Will My Testamentary Trust Avoid Probate? (Episode #289)

0:30 Well, good afternoon, Michiganders. It is Tuesday, September nineteen, twenty twenty three, and of course this is Tuesday with Tom, Michigan's only weekly podcast where we answer your questions about a state planning and a state settlement in Michigan, and we don't send you a bill. As always, I'm your host, Tom Doyle, estate planning attorney, lifelong Michigan resident, an ambassador for all things good in this great state of Michigan. Welcome, welcome, welcome to today's program. September nineteenth. I'm looking at my calendar and I see that fall is only a few days away. September twenty third is when fall is going to begin this year. It just seems like yesterday. I don't know about you, but it seems like yesterday that we were already looking forward to summer beginning. Well, let's review last week's episode A State Planning.

1:41 Questions that might make you squirm. Sometimes when we're in the process of talking to our clients and asking them questions, the questions might be very uncomfortable for them to answer. But we're not asking them to make you squirm. We're simply asking them to make sure that we have all of the appropriate information in developing an estate plan. So if that's something that you're concerned about experiencing, I would invite you to listen to last week's episode today's show, Will my Testamentary Trust Avoid Probate? But please remember that what I'm about to discuss in the program is for educational purposes only. It is not intended to be legal advice. As always, you need to work with your attorney to determine what is appropriate for you and your estate plan. Will my testamentary trust avoid Probate? Well, let's start with a little discussion about what a testamentary trust is. Essentially, a testamentary trust is one that is created inside of your

3:12 will, So if you were to read through your will, you'll have some provisions in there where a trust is created inside of the will itself. Let's contrast that with what's called a living trust. A living trust is a standalone document. It is not part of your will. It is a totally separate, standalone documents. Now, with either of them, whether it's a testamentary trust or a living trust, you will still have control of your assets during your lifetime. So under either of them, in most cases, now there might be a reason a particular type of living trust, which would be an irrevocable trust. Maybe it's being created for perhaps a asset tection strategy, or maybe your medicaid planning strategy. But the normal living trust that most people have, you still have control of your assets during your lifetime. Under either you can provide for the distribution of your estate upon your death or continued management of assets after your death. So, for example, you might have the desire to have your estate managed for the benefit of perhaps children or grandchildren or entailed they churn twenty five. That can be done on either under either the testamentary trust or the living trust. Also, both of them are going to become

4:45 irrevocable upon your death, so once you die, you cannot They survivor of you cannot change the terms of either of those trusts. Now caveat on that though, if it's a joint living trust, it normally will only become irrevocable upon the death of the second person. So what's the real difference. Well, think about this. The living trust becomes effective during your lifetime, but the testamentary trust, because it is inside your will, only becomes effective when your will becomes effective. Now, if you listen to previous episodes of this podcast, you would know that a will only becomes effective when three things happen.

5:42 One you die, two a probate estate is open for you, and three the will is admitted for probate. Thus, your testamentary trust only becomes effective once it is admitted to probate, which means, in answer to our question, will my testamentary trust avoid probate, the answer is no again, because the testamentary trust is only going to become effective once your probate estate is open for you. What does that mean. Well, one thing that means is obviously a probate estate has to be opened. Another thing that's going to mean is that all of the assets that are going to be managed through that testamentary trust are now going through probate. So if one of your state planning goals, and that's what we're really looking at, what are you looking to accomplish with your estate plan? But if one of your state planning goals is to avoid probate, then the testamentary trust is not going to accomplish that goal.

7:05 Now, when I began practicing law over forty years ago, now, it was fairly common to include a testamentary trust inside a will as a way to manage assets after death for minor children, and perhaps if you have a very old will, and every now and then clients will come to us with very old wills that have not been updated. If you have a very old will, it's possible that it might also include a testamentary trust for children. So if you have that in your will, understand that is not a document that is going to avoid probate upon your death. Now, over the last forty years, amongst many changes in the estate planning world, most clients today have moved to the having a living trust since not only does it provide a way to manage assets, which is one of the goals, but it also has the additional benefit that it avoids probate, which is why the living trust has become the norm where most clients don't have testamentary trust created today. Another consideration today, if you think about it, having that trust inside your will

8:37 is essentially, as far as drafting is concerned, not really any different than having that separate living trust created for you, which generally means it's going to cost the same. So having a will with a living trust inside it generally is likely going to cost you the same as having a living trust created outside as a standalone document. And then when you factor in the cost of probating your estate and you add that to the cost of having the testamentary trust created for you, it is oftentimes a much more expensive estate plan. So for a lot of clients, they will also look at having the living trust created because it can be less expensive overall than having the testamentary trust and then having your estate go through probate. A couple other things to think about. Many clients will use a living trust as a way to protect privacy. If you've gone to any of the seminars or tended the webinars at both amand and I present, you'll know that we talk about that's one of the concerns that clients oftentime have that causes them to want to avoid probate is to protect privacy.

10:01 Well, just like a will will not protect your privacy, a testamentary trust that is inside that will also doesn't protect your privacy as will a living trust. And finally, another goal that clients often have when they're looking at putting together their estate plan, as they're looking for after death, the shortest period of time that it will take to settle their estate so that their loved ones can have the estate sooner rate rather than later. Well, having the testamentary trust can end up taking longer than it would to settle in a state with a living trust, because again that testamentary trust is going to require a probate estate to be open. So again, in answer to the question, will might testamentary trust avoid probate? Answer no. If you have any further questions though about whether or not your current will might actually have a testamentary trust, it's certainly something that we can read through and tell you that or any other concerns about testamentary trust. Certainly that those are questions at amand and I are able and would be willing to answer for you, And of course it should

11:58 go without saying. But amand And, as I tell you every week, we would be honored to have the opportunity to help you protect your loved ones by either putting together in a state plan for you, perhaps amending a plan that you already have, or assisting you was settling a loved ones state. Simply head on over to our website Doyle LAWPC dot com. There you will find information on how you can schedule a consultation with us. It could be an in person consultation at our New East Lansing office, or depending upon where you are stayed in the Michigan, it can be a virtual consultation that can be done via zoom or telephone. Additionally, you are, excuse me, you're going to find information at the website about our legal store. Perhaps all you need is excuse me, an individu dual document. Maybe all you need is an updated healthcare power of attorney. You will see that through the Legal Store you will have the ability to order individual documents. You can also order them through our Facebook page as well. So again I encourage you visit doilapc dot com for more information about the services that we provide and to schedule a consultation. Today. Well that's going to be it for today's show. Though,

13:43 as always, if you have a comment about the program, a topic that you'd like to have me discuss. Our questions that you'd like to have answer. This is a format to get answers to those questions, So send me an email Tom at two with Tom dot com. Please follow us on Facebook. That would be Tuesday with Tom follow the office as well at Doyle Law PC. Remember too, Tuesday with Tom is available on Apple Podcast, Spotify, Google Podcast, iHeartRadio, Spreaker and many other podcast services out there. Probably anywhere that you would normally listen to a podcast, you will be able to listen to Tuesday with Tom and you can always ask your smart speaker to play Tuesday with Ta. Well, thanks again for spending some of your time with us today and as always, I hope that you have an awesome day and an awesome week in Michigan. Stay safe. Tuesday with Tom has been brought to you by the estate Planning at Journeys at Doyle Law PC.

15:01 To learn how we can help you with your estate plan or was settling a loved ones estate, please call us today at five one seven three two three seven three six six. That's five one seven three two three seven three six six