Michigan Trust Administration Lawyer
Trust administration involves management of assets within a trust. It’s legally required that these assets are managed in accordance with the document’s terms. There are three main parties involved in this process.
1. Settlor – The creator of the trust.
2. Trustee – The person responsible for managing the trust
3. Beneficiary – The person or group of people who receive benefits from a trust
Our law firm has extensive experience representing all three parties throughout this process. This includes:
- Helping trustee’s with administration
- Guiding trustee’s through legal duties and obligations
- Assisting settlors with the drafting or execution of a trust
- Defending trustee’s against litigation
- Representing beneficiaries with legal disputes involving trusts
If you have questions or concerns with Michigan trust administration, contact us for a confidential consultation.
Michigan Laws On Trust Administration
Many Michigan laws regarding trusts are outlined in the Michigan Trust Code (MTC) which was drafted by the Michigan Trust Code Committee of the Probate and Estate Planning Section of the State Bar. The MTC was signed into legislation by former Governor Jennifer Granholm in June of 2009. This officially took effect in April of 2010 and applies to all Michigan trusts regardless of when they were established.
The Michigan Trust Code defines a trustee as “a person in whom some estate, interest, or power in or affecting property is vested for the benefit of another.” Basically, a trustee follows the wishes of the settlor after the creator of the trust passes or is incapacitated. The trust instrument dictates when the trust takes effect.
The MTC allows a trustee to accept or reject the role. In other words, a trustee may decline the responsibility for any reason.
The State of Michigan has specific duties and obligations for trustees to fulfill when managing a trust’s assets. Once a trustee accepts the fiduciary responsibility of trust administration the trustee must follow the trust document. So, if the creator of the trust wanted to distribute all assets equally between three living children, the settlor must follow the terms of the trust.
It does not matter how the trustee feels about the terms. Michigan law dictates the settlor’s wishes must be followed unless there was “undue influence” involved in executing the trust. In that type of situation, the courts get involved to settle the estate. Legal disputes involved with trusts are known as trust litigation.
Michigan law covers the duties and liabilities of trustees. Some of the numerous responsibilities involved in trust administration are listed here:
- Notify creditors: ask creditors for a final bill and pay all bills (providing this notification shortens the statute of limitation to sue from six years to four months)
- Notify beneficiaries: send registered letters to beneficiaries (they have 6 months to contest trust)
- Inventory assets
- Pay taxes, file all tax returns
- Get ten or more copies of death certificate
- Keep records of all transactions
- Pay beneficiaries
- Distribute property
- Notify post office to forward mail to trustee
Types of Michigan Trusts
A well written trust is an important part of an estate plan. Each estate plan is unique and every family situation requires individual planning. Generally speaking, trusts save money, avoid time consuming, expensive probate court and reduce taxes. A skilled, experienced trust attorney can help write a trust, administer a trust, and investigate a faulty trust document.
Here are some of the main types of Michigan trusts:
Revocable Trust – It’s important to understand that every trust is either revocable or irrevocable. A revocable trust can only be modified by the grantor (the person who created it) and assets within the trust are only transferred to named beneficiaries after the grantor passes away.
Irrevocable Trust – As stated, each trust is either revocable or irrevocable. An irrevocable trust cannot be altered, changed, or canceled without permission of named beneficiaries. The reason why some people use this type of trust in contrast to a revocable trust is that irrevocable trusts offer certain tax benefits that revocable trust do not.
Special Needs Trusts (SNT) – Sometimes a family finds it necessary to set up a special needs trust. This type of trust offers future protection for a disabled family member. Perhaps, a person has limited physical mobility, a debilitating illness, or is mentally unable to handle financial situations. Then, a special needs trust may be written considering the future for that individual while including other family members.
Charitable Trust – A charitable trust is often used by wealthy families to leave monies or property to organizations. Actually, some folks leave money to charity even when their estates are not that large.
Other Trusts – There are other types of trust’s with various benefits; these include:
- IRA Trusts
- Life Insurance Trusts
- Living Trusts
- Testamentary Trusts
As you can see, there’s many types of trusts each with their own individual benefits. An experienced estate planning lawyer at our law firm can advise you which type works best in your situation.