The Difference Between a Will and a Trust in Michigan
While each state has its own set of laws that govern wills and trusts within the state, the general principles are quite similar across the entire country. In fact, sixteen states, including Michigan, have adopted the Uniform Probate Code (UPC) in an effort to standardize the state laws that govern wills and trusts. Therefore, in order to examine the the key differences between a will and a trust in Michigan we must look to the language of the UPC. However, it is important to note that drafting a valid will or trust can be tricky and therefore it is always a good idea to consult with an experienced estate planning attorney who can help assess both your short-term and long-term financial goals.
What’s A Will?
A validly executed ‘will’ is an estate-planning instrument that goes into effect when you die and dictates how you want your assets to be distributed to your named beneficiaries. Under the Uniform Probate Code, and therefore in Michigan, there are several requirements that must be fulfilled in order for a will to be valid including:
- The testator (aka the person that the will belongs to) must be at least 18 years old;
- The will must be signed by at least two competent witnesses; and
- The will must be written (aka can not be oral).
What’s A Trust?
A ‘trust’ is an estate-planning instrument that allows the settlor, aka the person with the assets, to nominate a trustee who will hold the assets for the beneficiaries of the trust. A trust allows the settlor to dictator how and when the the assets will be invested, distributed to the beneficiaries, etc. These instructions can dictate that the trust will take effect during the settlor’s lifetime, if the settlor becomes incapacitated, or when the settlor dies. There are several different types of trusts (for example express trusts, private trusts, or charitable trusts) that can each be used to achieve various estate-planning objectives.
Key Differences Between A Will And A Trust
While both wills and trusts are useful estate-planning tools, there are several key difference to keep in mind. One difference between a will and a trust is the fact that a will can only go into effect upon your death, while a trust can either be used to manage property during your life or after your death. Another important difference is that a person can only have one valid will at a time while a trust can be used to either replace or supplement a will.
Benefits And Downsides
The key benefits and downsides associated with wills and trusts in Michigan really depend on what your estate-planning goals are. For example, if you are looking for a way to distribute your assets while you are still alive then you will want to execute as trust opposed to a will. While keeping your goals in mind, consider some of the commonly noted benefits and downsides associated with wills and trusts that are listed below:
- Avoiding Probate: One main benefit associated with trusts is that they can be used to avoid probate, which can save your beneficiaries time and money. Conversely, one downside of wills is that they pass through probate.
- Privacy: If you would like for your affairs to remain private it is key to note that a will becomes a public document when you die while trust instruments do not.
- Naming a Guardian: If you have minor children you can use a will to name a guardian for your kids, however, a trust can not be used to appoint a guardian.
If you are wondering, “why should I do estate planning?”, or you have other questions about how to protect your assets, contact the Law Offices of David L. Carrier. David Carrier has years of experience drafting wills and setting up trusts and would be happy to discuss your options with you. Start by attending one of our Free LifePlan™ workshops, where you can learn valuable techniques that will help you plan for your family.