As a Michigan estate planning lawyer, I participate in online discussions with other estate planning attorneys across the nation to stay up on the latest estate planning and business succession planning news, laws, and cases. Well, one of my colleagues very succinctly summarized two situations that he has seen occur when a business owner only had a Last Will and Testament and not a Revocable Living Trust based estate plan.
The first situation occurred when a client became disabled. With a Last Will and Testament that doesn't become effective in Michigan until the creator passes away, the court had no ability to pass the business to who the client would have preferred, a brother in this instance. What happened was that the business basically disintegrated with a lack of proper leadership.
Now if the client had used a Michigan Revocable Living Trust based estate plan drafted by a Michigan trust planning lawyer, the successor trustee, the brother in this case, would have been able to step and continue the business during the client's disability. Michigan Living Trusts provide for trustees to manage assets (and businesses) during the incapacity of the creator while a Last Will and Testament has no such provisions and is only effect upon death.
The second situation is when the business owner dies. At this time the Michigan Last Will and Testament will have to be probated. During the date of death and the opening of the probate estate, or even worse upon final distribution if the proposed business successor isn't the Michigan personal representative, the business disintegrates or is diverted to third party creditors. With a Michigan Revocable Livnig Trust based estate plan, the transition is quick and seamless, there won't be any erosion due to lack of legally recognized leadership.
So, if you are a Michigan business owner and are considering a Trust vs. a Will it's important to not only consider your personal assets, but also the business in creating your Michigan estate plan.
