Sumner PC & Associates
Experienced Trust Attorneys in Michigan
While no one likes to consider their mortality, advanced planning with a Michigan estate and wills attorney will help your family during a difficult time. Estate planning lets you protect your loved ones, control the distribution of your assets, and direct your end of life care. At Sumner & Associates, P.C., we empower our clients through comprehensive estate planning services. We also help their families administer their wills and trusts.
Preparing Your Future With Trusts
If you have questions about establishing a trust or any estate related legality, contact our estate planning attorneys at Sumner & Associates, P.C. today. Our dedicated team will work with you to protect your interests and meet your long-term goals. Our firm has over 50 years of combined legal experience in the Michigan area, and are ready to help you protect your property and family next.
Living trusts are estate planning tools that allow you to set aside property or assets for specific purposes. These include:
- Revocable Living Trusts. Revocable living trusts allow you to set aside property or assets. They are essentially legal “containers” for assets. You can set aside money, real estate, investments, businesses, and more. Some folks even use trusts to set aside financial support for a beloved pet. While you’re alive, you have total control over the trust, hence the term “revocable”. Once you pass, the trust becomes irrevocable, and its assets are transferred according to your wishes. Trusts have several advantages over wills when transferring assets.
- Irrevocable Living Trusts. Irrevocable living trusts are not under the direct control of the grantor at the time they are constructed. Assets held in an irrevocable living trust are thus not considered part of your estate. This provides certain tax advantages. An estate planning attorney can tell you more about irrevocable living trusts.
- Special Needs Trusts. Those with lifelong illnesses or disabilities generally require the financial support of their family. Concerned family members can gift money and assets to those with disabilities but have to be aware that those who get social security and public benefits cannot directly possess the money without disqualifying them from receiving public benefits. A special needs trust provides a way that the assets can be held by the individual without threatening their Social Security payments.
Why is Having a Will Important?
If you don’t leave a will, your assets, property, and belongings will be distributed by what is known as intestate succession, an algorithm that allots a specific percentage of your assets to specific relatives with your spouse at the top of your list and your children next in line. A legal will gives you more control over how your assets are distributed when you pass. But in order to be valid, the will needs two witnesses to sign off on it. It can also be contested if one of your heirs isn’t happy with the results. When you have an estate planning lawyer draft your will, you can be assured that it is ironclad.
Probate & Guardianships
When your assets pass through probate, the transfers are all a matter of public record. Additionally, the process can be costly and time consuming. Your creditors get first crack at liquidating your assets to settle outstanding debts, and your heirs come second. Your tax liability, privacy, and wishes can be protected by looking into living trusts to distribute valuable assets. While some assets, like real estate, cannot avoid public records, there are a number of benefits that trusts provide.
If you become incapacitated and can no longer take care of your own needs, you can assign a guardian who will see to your needs. Typically, this is a spouse or a trusted sibling. The guardian has decision-making power over their ward’s day-to-day needs and finances. If you don’t name a guardian, another person can petition the court for guardianship. The guardian has considerable power over their ward, so this selection must be made carefully. For instance, those with severe dementia would be candidates to have a guardian watch over them.
Trust Administration & Types of Trusts?
“Trust Administration” generally refers to the process of carrying out the terms of a written trust document. If you set up a trust during your lifetime (i.e., a so-called Living Trust), the trust administration process begins as soon as you sign your trust. If you set up a trust within your will (i.e., a so-called Testamentary Trust), the trust administration process begins immediately after your death. The trustee is responsible for properly administering your trust.
What Is a Living Trust?
Essentially, living trusts serve as containers for property. There are two different kinds:
These trusts can serve the same sort of purposes but operate according to different rules.
The Difference Between Revocable and Irrevocable Living Trusts
In the simplest possible terms, an irrevocable living trust cannot be modified while a revocable trust can. To modify an irrevocable trust you need the permission of the beneficiary, not the trustee or the individual who set up the trust (the grantor). Revocable living trusts can be modified by the grantor at any time.
Irrevocable trusts cannot be modified, but they do come with certain advantages that are trade-offs for that restriction. One of the largest advantages is that once in an irrevocable trust, the assets are no longer in your name or part of your estate. This is not true of revocable living trusts. In other words, creditors or those who have secured a judgment against you in a lawsuit can come after those assets as part of the settlement. These assets wouldn’t be touchable in this case. They can also be used to move assets out of state.
In cases where you’ve assigned a beneficiary for the purposes of estate planning, the assets would not be taxed as part of your income. They would, however, be taxed on their way out of the trust when the assets are disbursed to the trust’s beneficiary. Additionally, since assets in a revocable living trust are considered part of the grantor’s estate, those assets are considered for the purposes of levying the estate tax. In cases where an estate is close to the estate tax threshold, assets held in a revocable trust might push them over the limit.
However, this is not true of an irrevocable living trust. Since the assets held in the trust are not considered a part of the estate, they would not be considered as part of the estate for assessing the estate tax.
Revocable vs Irrevocable Living Trusts in Estate Planning
As we discussed earlier, irrevocable living trusts are useful because the assets held in that trust are not considered part of your overall estate and thus not subject to capital gains or estate tax. However, they cannot be modified by the grantor (who set up the trust) at any time until the lifetime of the trust has expired. While the lifetime of the trust need not be the grantor’s entire life, for estate planning purposes, it generally will be.
Meanwhile, revocable living trusts are useful insofar as they can avoid probate. For those without major tax issues, a revocable living trust is an excellent option. The trusts disburse assets held within the trust directly to heirs. While they are still exposed to creditors, it is much more difficult for a creditor to access funds disbursed by the trust and nearly impossible after those funds have been disbursed.
A creditor or the winner of a settlement in a lawsuit would be required to sue the trust directly which is more costly, more difficult, and requires better timing than the day after the grantor dies.
If, however, the deceased allows their property to pass through probate, the first thing that the probate court will do is contact all of the deceased’s creditors and ensure that their debts are settled before their heirs get a dime of inheritance. While paying off your debts is a virtue, you also want to ensure that your creditors don’t get first dibs on sentimental items and that your family members are cared for when you pass. Having a revocable living trust disburse important items give you more control over the situation than probate would allow.
One of the other major upsides of a revocable living trust is that it allows the trustee (who is usually an estate planning attorney) to take control of the trust if you become incapacitated. This establishes a clear transition of power over your assets and does so in a much more specific fashion than establishing a financial power of attorney.
Trust Administration During the Trust-Maker’s Life
Unlike a will, a trust should not be put in your safe-deposit box and forgotten. You should take time to learn how to properly maintain or administer your trust. If you do not properly administer your trust during your lifetime, your family will likely be confronted with a greater burden upon your death, and perhaps even financial harm.
Alternatively, you can have an attorney set up your trust for you and then transfer assets into the trust to be distributed to your heirs upon your passing.
Trust Administration After the Trust-Maker’s Death
Contrary to what many people think, even though probate might not be required because of the existence of a fully funded trust, that doesn’t mean that there are no steps required for proper trust administration after the trust-maker’s death. Indeed, as I point out in my published article in the Journal of Taxation of Investments, post-death trust administration is a lot like probate without court involvement.
Here are some of the steps involved in proper trust administration after the trust-maker’s death:
- securing the original trust document(s) and providing copies to the beneficiaries and other interested parties;
- gathering all of the trust-maker’s assets and properly investing the assets during the period of trust administration;
- determining whether a legal notice to potential, unknown creditors should be published in a newspaper;
- paying the final debts of the trust-maker;
- keeping beneficiaries informed as to the process of trust administration, including an estimated time period for completion of trust administration;
- obtaining a tax identification number for the trust;
- filing the trust-maker’s final personal income tax return (Form 1040) and a tax return for the trust (Form 1041);
- filing state and federal estate tax returns for the trust estate;
- preparing a complete trust inventory and accounting; and
- making distributions of trust assets pursuant to the distribution provisions of the trust, and obtaining signed and dated Receipts on Distribution from each beneficiary.
It is very important that a trust be properly administered. If a trust is not properly administered, the beneficiaries of the trust may be harmed. You should only work with an attorney who has a dedicated focus on trust administration.
Talk to a Trust Administration Lawyer Today
Trust administration is not a simple process and a poorly administered trust can result in serious consequences after you pass. These consequences can make it more difficult for your family members to inherit your assets according to your wishes and may void the trust entirely. The reliable trust administration attorneys at Sumner & Associates, P.C. will ensure that your trust is created properly and meets your individual estate planning needs. We will sit down and work out an estate plan that addresses your unique concerns and execute that plan in a manner that you can feel safe about. Contact us today.
Who Needs an Estate Planning Attorney?
Many people mistakenly believe that only the very wealthy need an estate attorney. However, almost everyone in Metro Detroit could benefit from a well-prepared estate plan and properly drafted will. When you die, most estates must go through probate – the legal process of identifying your property, debts, tax obligations, and distributing your assets to your heirs.
Unless your estate is very small, probate is typically time intensive and complicated. For this reason, many people use an estate and wills attorney to:
- Create an estate plan with the goal of minimizing or avoiding probate,
- Guide their family through necessary probate proceedings,
- Ensure business continuity (if you are a business owner),
- Designate charitable gifts, and
- Administer their wills and trusts.
At Sumner & Associates, P.C., our estate and wills attorneys handle a wide variety of issues, including:
- Comprehensive estate planning,
- Drafting wills and trust documents,
- Estate and trust administration,
- Guardianships and conservatorships,
- Powers of Attorney,
- Probate proceedings, and
- Special needs planning (if you or a loved one have serious disabilities).
If you have questions about estate planning or an existing will or trust, contact Sumner & Associates, P.C. Unlike some law firms, we pride ourselves on personalized service and estate planning solutions. And we’ll make sure you fully understand your options.
Understanding the Fundamentals of Estate Planning
While nothing compares to the insight and guidance of an experienced estate planning attorney, you should understand some basic information about the estate planning process. When you die, you typically must go through probate and pay estate taxes. Probate is a formal court process where your assets are itemized, your debts are paid, and your remaining property is distributed to your heirs. Unless your estate is very small, a probate judge will oversee this time-intensive and costly process.
However, a skilled estate and wills lawyer can help avoid probate court proceedings, minimize estate taxes, and still distribute your assets according to your wishes. Your estate plan will vary, depending on your financial situation, family, and long-term goals. For example, the parents of a young child will have very different goals (such as designating a guardian and caring for the child ’s physical and emotional needs) than those of a senior citizen who is concerned about his or her end of life planning and estate tax burden.
What Does an Estate Plan Include?
Depending on your goals, your estate plan might include:
- Last Will and Testament: a document that explains how your property will be distributed after your death. Administering a will typically requires probate.
- Living (Inter Vivos) Trusts: a revocable trust that benefits you during your lifetime and transfers your assets to your beneficiaries once you die. A living trust can help you avoid probate.
- Guardianship: if you become incapacitated, a trusted person will make decisions for you. You can also designate a guardian for your children.
- Powers of Attorney: allows a trusted person to make certain decisions on your behalf (if you are incapacitated). For example, health care powers of attorney can guide your medical treatment if you are unable to make your own health care decisions.
- Special Needs Trusts: sometimes called a “supplemental needs trust,” it provides financial support for a severely disabled family member or loved one without risking their eligibility for federal and state benefits.
- Testamentary Trusts: a trust established after your death, based on instructions within your will. Typically, testamentary trusts are created for minor children. Unlike a living trust, they do not help you avoid probate.
- Charitable Trusts: trusts that help fund a non-profit organization or advance a charitable mission.
An estate planning attorney can also help you understand which assets are excluded from probate. At Sumner & Associates, we will tailor your estate plan to meet your exact needs. We strive to build lifelong attorney-client relationships. As your needs and Michigan’s probate laws change, we can help you revise your estate plan.
An Estate Plan Can Also Help Guide Your End-of-Life Decisions
Your estate plan can do more than distribute your property. If you become incapacitated, it can authorize a trusted loved one to make your medical decisions for you — and give this person guidance about your end-of-life priorities. It can also authorize someone to manage your finances, small business, or family farm through powers of attorney. Finally, your estate plan can include your funeral plans — easing your family’s burden during a difficult time.
If you’re interested in end-of-life planning, contact an estate planning lawyer at Sumner & Associates. We’ll take time to understand your personal goals and then help you build a plan that protects your loved ones and clearly expresses your final wishes.
What Happens If You Don’t Have an Estate Plan?
If you die without a will or other estate plan, the probate court will distribute your assets based on Michigan’s inheritance rules. While this sometimes will reflect your wishes, these rules can sometimes have unwanted results. For example, suppose you have children from a previous relationship, but later remarried. If you die without a will, your children might lose their inheritance — since your assets will transfer fully to your new spouse. When you craft a detailed and legally-binding estate plan with help from an estate planning attorney, you can prevent this kind of unfortunate omission.
Can I Just Use an Online Form to Create an Estate Plan?
There are plenty of “free” and “low-cost” estate planning forms online, but it’s important to understand their limitations. First, most of these forms are incredibly general and do not address the specific requirements of Michigan probate law. Second, when you use an online form, you don’t get the kind of personalized advice and long-term planning that you can only get during a one-on-one meeting with an estate planning attorney.
When you create a relationship with an estate planning attorney, you get an ally. At Sumner & Associates, we help our clients articulate their long-term goals, help them modify their estate plans as their lives change, and help them respond to changes in federal and Michigan laws. You’ll never get that kind of personalized attention from a website.
Finally, we too often see poorly-drafted wills from DIY estate planning websites. These problematic documents can lead to disputes, hurt feelings, and wasted time and money. Rather than risk your legacy, it’s best to consult with an estate planning attorney from Day One.
I’m My Loved One’s Personal Representative. Now What?
Are you struggling to administer a loved one’s will or estate plan? An estate planning attorney at Sumner & Associates, P.C. can help. We guide families through probate matters, offering practical and compassionate advice. This might involve inventorying your loved one’s assets, identifying their debts, filing reports with the probate court, and managing the heirs’ expectations.
If disputes arise, an estate planning attorney can also help you resolve a will contest or another probate matter either through alternative dispute resolution or in court. While our goal is to always resolve these matters quickly and fairly, we’re also tireless advocates for our clients and their legal rights. To learn more about our probate practice, contact Sumner & Associates, P.C. today.
Speak to a Local Estate Planning Attorney in Michigan Today
We also offer free initial consultations and flat-rate fees for some services. Call us today for more information, or to request a free case evaluation.