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Should you have a revocable trust?

People in Michigan who are looking to manage their assets may want to consider a revocable trust. Also known as a living trust, this is a popular tool people use for estate planning. In addition to a will, a trust helps many protect their money while they are still alive as well as after they have passed away. While a living trust is a good choice for many, people should also consider its downfalls before making a decision.

According to the American Bar Association, the owner of the trust designates beneficiaries of the assets and a trustee to administer the funds either after the owner's death or if they become incapacitated for another reason. One of the benefits of having this type of trust is it erases the need for probate, which can be beneficial for those who have a more complex estate and want assets distributed privately and easily. Another benefit is it can be revoked or modified by the owner at any time. 

FindLaw states a revocable trust is popular in part because the owner has control over how the assets are distributed and when. However, this advantage of control is balanced out by a number of limitations. Unlike an irrevocable trust, a living trust does not have any tax advantages. All assets, plus the income received from them, must be reported. This type of trust does not protect assets from creditors, and it can be expensive to arrange and maintain. 

Before making a decision as to which type of trust is the right one, if at all, consulting with an attorney is a good idea. Due to the costs and complexity of set up, and each owner's specific income and situation, there may be better options for money management. 

 

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