Many people know that creating an estate plan is essential for ensuring that your wishes for the distribution of your assets are fulfilled after your death. Those who fail to plan effectively risk leaving behind a significant amount of confusion among the family members who survive them. Sometimes, this lack of clarity can also lead to a great deal of contention amongst loved ones.
As you plan how to distribute your estate, you may wonder whether a will or a trust will better serve your estate planning goals. Understanding what wills and trusts are and how they differ can help you optimize your plan.
What Is a Will?
A last will and testament, or “will,” is an estate planning document outlining how your assets should be distributed. In Michigan, a will must meet the requirements in the Uniform Probate Code to be considered valid. These requirements include the following:
- The person whose wishes are outlined in the will (the testator) must be at least 18 years of age.
- The will must be signed and witnessed by two other individuals.
- The will must be written and not oral.
What Is a Trust?
A trust is an estate planning instrument that creates a separate legal entity that allows an individual (the “grantor”) to nominate a trustee who will hold and manage assets for the trust’s beneficiaries. The grantor may decide how and under what circumstances the assets within the trusts will be distributed to the beneficiaries, invested, or otherwise used.
There are several types of trusts, and each can be used to achieve different estate planning objectives. Some trusts take effect during the grantor’s lifetime, while others are only activated if the grantor becomes incapacitated or when they die.
What Are the Differences between a Will and a Trust?
Both wills and trusts are effective tools when planning an estate. However, it is important to note some important differences between the two:
- A will only becomes effective upon your death. You can use a trust to manage your assets while you are alive or after you die.
- You can only have one valid will at a time, while you may use a trust to supplement your will.
- Trusts can be used to avoid the probate process, saving your heirs both time and money. Wills, on the other hand, must pass through probate.
- Wills become public documents when you die because they will go through the probate process. Trust instruments remain private.
- Wills can be used to name a guardian for any minor children you may have. Trusts, on the other hand, cannot be used to appoint a guardian.
Which One is Better?
Determining whether you should use a will or a trust for your estate planning needs in Michigan is an important question to ask yourself. However, there are no simple answers. Each of these tools offers benefits that the other does not. Deciding which one is best for you will depend on your goals. Speaking with an experienced Michigan estate planning attorney can help you determine whether a will, a trust, or both might be right for you.
Contact a Macomb County Estate Planning Attorney
Whether you are at the beginning of your estate planning process or you wish to make changes to your existing plans, the experienced estate planning attorneys at Mihelich & Kavanaugh, PLC are here to help. Our legal team will strive to serve you with the excellence you deserve. Call us today at (586) 776-1700 or contact us online for a free consultation, and let us get to work for you.