Generally, the disadvantages of a Trust are outweighed significantly by the many advantages created by having a Living Trust in place. The biggest advantage of a Living Trust is that, unlike a Last Will and Testament, a Trust allows you to avoid Probate Court. There are three main reasons why this is important.
First, Probate can be very expensive.
Probate is the legal process through which the court ensures that, when you die, your debts are paid and your assets are distributed according to Michigan law. Legal fees, personal representative or executor fees, inventory fees (county taxes), and other costs have to be paid before your assets can be fully distributed to your heirs or beneficiaries.
If you own property in other states, your family could face multiple Probates, each one according to the laws in that state. These costs can vary widely, but we’ve had clients who had to pay tens of thousands of dollars throughout the Probate process. In general, Probate is often much more expensive than doing some simple Estate Planning in advance.
Second, Probate can take a long time.
In Michigan, the standard probate process takes a minimum of 5 months to complete. However, over the past decade we’ve seen that it generally takes 9 months to a year to resolve simpler cases (and several years for contested cases). We once represented a client whose Probate lasted for 8 years!
Third, Probate is public.
Your family has no privacy. Probate is a public process, so anyone can see the size of your estate (sometimes what you actually owned), who you owed debts to, who will receive your assets, and when they will receive them. The process invites upset heirs to contest your Will and can expose your family to greedy creditors and potential fraudsters.