Wills and trusts are estate planning tools that you may choose based on your circumstances. Each document offers different features. Your choice may depend on whether you wish to transfer ownership of your assets smoothly or provide your beneficiaries with an income stream.
Individuals with an existing will may find they also need a trust because it could minimize estate taxes. Others may require a means of enabling a trustee to oversee the care and finances of someone with special needs. Overall, the primary benefit of a will or trust centers on having a document that protects your intentions, assets and property.
Passing on without a will versus creating one
If you pass on without a will, the State of Michigan divides your assets under its intestacy laws as noted under Section 700.2102. Your spouse, parents and heirs may each inherit a portion of your property depending on who remains alive.
Creating a will ensures your assets transfer to specified individuals. By listing your properties in a will, you can include instructions regarding how the probate court should transfer each asset to a designated beneficiary.
Executing a living trust versus an irrevocable trust
A revocable living trust and an irrevocable trust serve to transfer property without requiring heirs to go through probate. Trusts save time for your beneficiaries after you pass on, but you could begin to utilize a living trust while you are alive.
With a revocable living trust, you maintain control over your assets and could name yourself as its trustee, as noted by Kiplinger magazine. A living trust may also include a healthcare directive and powers of attorney authorizing another individual to make medical or financial decisions for you.
An irrevocable trust generally transfers ownership and control of your assets to your estate’s designated trustee when executed. It could also reduce your beneficiaries’ tax burden.