People often wonder about the difference between a will and a trust. This is a common question, and you can find the answer below. Read on to learn more.
What is a will?
A will allows you to distribute your assets amongst your loved ones in the event of your passing. Some of the assets you may include in your will may be real estate, bank accounts, securities, and items of personality. You can also include gifts for your friends and family members, such as letters or a favorite photograph. If you pass away without creating a will, your assets will be divided by the state of Michigan, rather than according to your wishes. This can cause a lot of undue stress for your loved ones during a difficult time of mourning.
Who is involved in a trust?
A trust involves three parties:
- Trustor: This refers to the person who creates the trust
- Beneficiary: This is the person who will receive the assets allocated in the trust
- Trustee: The third party is assigned to maintain the assets on account of the beneficiary
What are the most common types of trusts?
In Michigan, trusts typically fall into two main categories:
- Revocable Trust: This type of trust is one of the most frequently chosen by trustors because it can be modified, changed, or terminated at any time without the need for the beneficiary’s consent.
- Irrevocable Trust: This type of trust requires a trustor to give up their rights and any access to the trust at the time that it is produced. This implies they cannot change or terminate it at any point.
Which one should I create?
In most cases, you will want to create both. These documents work well together. For example, leaving assets to a loved one with a disability can actually disqualify him or her from the necessary receiving government benefits. As a result, you would create a special needs trust so that you can leave assets to your loved one without interfering with government assistance.
If you have any questions or concerns, contact our firm today. We are here to help you create a comprehensive and cohesive estate plan.
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