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Ten Reasons Why You Need A Living Trust
- To Avoid Probate. How many times have you heard that statement? "Probate" means "proving the will." If you have a properly drafted, it does not need to go to probate court. If the trust is funded during the lifetime of the trust's creator, there is no need to go to probate court to transfer assets. It's all done before the death of the trust's creator. When the trust is not properly funded, you end up in probate court. Fixing on-line trust forms can get very expensive after the death of the maker of the trust.
- A Trust Allows You to Maintain Control During and After Your Life. As you create the trust, you also decide how the assets of the trust are to be distributed on your death. If your situation changes during your lifetime, you can amend the trust to reflect the changes. A trust contains a set of instructions on how your possessions are to be administered by the successor trustee. The successor trustee may even step in during your lifetime if you become incapacitated. The management of the trust is uninterrupted by your incapacity.
- Avoidance of Probate in Other States. If the trustmaker owns real estate in different states, it is possible to avoid expensive and time-consuming probate proceedings in those states by conveying the property to the trustee during the trustmaker’s lifetime. States do not generally recognize a probate proceeding in another state. If your Florida condo is not in a trust, your heirs could find themselves probating your estate in Michigan and Florida!
- Flexibility The name revocable living trust means that you can alter your trust at anytime without having to answer to anyone. Parties listed in a trust as beneficiaries have no voice in the management or disposition of your estate. No court approval is required for you to change your trust during your lifetime.
- Provides Quick and Inexpensive Estate Settlement. If you have a trust, your estate can be settled quickly. The alternative is probate court, which can take months, and even years to administer your estate!
- Guardianships to Protect Your Children and Grandchildren A trust can provide that your wishes for a minor child are carried out. You appoint the people who will act in the best interest of the children. The probate court is not given the opportunity to appoint some stranger to supervise assets being held for the benefit of the minor.
- Minimization of Emotional Stress Drawn out estate administration is frustrating. Filing court documents and publically held probate courtroom hearings are stressful and degrading. A trust will avoid heaping additional grief during a difficult situation.
- Complete Privacy If your estate is probated, everything in your estate is a matter of public record. Anyone can go to probate court and look at your file. They can see how much and to whom your estate is being distributed. A living trust keeps your affairs completely confidential and private. There are no court records with a living trust.
- Protect Loved Ones With Special Needs For a variety of reasons, some beneficiaries are unable to handle money responsibly. They may be spendthrifts or simply unschooled in financial affairs. They may need to continue with Medicaid or Social Security benefits that might otherwise become unavailable with an inheritance. With the proper trust, the management and distribution of your estate can be handled by competent individuals who will avoid disqualifying a beneficiary from governmental benefits .
- Tax Treatment of the Revocable. Assets in a revocable trust are taxable under the federal income laws in the same manner as property owned outright by the trustmaker. No tax is payable when a trustmaker creates a revocable living trust and transfers assets to it. During the trustmaker’s lifetime, all the income of the trust is taxed to the trustmaker. Income is reported on same IRS 1040 Individual Income Tax Return just as it had been reported before the trust was created.
How Do Lawyers Bill for Their Services?
Generally, there are three different ways that attorneys charge fees: first, on a contingency basis; second, on an hourly basis; and, third, on a fixed fee basis. When you hire an attorney, that attorney is providing you his or her expertise and advice, and you should expect to be charged for the time that an attorney expends on your behalf because this is how he or she gives you the benefit of their counsel and experience.
Contingency fees are generally limited to personal injury types of cases, commercial collection matters, or other matters of entitlement such as social security and worker's compensation. In these types of cases, there is some expectation that you will receive some financial award either by settlement or by judgment from a court or jury. However, in most cases, your financial award does not include your attorney's fees. You are responsible for paying your attorney's fees out of any financial recovery that you obtain. In contingency fee cases, the attorney assesses whether or not he or she believes that you have reasonable chance of succeeding. Basically the attorney is counting on being paid from a percentage of any award which you receive from a settlement or from a court. If your case is lost, the lawyer is paid nothing for his or her time.
Attorneys charge an hourly rate for almost everything else other than personal injury cases and standard routine matters. The amount your attorney charges per hour will be determined by a number of factors. The most important factor is his or her experience in the type of matter for which you are being represented. Another factor will be the generally accepted charges for similar matters in your legal community. In most hourly cases, your attorney will request that you pay a retainer fee up front against which the attorney will bill his or her time. When your attorney is charging you an hourly rate, your attorney will periodically provide you with an itemized statement of the time which he or she has expended on your behalf.
Attorneys charge a fixed fee for standard routine matters such as simple wills, deeds, powers of attorney, drafting a basic contract, traffic offenses, or minor legal matters. These are some but not all of the examples of tasks for which an attorney may charge you a fixed fee.
You should never be afraid to discuss fees with your attorney at the beginning of your representation. Having a clear understanding between you and your attorney on the issue of fees will assure a good working relationship between you and your attorney.
Why not just use on-line legal services?
Probate and estate attorneys are often called upon to fix “on-line” wills, trusts and deeds that have made a mess out of things. Defective execution, selection of the wrong wording, conflict with Michigan statutes, and failure to properly fund trusts are the most common problems. It costs a great deal more to fix an estate planning mess than to do it properly in the first place. And unfortunately, sometimes estate planning errors cannot be “fixed”. Then estates go to heirs in a very different manner than the decedent intended. The results can be disastrous.
Is there any “on-line” service that can be helpful in creating a will?
Yes, the Michigan Statutory Will can be very useful in the right circumstances. In a very simple estate, with careful adherence to the instructions, and properly executed, it can provide a suitable estate plan. And it is free! Take a look at the Michigan Statutory Will and Appointment of Patient Advocate brochure from the State Bar of Michigan.
Am I assured of confidentiality when I see a lawyer?
Yes. The Attorney–Client privilege is a legal concept that protects certain communications between a client and his or her attorney and keeps those communications confidential. The Attorney–Client privilege is one of the oldest recognized privileges for confidential communications. The United States Supreme Court has stated that by assuring confidentiality, the privilege encourages clients to make "full and frank" disclosures to their attorneys, who are then better able to provide candid advice and effective representation.
Does it cost anything to talk the first time?
It depends what the client wants to talk about. If the client is coming to see the lawyer for a “consultation” prior to initiating a course of action, or deciding whether to initiate an action, then the client is usually billed for the lawyer’s time for the consultation. Occasionally a lawyer will advise the client to simply do nothing. And surprisingly enough, it is sometimes the best course of action. If the lawyer recommends any course of action, it will generally be considered a consultation.
In a personal injury case, which the lawyer usually takes on a contingent fee basis, there is never a charge for the initial consultation. The lawyer needs to talk to the client to decide whether to take on the personal injury case.
What usually occurs is that the lawyer will speak to the potential client on the phone before the first meeting. That way, the client and the lawyer can usually “size up” the situation to see if the lawyer is right type for the client.
What does dying “intestate” mean?
Dying intestate is about as bad as it sounds. It means you died without a will. You give up (1) the right to select the beneficiaries of your estate, (2) make gifts to your close friends, (3) name the personal representative of your estate.
What’s almost as bad as dying without a will?
Dying with an outdated will. Marriage, death, divorce and the birth of new family members cause the circumstances in your life to change radically. If your will is not modified to accommodate these changes in life, your old will controls how your estate will be distributed.