Many Michigan residents put off discussing estate planning or making plans for after their death because it is uncomfortable to think about. However, the desire to leave money, assets, or other possessions to one's children often motivates people to take the steps to begin this planning process. Although there are many different options available for protecting one's own interests, as well as the potential interests of prospective heirs, trusts should not be overlooked.
A recent article in the Washington Post noted that even people who are not millionaires often desire to leave some type of inheritance to their children. The article provided a range of potential solutions for people seeking to make these plans, even those without significant levels of wealth. First and foremost, the article emphasized the importance of a will as a way for people to dictate their wishes and ensure that those wishes have legal force. Other options for passing on wealth included leaving children retirement benefits from retirement accounts, life insurance, 529 accounts, and trusts. The article noted that trusts, specifically revocable living trusts, provide the particular benefits of allowing the trust creator to control the trust during his or her lifetime, change or cancel the trust at any point, and transfer control of the trust to a successor upon the creator's death.
Trusts are often-overlooked, but highly useful, tools of estate planning. A person can designate a trust as either a revocable trust or an irrevocable trust. Each kind has different benefits and limitations. Although people should not rely on a trust as the only component of their estate planning, it can create a powerful plan when combined with a valid will and other forms of estate planning.
Trusts can have many different functions and purposes, so Michigan residents interested in creating a trust would do well to consult with an experienced attorney who can help them determine what kind of trust might best meet their needs. Functions and advantages of creating a trust can include tax planning (i.e., deferring income and maximizing growth of income), ensuring high quality of life if nursing home care becomes necessary, providing for the needs and protection of children-including those with special needs, protecting inheritances from abuse or misuse, and carrying out charitable giving.
Source: Washington Post, "How to pass money on to your children," Jonnelle Marte, Nov. 3, 2014,