Information on Michigan Living Trusts

What is a trust?
A trust is a trusted relationship where an individual or business holds title to property for the benefit of another person. The terms of such relationships are typically written in a document that is called as trust instrument, trust agreement, declaration of trust or simply trust.

Who are the parties to a trust deed?
There are basically three main parties to a trust – 1) the trust maker, sometimes called the trustor, settler or grantor; 2) the trustee, a person or business who is holding title to the property; 3) the beneficiary, the person for whom the trust is created. The trustor can act as both the trustee and the beneficiary of the trust. However, if one person acts as both the trustee and the beneficiary, then the trust won’t be treated as valid.

What is a "living trust"?
A living trust (also known as an inter vivios trust), is a trust created during the lifetime of the trustor. A living trust is different from a testamentary trust that is created through a will.

What is an irrevocable trust?
If a trust cannot be amended or revoked, it’s called an irrevocable trust. An irrevocable trust doesn’t allow the assets to be retrieved from the trust or to be used in a way that is contradictory to the terms of the trust.

Should you have a living trust?
Tradition of creating a living trust in order to avoid probate is not a new issue. Living trusts have typically been used in large estates, not only as to escape death taxes but also to evade high costs of probate, which are higher for larger estates and often very complex and obscure. If you have either a small or a modest sized estate, it may or may not make sense. As preparing a living trust involves a cost, it can never be a ‘savings’ to the person preparing it, but can save some money of the preparer’s heir. If you are considering a trust and trying to avoid a probate, consult with a lawyer having modest knowledge of estate planning and moreover, cautiously evaluate your options before arriving on a particular decision.

Is your trust responsible for your debts?
A trust can never protect your assets from the claims of your creditors. While you are alive, the assets in your trust can be used to satisfy any court judgment against you. Even if you die, the creditors can file a claim against your trust if there is not sufficient fund in your probate estate.