Should I create a trust for my estate?
November 8, 2022
You do not have to put your estate through probate court. To avoid the process, you need to place your assets in a trust. However, establishing a trust usually is more expensive than writing a simple will. You might question the benefit of avoiding probate court, especially since you will not be there to see the outcome.
Every estate is different, but it is probably in your best interest to establish a trust if you have significant assets. To learn why see below.
Probate is not free
According to Michigan Intestate Law, your property passes to beneficiaries without a trust or will. This might not seem so bad, but the process takes longer and has its fees. The state-appointed attorney, executor and courts do not work for free. Though skipping an estate plan while alive might be cheaper, your beneficiaries will pay for it in the long run.
Trusts minimize certain taxes
Even if you opt for a will, your assets still go through probate. High-valued estates benefit very little from a will besides the fact that you can choose your beneficiaries. Establishing a trust that allows your assets to pass smoothly and quickly upon death is much more prudent. Adding your beneficiaries to your bank accounts and property deeds while you are alive is not a good idea either. Creating a trust helps your heirs avoid the capital gains tax because the IRS judges inherited income on a step-up basis.
A simple will is a good option for some people. However, if you earned a lot of wealth throughout your life, a trust might be the better option.