How to Create a Valid Trust


Estate planning is an individual process — what works for one person might not be the best option for distributing your assets. For example, you don’t have to create a will in order to dispose of your assets after death. Another option is creating a trust (however, you can also include a trust in a will).

What Is a Trust?


A trust is a legal arrangement in which one person (the trustee) holds legal title to property for another person (the beneficiary). The person who creates the trust is called the grantor or settlor.

One of the benefits of creating a trust is that the settlor has multiple options:

  • A revocable trust allows the settlor to alter or even cancel trust provisions during his or her lifetime.
  • Trust property isn’t transferred to the beneficiary until after the settlor’s death.
  • Irrevocable trusts come in many forms. There is a common misconception that an irrevocable trust cannot be amended or cancelled without the beneficiaries consent, but that is not always true. It depends on the exact type of irrevocable trust that you have.
  • A living trust (also called an inter vivos trust) benefits the settlor during his or her lifetime and then transfers assets to a designated beneficiary when the settlor dies. Property put into a living trust is not subject to probate.
  • A testamentary trust does not go into effect until the settlor dies. It is included in the settlor’s will and often is used to benefit minors.

These options might seem confusing, which is why you should contact an experienced estate planning attorney to determine which type of trust is right for you.

Creating a Valid Trust

Your trust will fail if you don’t follow certain requirements:

  1. The settlor has to intend to create a trust. If the wording in the trust is ambiguous and doesn’t establish that the settlor intends to convey his or her property into the trust for the named beneficiary, then the trust will fail. It’s not enough to say that the settlor will create a trust in the future — the settlor must intend to create the trust now.
  2. The settlor must appoint a qualified trustee. A trust cannot exist without a trustee.
  3. If the settlor doesn’t actually transfer assets into the trust, then the trust will fail. The settlor must list the assets in the trust and take steps to change the title of those assets.
  4. The trust will fail if it doesn’t specifically identify the intended beneficiaries. If the beneficiaries can’t be identified or located, then the trust is not valid.

Luckily, there are ways to correct a failed trust. If it is proven by clear and convincing evidence that the settlor’s intent and the terms of the trust were affected by a mistake of fact or law, then a court may reform the terms of the trust.
You can also ask an estate planning attorney to help you modify or terminate your original trust so that it fully complies with Michigan law and properly distributes your assets.

Contact Us Today

Of course, the best way to ensure that your trust doesn’t fail is to seek professional help. Our experienced Michigan family trust attorneys can you help you create a valid, enduring trust. Contact us today for a free consultation.

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