A trustee is appointed to manage a living trust and assure that its assets are distributed to the appropriate beneficiaries in accordance with the trust’s instructions. The person who placed their assets in the trust can name themselves as a trustee or appoint another person
An irrevocable living trust is permanent where property cannot be taken out of this trust unless every person named in the trust gives their permission. The grantor, the person who placed their property in the trust, gives up ownership of the assets that were placed in the trust. The trust pays taxes on its assets.
A revocable living trust is more flexible. The grantor can take property from the trust and change the trust at their discretion. The grantor is the owner of the trust’s assets and must pay taxes on it.
Creating a living trust involves several steps. First, a grantor must select the type of trust. A single person can only create a single trust. Married couples can choose a single trust or joint trust. A joint trust allows the joint storing of property like vehicles or homes.
Taking inventory of property for placement in the trust is the next step. Bank accounts, investments, real estate, family valuables and practically any asset can be placed in a trust.
Next, a trustee who is competent and trustworthy must be selected. The trustee manages the trust’s property and assures that property is correctly passed onto the beneficiaries. Grantors may select themselves but should also select a successor trustee to take over if they die or become incapacitated.
After drafting and executing the trust document before a notary public, the grantor must place property into the trust. Paperwork is often complicated for this step.
Property in a living trust does not have to undergo probate in Michigan. This trust is useful for leaving property to young children or children with special needs to assure that it is used properly. This trust also helps avoid conservatorship if a grantor becomes incapacitated.
An attorney can provide guidance on creating a trust that meets these needs. Attorneys may also help assure that the trust is valid and properly drafted.