As Michigan attorneys, we understand how important it is for families in Troy, Shelby Township, and throughout Oakland and Macomb Counties to protect the property they have worked hard to acquire. Estate planning is not only about deciding who receives assets, but also about ensuring those assets remain secure for future generations. One of the most effective legal tools available under Michigan law for this purpose is the trust. By creating the right type of trust, families can minimize taxes, avoid probate, and prevent inherited property from being lost due to creditors, lawsuits, or family disputes.

Understanding How Trusts Work Under Michigan Law

A trust is a legal arrangement where one party, the “grantor,” transfers assets to a “trustee,” who manages them for the benefit of the “beneficiaries.” Under the Michigan Trust Code (MCL 700.7101 et seq.), trusts are legally recognized instruments that allow individuals to control how their assets are distributed during life and after death. Trusts can hold many types of property, including real estate, financial accounts, and personal assets.

One of the main advantages of a trust is flexibility. A revocable living trust, for example, allows a grantor to maintain control over assets during their lifetime and make changes as needed. Once the grantor passes away, the trust becomes irrevocable, meaning the terms can no longer be changed, and the assets are distributed according to the instructions in the trust document. This approach avoids the delays and costs of probate proceedings under the Estates and Protected Individuals Code (EPIC), MCL 700.1101 et seq., which govern how assets are handled if there is no trust in place.

Avoiding Probate And Maintaining Privacy

One of the most common reasons Michigan families establish trusts is to avoid probate court. When assets are held in a trust, they are not subject to probate because they are owned by the trust, not by the deceased person individually. This means the trustee can distribute property to beneficiaries without court approval.

Probate proceedings are public, meaning anyone can access the details of an estate. By contrast, a trust allows families to handle sensitive matters privately. For many individuals in Troy and Shelby Township, privacy is a primary reason to establish a trust, especially when real estate or family-owned businesses are involved.

Protecting Inherited Property From Creditors And Legal Claims

Another major benefit of trusts is protection against creditors. Under MCL 700.7502 et seq., assets held in certain irrevocable trusts are protected from the grantor’s creditors. Similarly, if a beneficiary inherits property through a trust with spendthrift provisions, that property is generally protected from the beneficiary’s creditors as well. This feature can be critical for families who want to ensure an heir’s inheritance is not lost to lawsuits, divorces, or debt collection.

Additionally, trusts can help prevent disputes among heirs. By setting clear terms, a trust can define how assets are to be managed and distributed, minimizing misunderstandings and conflicts that can arise after a loved one’s death.

Minimizing Taxes And Preserving Family Wealth

Although Michigan does not currently impose an estate tax, federal estate tax laws may still apply depending on the value of the estate. A properly structured trust can help reduce tax exposure by utilizing marital deductions, generation-skipping transfers, and other tax-planning strategies recognized under federal law.

Trusts can also be designed to ensure that family wealth remains within the family. For example, a dynasty trust can allow assets to be passed down for multiple generations without triggering new estate taxes each time an heir dies. This type of long-term planning is especially valuable for families who own real estate, farms, or businesses that they wish to preserve.

Common Types Of Trusts Used In Michigan Estate Planning

• Revocable Living Trusts – Allow control during the grantor’s lifetime and smooth asset transfer after death.
• Irrevocable Trusts – Provide asset protection and potential tax advantages, but cannot be changed once established.
• Special Needs Trusts – Protect eligibility for government benefits while ensuring long-term financial support.
• Testamentary Trusts – Created through a will and activated after death to manage and distribute assets.

Each of these trust types serves different purposes, and the right choice depends on a family’s goals, financial situation, and the nature of the assets being protected.

Working With A Michigan Trust Attorney

Creating a trust requires careful drafting to ensure compliance with Michigan’s Trust Code and EPIC requirements. Attorneys help clients determine which type of trust best meets their needs and ensure that property is properly titled in the name of the trust. Mistakes in the setup or funding process can cause significant issues later, including the unintended need for probate or disputes among beneficiaries.

Michigan Estate Planning FAQs

What Is The Difference Between A Will And A Trust?

A will takes effect only after death and must go through probate, while a trust can take effect during the grantor’s lifetime and avoids probate entirely. Trusts also provide greater privacy and control over how assets are managed and distributed.

Can A Trust Protect Property From Nursing Home Costs?

Certain irrevocable trusts can help shield assets from long-term care costs, but timing is critical. Transfers made too close to the time care is needed may not qualify for protection under Medicaid rules. Legal guidance is essential for proper planning.

How Long Does It Take To Set Up A Trust In Michigan?

The process can vary based on complexity. A basic revocable living trust can typically be established in several weeks, while more complex trusts may require additional time for tax and asset structuring.

Can A Trust Be Changed After It’s Created?

Revocable trusts can be amended or revoked as long as the grantor is alive and competent. Irrevocable trusts, however, cannot be changed except under limited circumstances, often requiring court approval.

What Happens If A Trust Is Not Properly Funded?

If assets are not correctly transferred into the trust’s name, they may still need to go through probate. This common mistake can defeat the purpose of creating a trust, which is why professional guidance is essential during the funding stage.

Can A Michigan Trust Own Real Estate In Another State?

Yes, a Michigan trust can hold property located in other states. However, additional documentation may be required depending on that state’s laws. Holding out-of-state property in a trust can also help avoid multiple probate proceedings.

What Happens If The Trustee Fails To Follow The Trust’s Terms?

Trustees have a fiduciary duty to act in the best interests of the beneficiaries. If a trustee mismanages assets or violates trust terms, beneficiaries may petition the court for removal or other remedies under Michigan law.

Call Boroja, Bernier & Associates For Guidance

At Boroja, Bernier & Associates, our attorneys help families across Troy, Shelby Township, and throughout Oakland and Macomb Counties establish and manage trusts that protect what matters most. Every client’s situation is unique, and our team works to create tailored estate planning strategies that preserve family wealth and minimize future conflict.

To learn how a trust can secure inherited property for future generations and schedule a free consultation with the Michigan estate planning attorneys at Boroja, Bernier & Associates, call our law offices at 586-991-7611. With offices in Troy and Shelby Township, we proudly serve clients throughout Michigan with trusted estate planning representation.