Q: What’s the difference between a Will and a Trust?
A: A Will is a legal document prepared by an individual to provide his or her Personal Representative (Executor) with instructions on how their property should be divided amongst their heirs, and can oftentimes give directions on the caring of children. While a Will is certainly an important Estate Planning tool, it won’t be effective until your death and is subject to Probate.
A Trust is a legal entity that holds your property for the benefit of another (a beneficiary). Similar to a Will, instructions provide what property should pass and to whom. But unlike a Will which only becomes effective upon your death, a Trust begins operating as soon as you sign it. In many circumstances you are the “manager” (Trustee) of your Trust, and remain in complete control over the property and assets that you put in it. Trusts can also provide instructions for your long term care in the event of a disability or hospitalization. While there are several other advantages to creating a Trust, one of the most common is the avoidance of Probate.
Q: How do I know if I need a Trust?
A: A common misconception is that only the wealthiest of people need a Trust to protect their estates. The truth is, anyone can benefit from the establishment of a Trust, and setting one up is easier than you might think.
Trusts are very flexible devices that are used for a number of reasons: to protect minor children, to protect the assets of a person, to plan for a disability, to save estate taxes. Most often, the Trustee is the same person who created the Trust, and maintains control over all of the assets within the Trust, and the way in which they are to be distributed. Trusts still remain one of the best ways to ensure that beneficiaries receive the maximum amount of wealth from the estate as possible, and if properly established, will eliminate the need for Probate.
Q: What happens if I die without a Will?
A: In Oklahoma, if a person dies without making a will, his or her property must go through the probate process in order to have the legal title to the property transferred to their heirs. This is known as intestate succession and refers to a specific set of laws which govern how property or assets are to be disposed of when a person dies. The probate process, overseen by a probate court, involves appointing an administrator, identifying heirs, and distributing of assets, which many times results in a tremendous amount of time, distributions that were not necessarily what the individual would have wanted, and additional expense.
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