A will is a documents that directs the disposition of your property after your death rather than following the formula set up by the laws of the State of Michigan. A will appoints a personal representative who will be in charge of the probate process and who is in charge of carrying out the terms of the will. It also allows you to nominate a guardian and conservator for a person’s minor children helping to insure that if a parent dies unexpectedly a minor child will be taken care of by someone you wish and avoids a court battle over custody of the minor child.
There are some misconceptions about wills. For example, a will does not avoid probate. For a will to be affective it must be taken to the probate court where it is admitted and a personal representative is appointed to carry out its terms. A will does not control all of a persons assets such as life insurance or joint assets. Further, just because you have joint assets does not mean you do not need a will because a joint owner of an asset may not survive you.
You do not need a lawyer to draft your own will, but often times a person does not take into consideration all the laws when writing their own will. In addition he or she may have misconceptions that make a self prepared Will a disastrous or inadequate estate plan which prevents a persons wishes with respect to their property from being carried out.
The probate code has been simplified to allow and require an estate to be probated quickly and efficiently with less cost than ever before.
A trust is an estate planning tool which allows you to avoid probate after your death while maintaining control of your assets during your lifetime. Other advantages found with trusts are: they allow you to delay distributions of assets to your children until they reach a certain age, allows management of your estate without court supervision during times of incapacity, avoids taxes, court fees and administrative expenses associated with probate court. It is a private administration of your assets, unlike a will,l which becomes a public record when taken to probate court for administration. Trusts are more complex than a will and individuals who are thinking about preparing one by buying a trust kit, need to be aware that they will not accomplish your objectives unless all the requirements of preparing and funding a trust are followed. Therefore it is best if you consult an attorney who is familiar with their preparation and administration when considering whether you want a trust for your estate plan.
Trusts are easiest to describe as a contract to direct how your estate is to be handled before and after death and is used in a variety of situations.
1. Avoids probate and the delays associated with it, i.e., property can be distributed quickly and without the costs associated with probate.
2. Trusts can have Private Administration compared to Probate which is a public venue.
3. You maintain control of your assets, unlike a joint deed or joint bank accounts.
4. Controls property after your death, i.e., limits how your beneficiaries will get your property and when.
5. Special Needs Trust; Blended families with children from prior marriages.
6. Allows a trustee to act on your behalf and to manage your property during periods of incapacity or at your direction.
7. Tax planning for federal estate taxes
Creation of Trusts are more complex and expensive than a will, but what you pay up front is saved because of probate avoidance.
TAXES - federal estate taxes. Will not go too much into detail here because it is a complex subject. Just note that if your estate including-life insurance, land, bank accounts, stocks, bonds and pensions exceeds $5,000,000.00 ($10,000,00.00 Joint) you may want to consult an attorney about planning your estate to avoid the federal estate tax.