Living Trusts Attorney in Grand Rapids, Michigan
A Living Trust is a vehicle to hold your assets and then distribute them according to the trust provisions. Here are a few important facts about a Living Trust.
Revocable: a Living Trust is “revocable” meaning you can change it at any time before you die.
Assets: You will put most of your assets into the Trust (your home, savings & investment accounts and other significant assets).
Trustee: You will be the trustee of your Trust — meaning you will make all decisions about its assets. Typically, both spouses act as co-trustees.
Income Taxes: The Trust’s income is not subject to federal or state taxes — instead, its income is simply treated as though it is your income. It is reported on your individual income tax returns.
Purpose: For most people (with estates under $5.45 million), the main reason for having a Living Trust is to avoid the time and expense of probating their estate. Those with estates over $5.45 million use the trust to reduce federal estate taxes.
After Death: After you die, several irrevocable trusts will receive the trust assets. These trusts provisions cannot be changed so no one can alter your intentions.
Developing your Living Trust:
In your Living Trust, you will have the opportunity to address the following:
Successor Trustee(s): you will name successor trustee(s) who will execute the trust provisions after your death.
Distributions: you will specify how the assets will be distributed after the first spouse’s death and then after the second spouse’s death. Let’s look at the options in more detail below.
Who/Beneficiaries: Who will the distributions go to? Those that will receive distributions are called Beneficiaries. They can include:
Family — spouse, children, parents, siblings, etc.
Charity — church, ministry, Red Cross, etc.
Other — whoever or whatever you would like.
How: How will your assets be distributed? You can distribute specific amounts, percentages or “shares”. Shares can be calculated various ways — the most common are:
Per Stripes: Shares are distributed by the number of children you have. For example, if you have 4 children, the amount each child would get is 25%. If a child is deceased without children, then that child would get nothing — but if that child has living children, then those grandchildren would get equal shares of their parent’s distribution.
Per Capita: Shares are distributed by the number of living descendants. For example, if you had 3 children — one is deceased with 2 children and the others are unmarried (so there are 4 living descendants) — each child would get 1/4th and the grandchildren would each get 1/4,
By Representation: Is a hybrid between "per capita" and "per stripes". If all the living descendants are the same generation (e.g, all are children or all are grandchildren), then the shares are calculated using per capita. But, if the closest living descendants of each child are different generations, then the shares are
When: When will distributions be made? You can distribute the assets at any time. Many times distributions to children will be made three times at 25, 35 and 45 years old (to help the children learn from any mistakes).
What: What will be distributed? You can identify specific assets that will go to specific beneficiaries. As experienced Grand Rapids estate planning attorneys we welcome the opportunity to help you tailor your living trust to your desires for your family, friends, and charity.