When a person dies, everything he or she owned becomes part of his or her estate. The estate is then distributed to that person’s heirs according to either Michigan law or the deceased’s will. This process, called probate, is overseen by a judge and may take several months to complete.
Many people prefer to bypass the probate process and transfer their assets directly to their intended beneficiaries directly upon their death without judicial oversight. By working with a Michigan estate planning lawyer, you can structure your estate to transfer the majority of your assets outside of probate and according to your wishes.
Probate vs. Non-Probate Assets
Some types of property transfer automatically and outside the probate process. A person who is planning his or her estate does not need to take additional steps to make sure that these assets bypass probate.
In general, non-probate assets are those that have a beneficiary or payable-on-death designation. These can include life insurance policies, bank accounts or brokerage accounts with a transfer-on-death designation, some retirement assets like 401k accounts, or jointly-owned property. The ownership of these types of assets transfers upon the owner’s death to the named beneficiary or joint owner without interference from the probate court.
In contrast, property that is owned by the deceased alone without a joint owner or beneficiary will be part of the estate and subject to probate proceedings. Estate assets are distributed according to the terms of the deceased’s will. If the deceased did not have a will, the property would be distributed according to the laws of intestate succession. Under Michigan law, property is distributed to the surviving spouse, children, parents, and other heirs of the deceased in certain percentages based on each heir’s relationship to the deceased.
Creating Assets That Transfer Without Probate
If a person wants the rest of his or her estate to transfer outside of probate, he or she can create a living trust. A living trust is created by the grantor during his or her lifetime and can be adjusted or changed as the grantor wants so long as the grantor retains control of the trust and remains competent.
The grantor can include any assets as part of the trust. However, some assets need to be titled in the name of the trust for the transfer to be effective. For example, if the grantor owns real estate, it is not enough to include that property in the trust documents. Instead, the grantor will need to transfer legal title and ownership of the property to the living trust. If this does not happen, the asset will likely go through the probate process.
When creating a living trust, the grantor will name a trustee who manages the assets and beneficiaries who receive the benefit of the assets. The grantor may be both the trustee and the beneficiary of the living trust while he or she is alive. The successor trustee and beneficiaries will take over upon the grantor’s death. The property in the trust will belong to the beneficiaries immediately (and according to the terms of the trust) without needing to go through probate.
Contact a Michigan Estate Planning Attorney Today
Creating a living trust is an efficient way to make sure that your heirs receive the property you want them to have without having to wait for the probate process to finish. If you want to save your loved ones’ time and money after your death, please contact one of our estate planning lawyers today to learn more about creating non-probate assets and living trusts.