Common Misconceptions About Oklahoma Living Trusts
A living trust can be incredibly helpful when you’re forming your estate plan and preparing for the future. The only problem is that you aren’t sure that it’s right for you. After all, aren’t they only for rich people? Don’t you just need a will when you pass away? Can’t you create one on your own? By learning about common misconceptions about living trusts, you can come up with your estate plan so that your final wishes are fulfilled and your loved ones are protected when the time comes.
Entz Burton & Associates, estate planning lawyers, have assisted Oklahoma families and family-owned businesses with estate planning and business law for over 30 years. Reach out to us today to schedule your free consultation and learn more about trusts.
What Is a Living Trust?
First, you should know what a living trust actually is and how it fits into your estate plan. A living trust is a legal document that stipulates how you want your assets and property to be distributed upon your death. It also designates a trustee, who is responsible for managing the trust and then distributing assets and property to the beneficiaries of the trust when you pass away.
A living trust can either be revocable or irrevocable. With a revocable trust, you can change it any time up until death. With an irrevocable living trust, you cannot change it once you create it.
You may be wondering: Why would anyone want an irrevocable living trust? If you work in a field where you are susceptible to lawsuits, like medicine or the law, or you have creditors coming after you, you can protect your assets by putting them in an irrevocable trust. Additionally, if you put your assets in an irrevocable trust, you may still be able to qualify for government programs like Medicaid, as well as minimize your estate taxes on the proceeds from your life insurance policy.
Trusts are used because they can help you avoid probate, a long and expensive process that can drag out for months or years on end, especially if you have a complicated estate or assets and property in different states. If your family is not in agreement on what should happen to your assets, that could make the process longer too. Trusts also keep your financials private, while probate is a public process.
It is recommended that you use a living trust in addition to a will in your estate plan. However, you may not know much about wills. Here are some common misconceptions – as well as the right information – about them.
Living Trusts Are Only for Rich People
If you aren’t a high net worth person, you don’t need a living trust… right? Wrong. Anyone can use a living trust in order to facilitate the transfer of assets and reduce the burden on family members. You may believe that only rich people use living trusts because they are expensive to set up. While you will spend money hiring an estate planning lawyer to help you set it up, it’s an investment in your future. It could cost you, and your loved ones, much more down the line if you don’t have a trust. That’s something to take into consideration.
You Can Create a DIY Living Trust
There are some websites that offer you the chance to download a living trust document and create it yourself, DIY style. This is not a good option. Again, it may be cheaper than hiring an estate planning lawyer, but it’s not worth the risk. If the document is not correctly established, you could be causing issues and not even know it. And, sadly, there is no easy way to fix the situation after you’ve passed.
Trusts Become Untouchable
You might have heard that once you create a trust, you cannot touch it and you lose control over your assets. This is certainly not true with a revocable trust, which you can change at any time. For instance, one of your beneficiaries might pass away before you, so you would potentially want to replace them with someone else. You have absolute control with your revocable trust.
And when it comes to an irrevocable trust, no one is forcing you to set one up. You have control over how you initially establish the trust, and you’re choosing to create one to protect other assets. Though you can’t change it, that may not matter because you’re benefiting from it in many other ways.
You’ll Have to Go Through Probate Anyway
There is a misconception that even if you have a living trust, your estate will need to go through probate. This is not true. It will only have to go through probate if you did not properly incorporate all your assets into the trust or your trust is not written properly. Keep in mind that a trust that is part of your will, however, is not a living trust. This means your estate will need to go through the probate process in order to form the trust described in your will.
You Need to Pay Trustee Fees
You won’t have to pay management fees if you designate yourself as the trustee of your trust. But when you pass away, successor trustees can take a fee. If your family member is the successor trustee, they may elect not to take a fee. If you hire a professional trustee, when they accept the position, then they will charge a fee, which is typically a percentage assessed annually against the total trust assets. The fee could absolutely be worth it because of the amount of work that goes into managing the trust. Plus, you can decide whether or not you want a professional or a family member to take on the role. It all depends on your personal and financial situation.
If you are ready to set up a living trust, then you should get in touch with an estate planning lawyer. The sooner you do it, the better, so you have ample time to figure out exactly what you want to happen to your assets and property after you pass away. Then, you can ensure your wishes will be fulfilled.
Contact Entz Burton & Associates
If you need help creating a living trust, then get in touch with Entz Burton & Associates today for your free consultation. Call us at 405-773-9800 or 800-633-7230, or contact us on our website. We look forward to hearing from you and helping you with all your estate planning needs.
Attorney J. Michael Entz at Entz Burton & Associates is an experience lawyer in estate planning law, business formation and asset protection serving the families in Oklahoma City and Weatherford office.
