Wills vs. Trusts in Michigan: DIFFERENCES THAT MATTER AND WHY

By: Stuart Williams | Estate Planning Lawyer

The first thought people have about transferring their assets to their children someday is that they need a will. But there are distinct advantages to trust based planning if you own assets you wish to protect for your children when they are inherited someday.

The main difference between wills and trusts
Wills distribute property "outright" to beneficiaries, and trusts can distribute property outright or in accordance with the terms you provide in a "trust agreement" (the document your attorney will use to create your trust).

Directly Inherited Assets are Immediately Vulnerable
Because wills result in direct ownership of the inherited assets they convey, assets inherited through a Will are immediately collectible by outsiders who can then lawfully "steal" your child's inheritance. When assets are inherited through a "will," all that's required of your child's creditors, divorcing spouse, or other law suit plaintiff, is for them to assert their lawful claim.

Trusts can protect inherited assets from “Outsiders”

Assets inherited and managed under typical living trust provisions, afford your child some level of protection by giving the successor trustee (who's job it is to distribute trust assets to beneficiaries), the discretion to withhold distributions if a creditor or lawsuit claim is brewing. Once assets are distributed out of the trust, assets become collectible.

There are however, special trusts that can extend asset protection beyond a trustee's mere discretion of whether to distribute trust assets, and instead hold the assets safely for the lifetime of the beneficiary.

If you have at least a modest estate, want to avoid probate, or if you have some of the asset protection concerns named above, these special trusts that hold assets for the lifetime of your child could be just what you were looking for.

At Family Wills & Trusts PLC, we’ll make sure there are no gaps in your estate plan that would leave you and your family exposed to unnecessary financial waste, headaches, or the stresses of probate. Request free information or schedule an appointment below to see how you can benefit from working with us.