4 Common Misconceptions About Living Trusts

Living trusts are one among the foremost popular estate planning tools people use to preserve their legacy and pass their money and property on to their loved ones.

But trust law is often complex and there are some common misconceptions about how living trusts work. This article will address a number of these common misconceptions.

Misconception #1 – You Lose Control Over Your Trust Assets

Some people believe that they won’t have control over the assets they put into a revocable living trust.

This is not true. One of the main benefits of a living trust is that they're incredibly flexible. After you place your assets into your trust, you'll be ready to manage them like you do now.

For instance, if you put your house in your trust and you would like to sell it, you'll do so at any time with no problem.

Once you purchase a replacement house, you'll then put the new house in the living trust to make sure it's protected.

Often times people get confused about this because there are two different classifications of trust – revocable and irrevocable.

A living trust is revocable, which suggests you'll change or amend it at any time. this is often what makes it so flexible and what allows you to move assets when you want.

Irrevocable trusts, are far more permanent and difficult to vary. Irrevocable trusts are sometimes used for specific tax purposes when planning for the care of a loved one with special needs.

If you're unsure which option is best for you, it's best to consult a living trust attorney in Michigan.

Misconception #2 – Only Ultra Wealthy People Need A Living Trust

There is a misconception that estate planning and living trusts are just for the ultrawealthy. This is far from the truth – a living trust is of great use to anyone with a family or assets.

Here are two main reasons why…

First, unlike a will, living trusts help you avoid long and expensive battles in court. If you don’t have a living trust, your family will need to undergo probate just to gain access to the money and property you wanted them to possess in the first place.

This can be long, expensive, and may create turmoil for your family during an already stressful period while they're mourning your loss.

Second, a living trust allows you to specify who you would like to receive your assets. It also allows you to put stipulations on how and when your beneficiaries should receive your assets.

For instance, if you've got children under the age of 18, you'll specify that your children will only receive their inheritance at a particular age once they are mature enough to handle the responsibility that comes along with managing your assets.

Misconception #3 – The Creator of The Trust Doesn’t Benefit While they're Alive

While it's true that a living trust provides benefits to your loved ones after you pass on, it also can provide benefits to the creator while they're still living.

It's common for people to become incapacitated from illness or injury before death.

If you have a living trust in place, your successor trustee would be able to step in to manage the financial well-being of all of the assets within the trust, while also ensuring you're receiving proper medical aid while you're incapacitated.

This enables both you and your family to be medically and financially protected within the event of a tragedy.

Misconception #4 - You Don’t Need A Lawyer to Make A Trust.

You may have seen do-it-yourself (DIY) will and trust kits on the web. DIY are often great for home improvement projects, but it’s not recommended for creating a sensitive document like a living trust.

If you're curious about getting a living trust in Michigan, it’s best to talk with an experienced living trust attorney.

Trust and estate law is incredibly complex and you don’t want to make a mistake when creating a sensitive document that protects your family and property.

A living trust attorney can assist you confirm that your trust meets your goals and is legally binding.

Conclusion

A living trust michigan is useful to preserve your legacy and protect your family. It’s one among the foremost popular estate planning tools due to the pliability and protection it provides.

A living trust can assist in avoiding court, passing your assets on to your heirs, and protecting you and your family in case of incapacity.

But trust law is very complex, and an improperly drafted document can leave you exposed to risk if it’s not legally binding.

This is often why it’s best to consult with a knowledgeable attorney when estate planning.