Resources & FAQ's
What is a Living Trust?
The term "living trust" was replaced with the term "revocable grantor trust" by the Michigan Estates and Protected Individuals Code (EPIC). Revocable grantor trusts are created during the lifetime of the person creating the trust (the settlor) and includes terms that allow the settlor to revoke the trust. The settlor is both the initial trustee and the sole lifetime beneficiary of the trust. The trust is not only revocable by the settlor, but is freely subject to modification by the settlor during his or her lifetime.
A revocable grantor trust becomes irrevocable upon the settlor's death or incapacity. Upon the settlor's death, the trust may either terminate or continue in the form of one or more trusts for the benefit of the settlor's spouse or other individuals or entities. The growing popularity of revocable grantor trusts is largely due to the desire to avoid the probate process. As the vehicle through which the settlor's assets flow upon his or her death, probate is unnecessary. However, to the extent the trust is not funded by any assets of the settlor, a will is always required to "pour over" those assets into the trust. Therefore, not all clients will be able to avoid the probate process.
Also, a trust will not provide for the care of the settlor's children. A will, on the other hand, is commonly used to name a guardian for minor children, and, if necessary, to nominate a conservator.
One more benefit of a revocable grantor trust is realized in the event that the settlor becomes incapacitated because of age or illness. A fully funded revocable grantor trust eliminates the need for a conservator which requires probate court involvement. A funded revocable grantor trust can manage the property in the manner selected, and by a person or entity chosen by the settlor.