As we've indicated on this blog, discussions regarding estate planning aren't the easiest to have with a spouse or other loved ones. Certainly, this is a barrier that people may need to overcome in order to create an effective will.
At the same time, people may be overwhelmed by all of the options that come along with estate planning. After all, many people probably don't know off the top of their head what types of estate planning tools will best suit their needs. This is the type of situation in which an estate planning attorney can help fill in the blanks as necessary.
Trusts might be one legal device that people might immediately -- and inadvertently -- write off. The reality is that trusts aren't only for couples who are considered "wealthy." Rather, trusts allow people to work within estate planning laws to control asset distribution and help maximize the share of assets passed on to beneficiaries.
For married couples, an AB living trust might be a worthy option. This allows assets to be passed along to children or other loved ones after both spouses pass away without bearing full estate tax liability.
Generally speaking, when one spouse dies, the other will receive assets tax free. Once both individuals pass away, the assets could be subject to taxation before being passed to surviving family or friends. By establishing an AB living trust, however, spouses invest all or most of their assets in the trust. After the first spouse passes, the surviving spouse technically doesn't own the assets, but provisions can be made to allow living expenses to be set aside.
Interestingly enough, an analysis of state laws provided by the USA Today determined that Michigan is one of the 10 most difficult states for retirement. Although there is no state estate tax in Michigan, many people are still subject to have their retirement or pension income taxed by the state. In other words, taking steps to plan ahead can help preserve financial assets for loved ones in order to help provide for them in years to come.
Despite the advantages that trusts provide, they're complicated legal instruments. However, our firm has significant experience in creating this type of legal arrangement in order to meet unique needs. This way, the questions and uncertainty can be removed from the process, and couples can confidently anticipate the future.
To explore this estate planning option further, please visit our firm's AB living trust page.