Estate planning is a crucial aspect of securing your legacy and ensuring your assets are distributed according to your wishes. Two common instruments used in estate planning are wills and trusts. In this guide, we will delve into the key differences between a will and a trust, shedding light on some of the intricacies of estate planning law. If you’re in Michigan and navigating these waters, our expert Michigan estate planning lawyers at Curcio Law, PLLC, are here for your family.
What is a Will?
A will is a legal document that outlines your wishes regarding the distribution of your assets after your death. It appoints a personal representative, or executor, who is responsible for carrying out your instructions and ensures your estate goes through the probate process.
It is a common misconception that a will avoids probate. To the contrary, your will must go through probate if there are assets in your name held individually at the time of your death. The probate process may be court-supervised, and the process can be time-consuming and may involve additional costs. Wills also become a matter of public record, meaning anyone can access the details of your estate distribution. Sometimes, families prefer not to have their dirty laundry aired before the courts and the public. Additionally, a will is not a separate vehicle for the management of assets during your lifetime; your will is only effectuated after you die.
Another key aspect of a will is that it allows you to nominate a guardian and conservator for your minor children, specifying who will care for them and their finances in the event of your passing. This is of utmost importance for young families – estate planning is for everyone, not just retirees.
What is a Trust?
A trust, in its purest form, is a contract between you, the settlor or grantor (the person who created the trust) and the trustee, or the person tasked with holding the trust assets and distributing them pursuant to the trust terms to the beneficiary(ies), the person or persons who are entitled to an interest in the trust assets. A trust can be a separate legal entity, with its own tax identification number, that holds and manages assets on behalf of beneficiaries.
Unlike a will, a trust can be effective during your lifetime and can bypass the probate process. One of the primary advantages of a trust is its ability to avoid probate, providing a faster and more private method of asset distribution. Trusts are private documents, offering confidentiality to your estate planning details and avoiding the public scrutiny associated with wills. Trusts also come in various forms, offering flexibility to address specific needs. Some common types include revocable living trusts, irrevocable trusts, and testamentary trusts, but these are broad categories, and the language of each can differ significantly dependent upon the settlor’s goals for their estate plan.
For instance, your primary goal may be probate avoidance – which might be accomplished by some other means beside a trust. Or, your goal may be to provide a common pool of resources for your children if they are minors at the time of your death, or to preserve a disabled child’s inheritance that might otherwise be lost to the state. Or, perhaps your intention is minimizing estate and gift tax liability, or protect your assets in the event you need to go to the nursing home. Each of these goals, among many others, can be addressed with a trust.
Choosing Between a Will and a Trust
One of the most frequent comments we hear from would-be estate planners is “I don’t have much, all I need is a will,” and, for straightforward estates, a will may suffice in conjunction with designating beneficiaries on specific assets. While the nature and extent of your assets is an important part of the picture, the choice between a will and a trust hinges more on your goals than the extent of your estate. Dependent upon your goals and whether your estate is complex or involves various assets, a trust might offer more comprehensive solutions.
If you wish to avoid the probate process and maintain privacy, a trust may be the preferred option. If retaining control over your assets during your lifetime is crucial, a trust can provide that flexibility. If your goal is to preserve and protect assets or minimize tax liability, a trust might be the only option.
Consult with a Michigan Estate Planning Lawyer
Navigating the nuances of estate planning law in Michigan requires expertise. Our Michigan estate planning lawyers at Curcio Law, PLLC, specialize in creating personalized plans tailored to your unique circumstances. Whether you’re considering a will, a trust, or a combination of both, we are here to guide you through the process and ensure your wishes are accurately reflected.
Understanding the differences between a will and a trust is essential for effective estate planning. There is no one-size-fits-all estate planning solution. If you have questions or need assistance, contact our Michigan estate planning lawyers today to secure your legacy and protect your loved ones.
Curcio Law, PLLC
625 Kenmoor Ave SE Ste 301
Grand Rapids, MI 49546
(616) 226-1861
jcurcio@curciolawmi.com
