A trustee must be appointed in a trust, and the trust must prescribe duties for the trustee to peform. The Michigan Trust Code also sets forth numerous duties for the trustee. The trustee must send notices to the beneficiaries, notify creditors, inventory trust assets, manage assets according to the instructions in the trust, and account for all trust distributions or expenses.
A trustee only has responsibility for, and control over, assets that are owned by the trust. Assets may be transferred to the trustee of a trust by changing the ownership to the trustee, or by designating the trustee as a beneficiary. For example, the owner of life insurance may change the ownership of the policy to a trustee, or designate the trustee as the beneficiary of the policy. In either case, the trustee will acquire control of the policy proceeds upon the death of the owner.
The purpose of a trust is to define the duties and responsibilities of the trustee to manage trust property. The trust may have several purposes, including management of assets for one or more beneficiaries, probate avoidance, or estate tax avoidance. The purpose and intent of the trust should be clearly defined.
For purposes of estate planning, living trusts provide maximum flexibility to the grantor. The grantor may control his or her property even long after having passed away. Therefore, the trust must be carefully drafted to achieve the grantor's objective, define the role of the trustee, and prevent disputes among beneficiaries. Click here to learn more about trusts.
The Living Trust Plan is designed to achieve the grantor's objectives by using a living trust, to ensure that the trustee's role is clearly defined, and to transfer assets to the trustee's control.
You will need to gather the following items to begin administration of a trust:
In general terms, a trustee has the following duties with respect to administration of a trust (other duties may apply in each case):