Revocable Trusts: What is a Revocable Trust?

A revocable trust is a type of trust that you can create during your lifetime. You maintain full command over your Michigan assets in the living trust while you are alive and well. You have the flexibility of making any changes you deem necessary, unlike an irrevocable trust. In the event of your disability, a successor (or trustee) takes over the management of the assets within the revocable trust.

Revocable vs Irrevocable Trusts

In simple terms, the difference between a revocable trust and an irrevocable trust is that a revocable trust (also known as a living trust) can be changed, and an irrevocable trust cannot be changed once set up and signed. Revocable living trusts are very flexible and can be ideal in many circumstances such as probate and estate planning. Irrevocable trusts may be unfavorable if in the future you want to make any changes to your estate planning strategy.

How are Revocable Trusts Taxed & Do Revocable Trusts File Tax Returns?

Revocable trusts taxes are pass-through, which means that all your Michigan income and deductions are reported on your personal tax return, similar to a single-member LLC or S-Corporation. Therefore, revocable trusts do not directly file tax returns. Revocable living trusts do not have a tax ID.

Revocable Trust Trustee

A revocable trust trustee is an individual responsible for the management and administration of your Michigan living trust. The revocable trust trustee declares by signing that he or she accepts the trust agreement. You, a family member, a friend, a bank trust department, or any combination of these may be eligible to be a trustee in Michigan. The trustee will generally own the assets in the trust, which will be passed down to the beneficiaries of the trust. For co-trustees, you can name someone you trust or an institution to serve as co-trustees with friends or family members.

How do Living Trusts Work?

To set up a living trust in Michigan, you must retain a lawyer to build a detailed strategy and create a trust document. The trust document is a complex legal record that should be formed in relation to your goals after a full review of your financial, estate, tax, and personal circumstances. It requires a witness and notary when being signed. Transactions involving trust assets will be fulfilled under the name of the trust. Your living trust document will detail provisions stating how and who should take over in the event of your disability. Your trust becomes an irrevocable trust after your death, and assets that were not already in your living trust may get transferred into it by using a pour-over will.

Do Living Trusts Avoid Probate in Michigan?

A revocable living trust is mainly utilized as a way of avoiding probate in Michigan, which can sometimes be a painful and expensive process. A living trust may be a proactive way of dealing with potential probate expenses now rather than in the future, with methods such as:

• Owning assets jointly with the right of survivorship to pass those assets directly.
• Use beneficiary designations to distribute assets without probate.

Are Living Trusts Michigan Public Records & Where Are They Recorded?

A living trust does not have to be on public records. Revocable trusts are recorded on a trust document and copies are designated to recipients by the Michigan lawyer.

Can a Revocable Living Trust Be Contested?

Revocable living trusts can be contested by a lawsuit in a Michigan probate court.

Form a Revocable Living Trust in Michigan with Spiegel & Utrera, P.A.

We have over four decades of experience helping entrepreneurs create living trusts in Michigan that help them avoid the negative ramifications of probate and erroneous estate planning. Call our law firm at (800) 603-3900 for a free consultation or visit our living trusts page to get started now.