents probably have questions about trusts, which is understandable. There are many different scenarios in which a trust can be an option. Determining whether a trust is the right option is just the first step.
Source: Community Advocate, “Estate Planning and Protection Law: Trusts can protect assets beyond the scope of a will,” Nancy Brumback, Oct. 15, 2013