At Boroja, Bernier & Associates, we often meet with families who want to make sure their loved ones are protected and their assets are managed properly after they pass away. One of the most effective estate planning tools we recommend for many Michigan residents is a living trust. A living trust can help you avoid probate, maintain privacy, and ensure your property is transferred according to your wishes. Understanding how a living trust works under Michigan law can help you decide if it is the right option for your estate plan.
Understanding A Living Trust In Michigan
A living trust is a legal document that allows you to place your assets into a trust during your lifetime while continuing to use and control them. You, as the grantor, create the trust and appoint a trustee to manage the assets. In most cases, you act as your own trustee until you become incapacitated or pass away. Upon your death, the trustee you’ve named will distribute the assets to your beneficiaries according to your instructions without the need for probate.
In Michigan, living trusts are governed by the Michigan Trust Code (MCL 700.7101 et seq.), which is part of the Estates and Protected Individuals Code (EPIC). This law sets the rules for creating, managing, and terminating trusts in our state.
Key Benefits Of A Living Trust
- Avoiding Probate – A properly funded living trust allows your estate to bypass the probate process, which can save time, reduce costs, and maintain privacy for your beneficiaries.
- Flexibility and Control – You maintain control of your assets during your lifetime and can change or revoke the trust at any time if it is a revocable trust.
- Incapacity Planning – If you become unable to manage your affairs, your chosen successor trustee can step in immediately without requiring a court-appointed conservatorship.
- Privacy – Unlike a will, which becomes part of the public record in probate court, a living trust remains private.
How A Living Trust Works In Michigan
To create a valid living trust in Michigan, you must:
- Have legal capacity and intent to create the trust.
- Clearly identify the trust property and beneficiaries.
- Appoint a trustee to manage the trust.
- Sign the trust document, typically in front of a notary public.
Under MCL 700.7402, a trust is valid if the settlor has the capacity to create it, the trust has a definite beneficiary, the trustee has duties to perform, and the same person is not the sole trustee and sole beneficiary.
After the trust is signed, it must be funded. This means transferring ownership of your assets—such as real estate, bank accounts, and investments—into the trust’s name. If assets are not properly retitled, they may still be subject to probate, defeating one of the main purposes of the trust.
Upon your death, the successor trustee you named will administer and distribute the assets as outlined in the trust document. This process is typically quicker and less expensive than probate and allows your family to access their inheritance sooner.
Frequently Asked Questions About Living Trusts In Michigan
Does A Living Trust Eliminate The Need For A Will?
No. Even with a living trust, you should still have a “pour-over will” to capture any assets not transferred into the trust during your lifetime. This ensures all your property is handled according to your wishes.
Is A Living Trust Only For The Wealthy?
No. Living trusts are beneficial for many Michigan residents, regardless of the size of their estate. They are especially helpful if you own real estate, have minor children, or want to simplify the transfer of assets for your loved ones.
Does A Living Trust Protect My Assets From Creditors?
A revocable living trust does not shield your assets from your own creditors during your lifetime. Since you retain control over the trust property, creditors can still make claims against those assets.
Can I Change Or Cancel My Living Trust?
Yes. As long as you are mentally competent, you can amend or revoke a revocable living trust at any time. Once you pass away, the trust typically becomes irrevocable.
Will I Still Have To Pay Estate Taxes If I Have A Living Trust?
A living trust does not reduce estate taxes by itself. However, it can be structured with additional provisions to minimize tax liability for larger estates. We can help you design a plan that addresses both distribution and tax concerns.
What Happens If I Do Not Fund My Living Trust?
An unfunded trust is ineffective. Any assets not titled in the trust’s name will likely go through probate. Proper funding is essential for your trust to work as intended.
Does A Living Trust Provide For Minor Children?
Yes. You can use a living trust to hold and manage assets for your children until they reach the age or milestones you choose. This ensures your children are financially supported even if you pass away unexpectedly.
Can A Living Trust Help Avoid Family Disputes?
Yes. A living trust sets clear terms for how your assets should be managed and distributed, reducing confusion and potential conflict among heirs. It allows you to appoint a neutral trustee and include instructions that minimize disagreements, which can help preserve family relationships after your passing.
Call Boroja, Bernier & Associates To Discuss Living Trusts In Michigan
At Boroja, Bernier & Associates, we help families throughout Troy, Shelby Township, Oakland County, and Macomb County create strong estate plans tailored to their needs. A living trust can be a powerful tool to protect your loved ones and your assets, but it must be set up correctly to work as intended.
Contact the Michigan living trust attorneys at Boroja, Bernier & Associates PLLC, to receive a free consultation when you call 586-991-7611. Let us help you create a plan that gives you peace of mind and provides security for your family’s future.
