In Michigan, trusts may have a reputation that they are only for the rich. People think of trust funds and with that rich people who are trying to avoid taxes. However, many people do not understand that trusts can be useful for middle class families in a variety of situations.
Families may want to consider using a trust if they have a special needs child that they want taken care of. A special needs trust can allow a family to create an entity with funds specially designed to care for the needs of their disabled, or special needs family member.
Trusts may also be important for middle class families if they want to delay giving an inheritance to their children. Without a trust in place children will receive an inheritance on their 18th birthday. A trust can allow people to delay the inheritance to a later time when children may be better able to handle it. Further, a trust is important for people who want to avoid probate and keep their affairs private.
No matter the reason that a family chooses a trust, they should understand that a trust is a legal entity of its own. The assets in the trust are used by the trustee to benefit the beneficiary. The creator the trust can assign the beneficiaries and the trustee. That person also has control over what assets are in the trust.
By choosing a trust, there a many decisions that Michigan residents must makes. While trusts can serve an important purpose, trust planning can be just as important. Without the right trust planning, a trust may not work as it was intended.
Source: Fox Business, “Is a Trust Right for You?,” Libby Kane, Oct. 25, 2013