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A lot of people think that a last will is the right choice as an asset transfer vehicle unless you are a multimillionaire with estate tax concerns. In fact, this is nothing more or less than a commonly held misconception.
Yes, it is true that high net worth individuals use trusts to gain estate tax efficiency. However, these are irrevocable trusts. People that have been successful without entering the true financial stratosphere could benefit from another type of trust called a revocable living trust.
Privacy Preservation
There are many benefits of a revocable living trust, and privacy preservation is one of them.
If you were to use a last will to state your final wishes instead of a living trust, the executor that you name in the document would serve as the estate administrator. Contrary to popular belief, the executor wouldn’t be able to follow the instructions and distribute assets to the inheritors independently.
Under Oklahoma laws, the will would be admitted to probate, and the court would supervise the administration process.
At various times, you may have read about the way that celebrities that have died distributed their assets. Have you ever wondered why this information is available to the general public? The answer is that interested parties can access probate records.
This loss of privacy can be disconcerting in a general sense, and the information could cause acrimony among surviving family members and others.
Probate Avoidance
The privacy issue is one of the drawbacks of probate, and the time consumption is another major negative. A probate will take somewhere between eight months to a year to run its course. Until the court closes the estate, no inheritances can be distributed.
Expenses pile up during probate, and this money comes out of the pockets of the heirs. Plus, it opens up a window of opportunity for disgruntled parties that may want to challenge the validity of the will.
When you use a living trust in lieu of a last will, these drawbacks are avoided. This is because the trustee would be able to distribute assets to the beneficiaries outside of probate.
Spendthrift Protections
The probate avoidance is key, but another major benefit is the ability to include a spendthrift clause to protect a beneficiary that may not be good at handling money. You could instruct the trustee to distribute limited assets over an extended period of time to prolong the viability of the trust.
Since the beneficiary would not have access to the principal, his or her creditors would also be unable to reach the funds that are in the trust.
Incapacity Planning and Streamlined Administration
A significant percentage of elders become unable to make sound decisions at some point in time. You can account for this when you create a living trust.
You can act as the trustee while you are alive and fully capable, and you could also name a disability trustee to take over these duties if you ever become incapacitated.
When you establish a living trust, the trustee will have easy access to all of the resources in the estate. This streamlines the estate administration process. You can also include a document called a pour-over will to allow the trust to absorb assets that were never signed over to the trust.
Attend an Educational Seminar!
We conduct seminars on an ongoing basis that cover all of the most important topics. You will come away with a lot of very useful information if you join us. There is no charge, so this is a great opportunity.
We have posted the dates on our seminar schedule page. Once you identify the event you would like to attend, you can follow the instructions to register, so we can reserve your seat
Need Help Now?
If you are interested in creating a living trust, or if you would like to discuss any other matter with an Oklahoma City estate planning lawyer, our doors are open.
You can send us a message to request a consultation appointment. You can also reach us by phone at 405-843-6100. We also have a location Tulsa, and the number for that office is 918-615-2700.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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