A trust may sound like a complicated legal arrangement that is designed only for high asset individuals.
Further, those who already have a will in place may believe that they do not need a trust at all.
Both of these conceptions are untrue; trusts are used in addition to wills for myriad reasons, and are beneficial for those of varying economic circumstances.
What Is a Trust?
A trust is a “fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries.”
There are a number of types of trusts, including marital trusts, bypass trusts, testamentary trusts, irrevocable life insurance trusts, and more.
One of the biggest distinctions between types of trusts is whether or not they are revocable.
A revocable trust, or living trust, allows you to retain control of assets within the trust during your lifetime, as well as the terms of the trust; you can change your trust at any time.
On the contrary, an irrevocable trust transfers assets out of your hands and cannot be altered by you once it has been executed.
The Benefits of a Trust
The benefits of a trust are many, beginning with the fact that assets in a trust are usually freed from the probate process. As such, beneficiaries will not have to deal with the complicated and time-consuming probate ordeal, and may also receive their assets more quickly.
Another reason that trusts are popular is that the creators of trusts have the ability to specify the terms of a trust; you can make decisions about which assets will be given, and to whom.
A well-constructed trust can also avoid estate taxes, or mitigate an estate’s tax burden.
The Difference between a Trust and a Will
It is important to note the differences between a trust and a will, and be aware that a complete estate plan includes both.
For example, while a will can name guardians for minor children, a trust cannot. Further, wills can instruct how to pay taxes and debts, as well as who should be an executor of an estate; a trust can do neither of these things, but can provide protection from court challenges, avoid probate, and be used to leave property to young children.
Work With an Experienced Trust & Estate Planning Attorney Today
If you own property, your estate plan is not complete without a trust.
However, forming a trust on your own can be complicated, and is much more complex than is the formation of a simple will.
For legal counsel regarding trusts, including which type of trust is best for your financial situation, which items you can leave in a trust, and how to create a valid trust, contact an experienced Ada, Oklahoma estate planning attorney at the Erik Johnson Law Offices. You can reach us today at (580) 279-1975.