A will is an invaluable part of estate planning. However, trusts can take care of financial matters even before death and have other benefits such as faster distribution of assets, prompt payment of bills and confidentiality.
Income does not create the advantages of trusts. A revocable trust, for example, performs the same task as a will but avoids the requirement for probate court approval and hastens the distribution of money.
Revocable trusts may be changed during a person's lifetime. A person can close a revocable trust if their financial situation changes or they feel they made a mistake.
A trust also provides more privacy than a will which may be disclosed in probate. It is also distinguishable because courts provide more scrutiny to the terms of a will and must approve them. Trusts do not require independent approval or review.
Trusts also assure that personal and financial needs are covered if that person becomes incapacitated. As people live longer, they also face the risk of Alzheimer's and other conditions that impede their ability to handle their finances and other affairs. According to estimates, at least 5.5 million people in this country are afflicted with this disease.
Revocable trusts help assure the prompt payment of bills during a person's lifetime without interruption by taking items in the person's name and retitling them in the name of the trust. These trusts allow the uninterrupted payment of other expenses such as a grandchild's college tuition even if the grandparent becomes incapacitated.
Trusts have some disadvantages. A person who creates the trust also controls it and selects one or more co-trustees to assist with its management.
This is a difficult but important decision and requires the selection of a person with the ability for making wise long-term investments. Selection of the trustee can be the basis of future problems if a person follows their inclination to pick a spouse or a child who is nonetheless unqualified or does not have the time to perform this important duty.
Making decisions about finances requires compliance with Michigan laws, valid documents and the ability to select reasonable options. A qualified attorney can help with these matters and help assure that a person can take care of future expenses and assets are distributed appropriately.
Source: The New York Times, "Life after death? Here's why you should have a trust" By Elizabeth Olson, March 22, 2018