Deciding on a trust is an important decision in your life. Let Martin Foldie Law help you decide what option is best for you. We are dedicated to serve your interests and provide you with the trust that fits your needs.
Type of Trusts
There are several major components when deciding what type of trust to have. First you must consider if you want a revocable or irrevocable trust.
- Revocable is a flexible, living trust that can be dissolved at any time.
- Irrevocable cannot be changed or dissolved once it has been formed
Types of Trusts Continued…
In addition, there are several specific trusts that you can select based on your specific needs.
- A Trust
- Also known as Martial, these types of trusts are created to provide benefits to a surviving spouse.
- B Trust
- Also referred to a credit shelter trust, the B trust allows a surviving spouse to bypass an estate in order to receive any kind of federal tax exemptions.
- Charitable Lead
- This type of trust designates certain benefits to a charity and the rest to the beneficiaries.
- Charitable Remainder
- This type designates any residual income to be given to charity.
- Generation-skipping ensures that your grandchildren have access to the trust without a generation-skipping tax.
- Grantor Retained Annuity
- This is designed to grant appreciating assets to future generations.
- Irrevocable Life Insurance
- This type excludes life insurance proceeds from the trust.
- Qualified Terminable Interest Property
- This provides income to a surviving spouse. If there is no surviving spouse, the income passes to the named beneficiaries.
- This type is created in a will and enforced after death.
Michigan Law is very complex regarding the formation and activity of the various types of trusts mentioned above. Below is an edited section from the official tax law. For more information, please be sure to read the Michigan Trust Code and Annotation section found in the Estates And Protected Individuals Code MCL 700.
Trust Expenses and Compensation
Any expenses of trust administration, including trustee compensation and attorney fees, shall be paid by the trustee before the administration costs and expenses of the settlor’s estate, an enforceable and timely filed claim of a creditor of the settlor, and homestead, family, and exempt property allowances. The trustee shall make payment in the following order of priority:
- Costs and expenses of administration of the decedent’s estate.
- Reasonable funeral and burial expenses.
- Homestead allowance.
- Family allowance.
- Exempt property.
- Debts and taxes with priority under federal law.
- Reasonable and necessary medical and hospital expenses of the decedent’s last illness, including compensation of a person attending the decedent.
- Debts and taxes with priority under other laws of this state.
- All other claims.
If the terms of a trust do not specify the trustee’s compensation, a trustee is entitled to reasonable compensation depending upon the circumstances. If the terms of a trust specify the trustee’s compensation, the trustee is entitled to be compensated as specified. However, a court may allow more or less compensation if either of the following apply:
- The duties of the trustee are substantially different from those contemplated when the trust was created.
- The compensation specified by the terms of the trust would be unreasonably low or high.