A last will and a trust are two different ways to leave property to certain people after you die. In Michigan, a will and a trust may be written separately, or they may be used together. Wills and trusts have key differences that make each type suited to different circumstances. Understanding the differences between last wills and trusts can help you make estate planning choices for yourself and your family.
While both a last will and a trust serve the purpose of explaining how your property should be distributed when you die, each offers a different process for reaching this goal. A will makes it easier to manage your assets while you live and offers limited protection from creditors. A trust, on the other hand, avoids the need for a probate court, but leaves the estate open to claims from creditors, according to the law firm of Brown Winick.
The process for giving your beneficiaries their portions of your estate when you die differs under a will versus a trust. In a will, the person you have named as personal representative files the will with the court, and his actions in giving your beneficiaries their shares are supervised by the probate court, according to the Calhoun County Courts. In a trust, however, the trustee is required upon your death to distribute the entire contents of the trust to the beneficiaries, and the probate court does not get involved unless a dispute develops, according to Michigan State Bar Trust Code Committee Chair Mark K. Harder.
The amount of time an interested party has to contest a will differs from the amount of time available to contest a trust. For wills, any interested party has 21 days to contest the will after the date the will enters formal probate proceedings, according to the Calhoun County Courts. A will that does not enter formal probate proceedings can be contested at any time. Meanwhile, beneficiaries of trusts have one year to bring a claim for breach of trust after they receive the required trustee's report, according to Mark K. Harder.
Since a will does not take effect until you die, you do not have to transfer the title to any of your property to another person or entity, according to Brown Winick. In most trusts, however, the title to your property, including your house, vehicles and any assets must be transferred to the trust in order to pass to your beneficiaries without going through probate. In order to make title questions easier, many Michigan residents use a trust in conjunction with a pour-over will. A pour-over will is a will that leaves your entire estate to the trust. The trust owns nothing while you live. When you die, your will leaves your entire estate to your trust, and the trustee distributes it to your beneficiaries, according to the Calhoun County Courts.