Michigan law permits many different types of trusts, each designed to accomplish specific goals. Choosing the right trust depends on your family’s needs, financial situation, and long-term planning objectives. Below are the most common trusts used in Michigan:

•    Revocable Living Trust
A revocable trust is created during your lifetime and can be changed or revoked at any time. It helps avoid probate, provides privacy, and allows you to control how your assets are managed and distributed.

•    Irrevocable Trust
Once established, an irrevocable trust generally cannot be changed. These trusts are used for asset protection, Medicaid planning, and reducing estate tax exposure.

•    Medicaid Asset Protection Trust (MAPT)
A MAPT is an irrevocable trust that shields assets from being counted for Medicaid eligibility. It helps preserve wealth for loved ones while ensuring eligibility for long-term care benefits.

•    Third Party Special Needs Trust (SNT)
A third-party special needs trust is a legal arrangement established by a family member (the "third party") to hold and manage assets for a person with a disability without jeopardizing their eligibility for government benefits like SSI and Medicaid. Unlike a first-party trust, the funds in this type of trust belong to someone other than the beneficiary. The trust is typically created through an estate planning document, such as a will or revocable living trust, and the funds are often distributed after the original owner's death.  It typically does not require that Medicaid be reimbursed from remaining funds upon the beneficiary’s death.

•    First Party Special Needs Trust (SNT)
A first-party special needs trust is a legal arrangement that holds assets belonging to a person with a disability to protect their eligibility for government benefits like SSI and Medicaid, allowing them to receive supplemental care and resources. It is funded with the beneficiary's own money, often from personal injury settlements or inheritances, must be irrevocable, and requires Medicaid be reimbursed from any remaining trust funds upon the beneficiary's death. 

•    Solely for the Benefit of (SBO) Trust
An SBO (Solely for the Benefit of) Trust is an irrevocable trust designed to protect a married couple's assets from being spent on long-term care for one spouse who needs nursing home Medicaid. By transferring certain "countable assets" into the SBO trust, the community (non-institutionalized) spouse receives a guaranteed income stream from the trust's assets, while the institutionalized spouse can then qualify for Medicaid. However, SBO trusts are a type of "crisis planning" and were subject to recent Michigan court decisions, meaning they are not always a guaranteed method to protect assets.

•    Testamentary Trust
A testamentary trust is established under a will and takes effect only after death. It is used to provide for minor children or beneficiaries who need financial oversight, but it requires opening a probate estate to fund it.

•    Spendthrift Trust
A spendthrift trust protects assets from a beneficiary’s creditors and prevents irresponsible spending. It is commonly used when a beneficiary may not be financially secure or disciplined. While this type of trust can provide substantial asset protection, certain obligations like federal taxes, child support, and court-ordered judgments may still be payable from the trust.  

•    Cottage Trust
A cottage trust helps Michigan families keep a vacation home or cottage in the family for future generations. It can provide rules for shared use, expenses, and succession while minimizing family disputes.

•    Gun Trust (Firearms Trust)
A gun trust is designed to hold firearms, including those regulated under federal law. It simplifies the transfer of firearms, ensures compliance with regulations, and allows multiple trustees to use the weapons legally.

•    Charitable Trust
A charitable trust benefits nonprofit organizations or charitable causes. It can provide tax advantages while supporting meaningful philanthropic goals. Two primary types exist: a Charitable Remainder Trust (CRT), which provides income to non-charitable beneficiaries before distributing assets to a charity, and a Charitable Lead Trust (CLT), which pays a charity for a set term before distributing assets to non-charitable beneficiaries. These trusts can offer benefits like tax deductions, reduced estate taxes, and capital gains tax deferral.

•    Asset Protection Trust
Michigan law allows for certain self-settled domestic asset protection trusts. These irrevocable trusts shield assets from creditors, lawsuits, and potential liabilities by transferring them from an individual's name to the trust's legal ownership under the management of a trustee.

•    Totten Trust (Payable-on-Death Account)
A Totten trust is a simple bank account arrangement where a beneficiary is named to receive the funds upon the account holder’s death. It avoids probate but offers limited flexibility.

•    Qualified Terminable Interest Property (QTIP) Trust
A QTIP trust is an irrevocable trust designed to provide for a surviving spouse while preserving assets for other beneficiaries, such as children from a previous marriage, after the spouse's death. It allows the grantor to qualify for the unlimited marital deduction, deferring estate taxes, but ensures the grantor's chosen remainder beneficiaries ultimately receive the assets.

•    Qualified Personal Residence Trust (QPRT)
A QPRT is an irrevocable trust that allows you to transfer your home to heirs at a reduced tax value while retaining the right to live there for a set term. It is useful for high-value estates with potential estate tax concerns.

•    Grantor Retained Annuity Trust (GRAT)
A GRAT is an irrevocable trust that enables you to transfer appreciating assets to beneficiaries at little or no gift tax cost. You retain an annuity for a set period, and remaining assets pass to heirs after the term ends.

•    Pet Trust
A pet trust ensures that funds are available for the care of your animals after your death. It names a trustee to manage the assets and a caretaker to provide for the pet’s daily needs.

•    Education Trust
An education trust sets aside funds specifically for a beneficiary’s schooling or training. It ensures resources are used for education and can provide tax planning benefits.
 

Maple Law Group offers free consultations to discuss how a trust can help you meet your goals.  Call (734) 519-1019 or email info@maplelawgroup.com to schedule an appointment.