Trusts are one of the most powerful tools in estate planning. When implemented properly, they allow you to control the use and distribution of your assets and can provide a wealth of other benefits.
At Hertz Schram PC, our estate planning and asset protection team is at the forefront of trust law. We draw on our many combined decades of experience and conduct in-depth research into emerging trust-related topics so that we can maximize the benefits our clients receive from their trusts. We keep our clients informed about any developments in the law and take the time to answer their questions as they arise.
The following are among the most frequently asked questions (FAQ):
What Are the Benefits of Having a Trust?
Different trusts will provide different benefits. This is especially true when a trust is tailored to your specific goals and situation. In general, though, some of the main benefits that trusts offer, although not necessarily all in the same trust, include:
- Asset protection
- Tax benefits
- Probate avoidance
- Directing financial distributions after death (such as waiting to distribute money to a child until he or she reaches the age of 21)
Can Trusts Help Me Avoid Probate?
Yes. Assets that are put into a trust are property of the trust and are controlled by the instructions in the trust document. When the grantor (the person who made the trust) dies, his or her estate - all the property he or she owns - must go through probate. However, any property that he or she put into a trust is owned by the trust, so it avoids probate.
What Is the Difference Between Revocable Trusts and Irrevocable Trusts?
Revocable trusts can be modified or even terminated by the grantor (the person who created the trust). Conversely, an irrevocable trust cannot, in most cases, be modified or terminated once it is created. There are limited exceptions to this rule, such as when the trustee (the person in control of the trust) and all of the trust's beneficiaries (those who will receive the benefits of the trust) agree to modify the irrevocable trust.
What Is a Dynasty Trust?
Dynasty trusts are unique to Michigan and a few other states. In most states, trusts last for only a set period of time, which can be an issue for those who wish to plan for future generations. For many years, Michigan had a similar rule, but in 2008, Michigan passed legislation that allows trusts to last forever, or "in perpetuity." These new, unending trusts are referred to as dynasty trusts (or perpetual trusts) because they can be used to preserve a person's dynasty and his or her family's well-being by shielding assets from creditors and avoiding asset depletion from multigenerational estate taxes.
Are There Other Types of Trusts?
- Yes, there are many other types of trusts, all of which serve different purposes. They include:
- Special needs trusts
- Charitable trusts
- Life insurance trusts
- Spendthrift trusts
- Gun trusts
These are just a handful of the different types of trusts available to you. It is important to select trusts that align with both your short- and long-term goals; we are happy to discuss all of your options with you and provide advice about which kinds of trusts are best suited to your needs.
If you would like to discuss your trust-related questions or concerns, please contact us to schedule a consultation with a member of our estate planning and asset protection team.