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A trust fund can be used to pass down wealth, but it’s usually not meant to last forever. If you have questions about how long a fund can be maintained for, a Washtenaw County estate planning attorney from our firm can answer them. We can also help you figure out the best kind of trust to use for your specific purposes.

What is the Typical Rule For How Long a Trust Fund Can Last?

Usually, a trust fund is supposed to last until it serves its intended purpose. When you make a testamentary trust, also known as a will trust, it’s meant to pass down your assets to your beneficiaries. A marital trust functions in a similar fashion, but its job is to pass on property to your spouse. The trustees of these funds should act quickly to distribute your assets in a manner that aligns with your wishes.

If a trust fund is going to last a long time, it’s going to run into the 21-year rule. When a trust lasts this long, the government essentially treats you like you sold off all of its assets at fair market value. This can result in a significant tax liability and other headaches.

Does Michigan Allow a Dynasty Trust Fund?

This 21-year rule has been around for a while, but some states have begun to set their own rules. Michigan is one of them. It now allows for “dynasty trusts” and these funds do not have an expiration date. They can be used to benefit generation after generation. Stocks, life insurance policies, and bonds can all be placed in the trust, but there are some potential drawbacks to be aware of.

First of all, a dynasty trust is irrevocable. This means that you give up control over your assets and the rules about this cannot be changed. It’s also important to remember taxes will be owed when the trust finally dissolves many generations down the line.

Why Use a Trust Fund?

It can seem like this is all so needlessly complicated, but our law firm can help you figure out what kind of trust fund can work for you, your heirs, and your assets. A trust fund can protect your beneficiaries from unnecessary taxes and other costs. It can also make it easy to pass down assets and avoid the need for probate court, a lengthy process for dividing up a decedent’s assets that can cost your loved ones money.

Contact Our Law Firm

When you are ready to make an estate plan and protect your assets, contact Collis, Griffor & Hendra. We can guide you through your options and help you find out which kinds of trusts would work best for you and your beneficiaries.

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