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Posts tagged "trusts"

What to know about grantor trusts

Michigan residents and others who are looking to protect their assets may benefit from creating a trust. Assets inside of a trust are generally off-limits to creditors, and beneficiaries may be limited in how they use money or other items distributed from it. A grantor trust is a type of living trust that allows the creator to retain control of assets titled in the document's name. As the assets are still under the grantor's control, income is taxed to that person instead of to the trust.

How 529 plans can fit into an estate plan

Making gifts to an irrevocable trust may be an effective way for an individual to reduce the size of his or her taxable estate. However, it also means giving up control of how assets are used, and it also means giving up the ability to change who benefits from those assets. This can be problematic if the beneficiary passes away or no longer needs money or other items that were placed in the trust.

Having a will may not be enough

Michigan families that have an estate plan will almost always have a will in place. However, they often want to know whether they need a trust if they already have a will. In many cases, the answer to this question is yes.

How assets in a trust are taxed

Income that is generated by a trust can either be kept in the trust or distributed to beneficiaries. In some cases, a Michigan trustee will have the ability to make distributions as he or she sees fit. However, it is also possible that the trust itself will limit the actions that a trustee is allowed to take. For instance, the document may not allow distributions to be made unless they are for educational purposes.

Tips for using trusts to avoid estate tax

People in Michigan who are creating an estate plan may want to consider using a trust and a trust protector. The reason to use a trust in the first place is to protect the assets in case of divorce or other problems, such as a lawsuit. As an example, a living trust can be set up for an adult child with the child as the trustee and a sibling appointed as protector. If a problem arises, the child would lose access to the trust, and the protector would be in charge of it.

What is an AB trust?

Trusts may seem like complicated estate planning tools, but, with the right help and a trustworthy legal counselor, a Michigan resident can confidently execute this important testamentary device. There are many different types of trusts that individuals can use to meet their estate planning goals. One popular form of trust is the AB trust, which is often used by married couples.

Special needs trusts

The estate planning process is designed to create protections for the future. Depending on the needs and wishes of an individual, an estate plan can include various documents.

Flexibility and trusts

Changes to the federal tax laws in 2017 increased estate exemption amounts and provided other benefits for a trust. But, this law is complex and may expire in 2025, if not earlier. Because of this unpredictability, trusts may need more flexibility.

Planning an inheritance trust

Heirs often assume that their inheritance is protected from creditors, taxes, divorce and undue influence, if there was an incapacity. But, there may be little support for this assumption unless inheritance trusts were properly planned. Several components should be considered.

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