A Living Trust can serve to accomplish many goals. Some individuals establish Trusts to ensure their loved ones avoid probate, while others have certain strategic tax planning goals that they’d like to accomplish for their beneficiaries.
Some families opt to establish a Living Trust to offer asset protection to their beneficiaries or their children. One big reason to plan for beneficiary asset protection is to protect your children’s inheritance from the possibility of divorce. If a child or other beneficiary receives an inheritance and comingles it with other assets that are owned jointly with their spouse, such as a checking account, that inheritance may then be considered martial property. An issue may arise if there is a divorce between your child and their spouse. Now, because they have comingled or combined their inheritance with their jointly held assets, their spouse may likely take half in a divorce, dependent on how property is divided up in their divorce judgment.
You can protect your children’s inheritance with a Living Trust. If the inheritance is held in trust for your beneficiaries, the trust ‘owns’ that asset and it will not end up being split with their ex-spouse. On the other hand, if you have a longstanding relationship with your son-in-law or daughter-in-law, you may want to provide for your child’s spouse. Another consideration may be that you want to provide for your child’s spouse and their children should your child predecease you. There are many considerations that go into establishing a Trust, and it takes thoughtful planning to make sure your Living Trust accomplishes your goals.
If you currently have a Living Trust or other estate planning established, it is encouraged that you review your plan periodically to ensure that it still accomplishes your goals. Life is everchanging and, throughout the years, family dynamic, relationships, finances or other considerations may evolve. You want to be sure that your Living Trust also evolves with you and your goals.
Estate Planning documents are changeable – you can amend your Will or Trust throughout your lifetime as your family’s circumstances change. And Estate Planning is not a one-size-fits-all approach. It requires tailored planning to address the individual goals that you have for yourself and your loved ones. Therefore, it is recommended that you consult with an experienced Michigan Estate Planning Attorney today in order to discuss your planning goals.