Binghamlegal group
248-952-8783 888-794-3433

Detroit Probate, Trust & Estate Administration Law Blog

What parents need to know about spendthrift trusts

When planning for the future, a person in Detroit should consider how his or her beneficiaries may handle their inheritance. For many people, the goal is not merely to distribute assets, but to allocate them as provision for their children’s future. Not everyone understands how to be responsible with money, though, particularly when there is a lot of it. NerdWallet explains that in these cases, a parent can choose someone else to manage the child’s inheritance for him or her through a spendthrift trust.

As HuffPost points out, an irresponsible heir could deprive himself or herself of an inheritance set up in a regular trust fund because there are methods for selling the future income. Typically, a spendthrift trust includes a provision that prevents this action, along with protections against the income being seized by creditors, liquidated in a bankruptcy or divided in a divorce. However, a judge who makes a ruling in a divorce may consider the income when determining a fair division of other property. Laws regarding child or spousal support may require a beneficiary to use the income to make those payments.

Why probate may be preferable to joint accounts and ownership

Many people in Michigan may assume that probate is something to be avoided at all costs. By adding another person’s name to a property title or a bank account, they may be able to skip over that process. However, as Bankrate.com points out, there are dangers to sharing ownership of assets, particularly for people who are not spouses, even though the rights of survivorship can negate the need for a will or probate.

When both names are on an account, either person may withdraw or transfer funds, no matter who deposits the money. Other actions by one person that could affect both include money garnished by a debt collector or for child support, a lien and overdraft charges. If the person added to the account withdraws more than the annual limit, it may be subject to gift taxes, even though it is not intended that way.

Convincing a loved one to create an advance directive

End-of-life decisions are often a part of a Michigan estate plan, but a person does not necessarily have to be on a deathbed to need important questions answered by this document. However, the answers could make the difference between life or death.

According to the State of Michigan, an advance directive contains information about how medical care should or should not be administered if a person is incapacitated and unable to choose in the moment. Some choices can be made ahead of time, but it is a good idea to name a patient advocate, as well. This should be a person who is trusted absolutely to make the decisions that the patient would have if he or she had been able. The agreement must be in writing, and the person chosen must sign it, in order for it to be legal.

Tax advantages and income benefits of charitable trusts

One of the primary goals you probably have when you begin the estate planning process in Michigan is to keep as many of your assets as possible from being taxed so that you can preserve them for your heirs. Trusts are tools that may achieve your objectives. At the Bingham Legal Group PC, we often advise people about the benefits of charitable trusts.

According to Fidelity, if you decide to set up this type of trust, not only are you supporting your favorite cause, you may be able to significantly reduce the amount of money that goes to the IRS. For example, you may receive income tax deductions based on your donations to charity. Depending on whether you opt for a charitable remainder or lead trust, you may qualify for a gift tax deduction, as well. Because the assets that you place in the trust are no longer officially part of your estate, your beneficiaries will not lose as much money to estate taxes.

Ways to prevent sibling conflict during probate

Having substantial assets may cause a parent in Michigan to feel anxious over the way the children will deal with the news of who gets what in the estate plan. According to Forbes magazine, much of the potential for disputes over inheritance may be anticipated and addressed ahead of time.

Even if sibling rivalry is kicking in before the parent has passed, there is no need to take such drastic measures as eliminating the assets so no one gets them. However, if the parent owns a significant amount of personal property, heirlooms and real estate, and the likelihood of conflict is high, he or she may want to go as far as to designate that all items are sold at auction, and the money divided evenly. Someone who would rather keep things in the family may want to have a professional mediator assist with the discussion when finalizing the estate plan.

Have you confided pertinent estate planning information?

When you sit down with your attorney to flesh out your estate plan, you may be under the impression that the usual information about financial assets, property, bequests and the like will be sufficient. You will be talking about things like wills, trusts and patient advocate designations, and you think you have everything covered.

However, there may be parts of your life or beliefs you hold that could be relevant in terms of estate planning. Consider the following points, and if any apply to your situation, you should share the details with your attorney.

Writing your will

Whether you tend to be the type who is kept awake at night by worries, or you just recently had a major change of circumstances, right now might be the moment when you feel the need to jot down your last will and testament. If you die without completing this document, the probate process could become particularly difficult for those you leave behind. The legal team at the Bingham Legal Group PC has provided assistance to many people who want to make sure their wishes are honored after death.

Without an estate plan to follow, the Michigan court system takes inventory of your assets and liabilities after your death, and appoints a person to oversee the distribution of your estate among your heirs. According to the Michigan Legislature, your will has to be written and signed by you, and witnessed and signed by two other people. However, you could also direct someone else to sign it for you in your presence if you are not able to.

What are the duties of a trustee?

As a trustee in Michigan, you agreed to take care of certain tasks for the settlor. According to the National Paralegal College, you must perform your responsibilities with the level of care that you would use if the property or assets in question were your own. If you are not a professional fiduciary, you would not be held to the same standard that would be expected from a trust company or financial institution. However, you could be held personally accountable for losses that come about because of any negligence in your duties.

You may have the ability to delegate some of the functions to professionals, which could be particularly beneficial if you are not trained to manage investments or similar assets. You are still obligated to make sure that any delegated tasks are performed correctly by the person or institution you hired, as well as to provide a regular record of the expenses, assets and losses to the beneficiaries, and to the court.

Preparing the inventory

A person who has been named as the personal representative of an estate in Michigan has several duties after the death of the decedent, such as paying his or her debts and distributing assets to the beneficiaries. According to MichiganLegalHelp.org, one thing that has to be done before these other tasks can be undertaken is the preparation of an inventory of the estate.

The Michigan Courts differentiate between the types of property that must be inventoried. Real property is land and the buildings on it; personal property is anything else. Each of these items must have value attached to it, although similar items may sometimes be placed in categories, such as housewares, furnishings or clothing. Items that must be valued individually include the following:

  •          Bank accounts
  •          Stocks and bonds
  •          Mutual funds
  •          Annuities

Providing for your heirs through your business

You may have put some thought into what you want to include in your Michigan will, but if you own a business, there may be factors that you are not sure how to handle. For example, determining whether your child should run your company after you are gone may be difficult on a business level, but it could also be an emotional decision. At the Bingham Legal Group PC, our team often provides entrepreneurs with answers to this type of succession plan question.

Entrepreneur Media explains that if you want to name your child as successor in your will, it may benefit both of you to begin training him or her in the basics of the business. This gives you a chance to raise the company’s likelihood of ongoing success after your death, and it also allows your child to test the waters and see if this kind of work is something that can be undertaken in the long-term.

proper representation is important.schedule a meeting to review your case andlearn more about how we can help you.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

have you already made an appointment?review our address information and get driving directions to our location.

Bingham Legal Group PC
30100 Telegraph Road, Suite 360
Bingham Farms, MI 48025

Fax: 248-642-3207
Bingham Farms Law Office Map

Phone: 248 952 8783
Toll Free: 888-794-3433
Contact the Team

Review Us