On behalf of Bebout, Potere, Cox & Bennion, P.C. posted in estate planningon Monday, March 6, 2017.
With the wealth of information available on the Internet, individuals may wonder whether they could set up a trust on their own. According to the Michigan State Bar, it is highly risky, although not illegal, for an individual to draft his or her own trust. Let’s take a look why.
First, one of best features of a trust is its customization: Within certain parameters, the trust instructions can be tailored to fit the specific wishes of the trustor. Yet a do-it-yourself online trust will probably be a form document with many fill-in-the-blanks. A generic form lacks the information needed to accomplish that goal. In fact, a form may not even offer enough information to explain the various types of trusts, such as revocable, irrevocable, special needs, spendthrift, generation-skipping, and others.
In addition, a generic form may not contain the additional instructions needed to complete the estate planning process. For example, a trust document only creates a shell, but not the actual trust. Said another way, assets must be specifically retitled in the name of the trust. If insurance covered any of the transferred assets, the policies must be updated to reflect the trustee as the new owner.
If a trust has not been funded, the trust instructions cannot be placed into effect, and the estate will have to go probate. This would be a sad outcome; indeed, another benefit of trusts is that they can be used to avoid probate. Unfortunately, failure to fund a trust is far too common of a reason why many trusts fail.
Our Michigan estate planning attorneys have extensive experience in crafting estate plans that accomplish our clients’ goals and desires. We will draft trust instructions and all documentation needed to fund a trust. If a trustor has certain values that he or she wants to pass along to heirs, we can describe the legal options available.
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