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When it comes to planning for your financial future, there are a lot of different options to choose from. One option that many people don't know about is the retirement trust. A retirement trust can be a valuable part of your estate plan in Michigan. In this blog, learn what a retirement trust is and how it can help you secure your retirement future!
A retirement trust is defined as an irrevocable trust created for the primary purpose of holding retirement assets, such as 401(k)s, IRAs, and other pension or profit-sharing plans. The retirement trust is designed to provide benefits to the settlor during their retirement years and can be structured in a number of ways to achieve this goal.
There are several reasons why someone might opt to create a retirement trust as part of their estate plan. One reason is that it can help manage retirement assets and distribute them according to the settlor's wishes. Another reason is that a retirement trust can provide tax advantages. For example, if the settlor dies before they have withdrawn all of the funds from their retirement account. In that case, those funds can be distributed to their beneficiaries without incurring any tax penalties.
A retirement trust works by holding retirement assets in an account that is managed by a trustee. The trustee is responsible for investing the retirement assets and distributing them according to the terms of the trust. The settlor can choose to have the trust pay out benefits during their lifetime or after their death.
Creating a retirement trust is just one way to plan for retirement. There are many other options available, so it's important to speak with a qualified estate planning attorney to determine what's best for you and your family. If you have questions about retirement trusts or other aspects of estate planning, contact the team at Michigan Law Center, PLLC today. We would be happy to help you plan your most effective future.
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Many people interested in estate planning are unsure of the difference between wills and trusts. While both instruments allow you to distribute your assets after death, there are some key differences between the two. Keep reading to learn the differences between wills and trusts in Michigan to make the best decision for you and your family.
A will is a document that directs how your property will be distributed after you die. You can use a will to:
Trusts
A trust is another way to direct how your assets will be distributed after you die, but with some important differences from wills. Trusts can be revocable or irrevocable. Revocable trusts can be changed at any point during the settlor's lifetime, while irrevocable trusts cannot be changed once they are created. This means that with a trust you can:
While wills and trusts both allow you to direct how your assets will be distributed after you die, there are some important differences to consider. These include:
As mentioned above, one of the main advantages of using a trust is that it can help you avoid probate. With a will, your assets will go through probate after you die. Probate can be time-consuming and expensive, so avoiding it can be a major advantage.
With a will, you have less control over your assets' distribution than with a trust. With a trust, you can place conditions on how and when assets are distributed, which gives you more control over what happens to your assets after you die.
Another advantage of using a trust is that it can help you reduce or eliminate estate taxes. With a will, your assets may be subject to estate taxes when you die.
Deciding whether to use a will or a trust is an important decision in Michigan estate planning. If you have questions about wills vs. trusts, or any other aspect of estate planning, contact an experienced Michigan estate planning attorney today.