Wills Vs. Trusts — A Real Estate Attorney’s Guide
Estate Planning is a crucial step for everyone, regardless of age or wealth. Everyone needs to ensure their wishes are followed after they are gone, protect their loved ones, and minimize legal complications. As a real estate attorney in Oklahoma, I often see the benefits of proper estate planning firsthand (especially when it comes to real estate & real property).
In this blog, we will cover two key estate planning tools and the differences thereof: Wills Vs. Trusts.
WILLS: Good, but not Great.
A Will, also known as a Last Testament, outlines your wishes. It is a legal document that includes provisions like:
(a) Naming Beneficiaries: Specify who will receive your property including: real estate, financial accounts, and personal belongings. However, for real estate, a will MUST STILL BE PROBATED.
(b) Appoint a guardian: For individuals who have minor children, a will is highly important. If you pass away before your children obtain the age of majority, a Will allows you to name a guardian.
(c) Appoint an Executor: Designate a person you trust to handle your estate. Pretty self-explanatory, but you can name someone who is going to distribute your assets (i.e. cut the checks and sign the deeds).
PROS of a Will: Under Oklahoma Law, a Will is simple to create and relatively inexpensive. At HH Legal, we charge $250.00 for a Will. Further, they also provide direction and your last wishes so that your loved ones can have clarity and guidance during a difficult time.
CONS of a Will: Unfortunately, a solo Will is not an estate plan. They do not avoid the expensive and time-consuming process of Probate and a Will is pretty limited in what it can and cannot enforce. For example, provisions that include conditions of marriage, divorce (child custody), religion, and gifts to pets are all examples of unenforceable provisions. If you want to leave assets in order to provide for a pet, you will need a pet trust!
TRUSTS: The Golden Standard of Estate Planning
A trust is a legal agreement between yourself and a trustee. You create a separate legal entity that holds your estate according to the agreement. While there are countless forms of trusts, the most popular is an intervivos, revocable trust wherein you are the trustee. The trust then regulates, controls, and distributes the trust per the trust agreement.
PROS of a Trust: Trusts are the Golden Standard of Estate Planning and therefore, they offer the most benefits. Assets held by a trust bypass probate court procedures, saving your loved ones time and money. Trusts offer greater control over the assets and can even provide for generation distribution (i.e. your children can use the assets, but when they die, assets are distributed to grandchildren). A trust also provides some asset protection from creditors and lawsuits (but its not total immunity). Finally, trusts offer immense flexibility. You can do almost anything you want with a trust.
CONS of a Trust: Trusts are not simple to create and they require the assistance of an attorney. Further a trust also requires ongoing management and puts more duties & burdens on your trustees. Finally, sometimes trusts are overkill. There are many other estate planning tools so, for a simple estate, a trust might be overkill.
Conclusion:
Choosing the best estate planning tool for you and your estate should be a conversation with an attorney. Your estate plan should match your circumstances and your assets. There is no point in having a trust if you can get the same results with a joint tenancy deed and payable on death accounts. So, consulting with an experience estate planning attorney is crucial. Give us a call at 828.851.2963 for a free asset consultation.