Accordingly to a recent article from Merrill Lynch, many people still believe that a trust is only for the very wealthy. On the contrary, a trust allows someone of even modest means to ensure that his money is distributed as he wishes after his death. Merrill Lynch points out the three benefits of a trust:

More Control. A trust can set rules or conditions about when and how money is released. For example, you can establish a trust that sets a specific age or a milestone, such as graduating from college, as a condition for an inheritance to be paid.

Protection. A trust can make sure that your children, or their children, will receive their inheritance even if you divorce or remarry. It can also help shield assets if your heirs divorce or are in a profession with a high risk of litigation.

Investment Guidance. A trust allows you to appoint a professional trustee to handle a family business or investment properties so that your heirs are protected from making mistakes due to inexperience. The trustee can also manage assets for younger heirs until they reach a suitable age to make their own decisions.

If you are new to estate planning and not sure where to start, contact us today for a free consultation.

house insurance

If your home is owned by your Trust, or if you are the Trustee or Personal Representative for someone who owned a home, you need to make absolutely certain that your homeowner's insurance knows that!

Earlier this year, the Michigan Court of Appeals was faced with a case where a homeowner transferred his house to his Trust as part of his estate plan. He never notified his insurance company of the transfer.

After the homeowner died, the Trustee renewed the insurance policy, but never told the insurance company that the house was owned by the Trust. While the family was at the home to divide the deceased's personal items, a family member fell through the stairs and was injured.

The insurance company denied the claim, and the Michigan Court of Appeals agreed with that decision. The Court found that although the Trust owned the home, the Trust was not the insured party on the policy, the homeowner was. Even with the Trustee paying the insurance premiums after the homeowner's death, that did not create a contract between the insurance company and the Trustee.

If you are new to estate planning and not sure where to start, contact us today for a free consultation.

beneficiaries of your estate
 

Most people have at least one asset that includes a beneficiary designation (i.e, a life insurance policy, 401(k), IRA, annuity, etc.) It is important to remember that a beneficiary designation is the “trump card” and will overrule your will, your trust, or any other document that tries to direct to whom these funds are paid at the time of your death.

Keep Beneficiaries Up to Date!

That is why it is extremely important to keep these designations up-to-date and to retain copies in your personal files. It is not unusual for an employer to lose or misplace a beneficiary designation that you previously filed. If your family cannot find a copy of a more recent designation in your personal papers, then the last designation on file with the employer will control who gets the funds.

It is not uncommon for people to forget to update these designations after a divorce. When the person dies, often many years or decades later, the ex-spouse gets an unexpected windfall because he or she is still named on an old life insurance policy or IRA.

Minor Beneficiaries? Proceed With Caution!

Even more important is to seriously consider whether to name a minor child as a beneficiary. If you do, once you are deceased, that child will get the funds on his 18th birthday – regardless of the amount of money involved or his maturity level to handle those funds. It is often much safer to have your trustee or your estate named as the beneficiary and then to have provisions in your will or trust for someone to manage the funds until the child is a more suitable age.

Enlist an Estate Planning Professional!

These scenarios illustrate how important it is to have professional assistance when planning your estate. A professional will ask questions that you may never have thought of.

Interested in taking the next step? Please Contact Us!

Legal Strategies, P.C. 

Terri North is the Macomb County, Michigan attorney who heads up the Legal Strategies practice. Legal Strategies assists clients in the areas of estate planning, probate and real estate. 
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