Michigan Trust Administration Lawyer
Trust administration involves management of property within the trust in accordance with the document’s terms. This property is managed by the trustees for the benefit of beneficiaries named within the trust.
In Michigan, there are specific duties and legal obligations that trustees must in order to avoid legal issues with trusts in probate court.
As a result, it’s advised to work with an experienced probate attorney in order to help facilitate the administration of a Michigan trust.
Overview of Michigan Trusts
A trust is a vital part of an estate plan. In a trust, a person (settlor or grantor) transfers property to a trustee to hold for a beneficiary. A well written trust protects an estate so assets may be passed down after death or during the settlor’s lifetime.
One main advantage of using a trust is to avoid taxes and probate court. Basically, trusts preserve wealth and control distribution of assets.
There are numerous types of trusts. A lawyer that specializes in this area of law can advise clients which type works best for their unique situation.
The two main types of trusts are: revocable and irrevocable. In a revocable trust, assets remain in the estate but assets move out in an irrevocable trust. An irrevocable trust may not be changed without the beneficiary’s permission. So, an attorney’s advice is important before deciding which type of trust works best.
Families may find it necessary to establish a special needs trust. This kind of trust protects an inheritance for a beneficiary who may be disabled or unable to handle financial decisions. IRA trusts, life insurance trusts, and charitable trusts are a few of the other vehicles people may utilize when establishing an estate plan.
Generally speaking, life insurance trusts and special needs trusts are irrevocable trusts. However, sound legal advice remains advisable.
Trustee Duties in Michigan
Michigan law covers the duties and liabilities of trustees. Under the Michigan Trust Code (MTC) once a trustee begins distributing assets from an estate, the trustee has accepted the role of trustee and must follow the trust instrument. In other words, a trustee may not change the settlor’s wishes. So, if the settlor wanted the estate to be divided equally among four heirs, the trustee may NOT give a larger portion of the estate to one beneficiary. Hopefully, the settlor chose an honest person as trustee; otherwise, the estate may end up in probate court.
Trustees do not have to accept their fiduciary responsibility. In fact, they are allowed to pass up this opportunity for any reason. For example, a trustee may have moved out of town, or may be ill. In fact, if a trust was written long ago, the trustee may be deceased. In some cases, the trustee may not want to handle all the work involved with settling an estate. So, it’s important to name more than one trustee when writing your trust.
The trustee must distribute all assets within a reasonable time frame and pay all bills to settle the estate. Sometimes a trustee may take too long to distribute assets. Of course, all of the deceased financial obligations and taxes must be paid first. After that, the trustee should disperse monies and sell property as soon as possible.
Also, the trustee should keep records of all financial transactions and share this information with beneficiaries when possible and prudent. Solid record keeping prevents any misunderstandings between beneficiaries. So, if you are appointed trustee of an estate make sure you have knowledge of the grantor’s financial situation and always follow the trust document.