Setting The Stage For Smart Asset Protection Decisions
Many families across Oakland and Macomb counties seek simple ways to protect property, avoid unnecessary court proceedings, and ensure assets pass smoothly to loved ones. We often meet people who have added a child to a deed or bank account because someone told them joint ownership “keeps things simple.”
Others have heard that a trust may offer more control. Both options can work, but each carries very different legal consequences under Michigan law. Our goal is to explain how these tools function, how they affect control during life and transfer after death, and how Michigan statutes treat key issues such as probate, creditor exposure, and incapacity.
The right approach depends on family structure, type of property, health concerns, and long-term planning goals. Joint ownership and trusts are both widely used in Michigan, but they do not offer the same level of protection or flexibility. Understanding the legal framework before making changes avoids later conflict and unintended results. We want every client to clearly understand choices, rather than relying on shortcuts that may create future problems.
How Joint Ownership Works Under Michigan Law
Joint ownership generally means title is held by more than one person at the same time. In Michigan, the most common forms are:
- joint tenancy with rights of survivorship
- tenancy by the entirety (only between married spouses)
- tenancy in common
With joint tenancy with rights of survivorship, when one owner dies, the surviving owner automatically receives full ownership. That transfer occurs outside probate because of the survivorship feature. Michigan courts have long recognized survivorship provisions as a valid means of passing title without court administration, and this is consistent with principles reflected in the Michigan Estates and Protected Individuals Code (EPIC).
Tenancy by the entirety exists only between married spouses and provides additional marital protections based on Michigan common law and statutes governing real property and marriage rights. This form also includes survivorship.
However, tenancy in common does not include survivorship. Each owner holds an undivided share, and that share passes through probate at death.
Advantages And Risks Of Joint Ownership
Joint ownership can be attractive because it is simple to set up and can avoid probate upon the first death. It can work well for small accounts or between spouses. However, joint ownership also carries significant trade-offs.
When another person is added as a joint owner, that person immediately gains ownership rights. That means joint assets may be exposed to that person’s creditors, divorces, or financial problems. Adding a child to a deed or account is not “just paperwork.” It is a legal transfer of property rights.
Joint ownership can also create unequal inheritances. At death, jointly owned assets with survivorship pass only to the joint survivor, even if a will states something different. This can unintentionally disinherit other children or heirs and may conflict with expressed wishes.
Finally, joint ownership does not fully address incapacity planning. If an owner becomes unable to manage finances, court involvement may still become necessary unless other planning tools, such as powers of attorney or trusts, are in place.
How Revocable Living Trusts Work In Michigan
A revocable living trust is a legal arrangement where assets are retitled into the name of a trustee to be managed for beneficiaries under written instructions. In Michigan, trusts are governed by the Michigan Trust Code. These statutes outline trust creation, administration, trustee duties, and beneficiary rights.
With a revocable trust, the person creating the trust often serves as both trustee and beneficiary during life, retaining full control and the right to amend or revoke the trust at any time. Upon incapacity, a successor trustee can step in without court intervention. Upon death, assets can be distributed according to the trust terms without formal probate court proceedings.
Probate Avoidance Under Michigan Law
Whether probate is required depends on how the property is titled at death. Probate administration in Michigan is governed by EPIC. Jointly owned assets with survivorship are usually not probated. Assets properly titled to a revocable living trust also avoid probate because the trust, not the individual, is the legal owner at death.
However, any assets still titled in an individual’s name without a beneficiary designation or survivorship feature will typically require probate. Trust planning, therefore, requires proper funding—the process of transferring legal title into the trust’s name.
Comparing Joint Ownership And Trusts For Asset Protection
A useful way to compare both tools in Michigan is by focusing on four key areas:
- Control During Life – Joint ownership immediately shares control with another person. A trust allows retention of control while setting clear rules for management if incapacity occurs.
- Creditor Exposure – Joint assets may be exposed to the joint owner’s creditors or divorcing spouses. A properly drafted trust may reduce certain risks, although a revocable trust is generally still subject to the grantor’s creditors during the grantor’s lifetime under MCL 700.7506.
- Family Fairness – Joint ownership pays only the survivor. A trust allows structured distributions among multiple beneficiaries and can stagger inheritances, protect minors, or support individuals with special needs.
- Privacy And Administration – Probate filings become public record under Michigan law. Trust administration is typically private.
When Joint Ownership May Make Sense
Joint ownership can make sense between married spouses or for small accounts intended for convenience. It may also be used for day-to-day bill paying. However, it should be adopted with a clear understanding of creditor risk, inheritance consequences, and tax considerations. What seems simple today can become complicated later if owners disagree or family circumstances change.
When Trusts Often Offer More Complete Solutions
Trusts often work better for:
- blended families
- property in multiple states
- minor children or beneficiaries with disabilities
- business ownership
- real estate intended to stay in the family
- individuals wanting clear incapacity planning
Trusts can also coordinate with Michigan patient advocate designations and durable powers of attorney for comprehensive planning, all of which are supported under EPIC.
Michigan Joint Ownership Frequently Asked Questions
What Is The Difference Between Joint Tenancy And Tenancy In Common In Michigan?
Joint tenancy usually includes survivorship, meaning the surviving owner automatically receives the property at death. Tenancy in common does not include survivorship; each owner’s share passes through probate subject to Michigan law. Understanding this difference is important because it determines whether court involvement will later be required.
Does Joint Ownership Always Avoid Probate In Michigan?
Joint ownership with survivorship often avoids probate at the first death, but not necessarily at the second death. If the surviving joint owner dies without proper planning, that asset may require probate under EPIC. Also, improperly worded deeds or account titles can create disputes about whether survivorship exists. Proper documentation is essential.
Are Revocable Trusts Recognized Under Michigan Law?
Yes. Revocable living trusts are recognized and governed by Michigan trust laws. These statutes outline requirements for creation, administration, and trustee duties. These trusts are widely used for probate avoidance and incapacity planning.
Can A Trust Help During Incapacity?
Yes. A revocable living trust allows a successor trustee to manage trust assets if the original trustee becomes unable to do so. This process typically avoids the need for court-appointed conservatorship, which otherwise may be necessary under Michigan law. This is one of the strongest reasons many families select trusts over joint ownership alone.
Does Adding A Child To A Deed Or Bank Account Create Legal Ownership Rights?
Yes. Adding another person as a joint owner is not honorary. It transfers legal ownership rights immediately. That means the added owner may withdraw funds or sell property in certain circumstances, depending on the title form. Those assets can also become subject to that person’s creditors or divorce cases, something many parents never intended when they added the child.
Are Trusts Only For High Net Worth Families?
No. Trusts are commonly used for modest estates as well. The benefits of probate avoidance, incapacity management, and controlled distribution apply regardless of asset size. Many Michigan families value privacy and smooth administration more than estate size.
Can A Will Replace A Trust In Michigan?
A will alone does not avoid probate in Michigan. A will directs how property is handled through probate court. A properly funded trust, on the other hand, generally avoids probate because the trust holds title. Many comprehensive plans use both a will and a trust together to cover all circumstances.
What Happens If Someone Dies With Only Joint Ownership And No Trust?
Surviving joint owners usually receive the entire asset. However, this can unintentionally exclude other relatives or beneficiaries. The result may differ from stated family intentions. Further, once the surviving owner dies, probate may still occur if additional planning was not completed.
Call Boroja, Bernier & Associates For A Consultation
Questions about whether joint ownership or a trust works better depend on family goals and Michigan law. At Boroja, Bernier & Associates, we help families clearly understand options, avoid unintended transfers, and design plans that preserve control while reducing court involvement.
For guidance on joint ownership, trusts, and broader estate planning, call the Michigan estate planning attorneys at Boroja, Bernier & Associates at 586-991-7611 to schedule a consultation. Our offices in Troy, Michigan, and Shelby Township, Michigan, serve clients throughout Oakland County and Macomb County. We are ready to assist with clear, tailored planning that reflects Michigan law and family priorities.
