Estate Planning for Life: An Introduction to Wills & Trusts

Last week I touched on POAs and Advance Directives. They are, by a large margin, my top recommendation for every adult to put together as soon as practical for their estate plan. That means doing those first at the expense of other planning if you can't get it all done at once. There will be exceptions to that general rule, of course, so have those planning conversations with the appropriate professionals as soon as you can.

In charting out this series of articles, I initially put way more on the calendar than I think is useful to convey the appropriate message. I'm no guru of social media exposure, and my initial game plan was too dense and lengthy to really hold anyone's attention.

So, new plan!

Four (4) articles, still with some information and without terribly-deep dives.

The punchline for all of them will be the same, though: you should talk to an attorney in your state about your estate planning goals and concerns immediately.

This piece will generally cover what a typical probate-avoidance Trust is as well as a Last Will & Testament.

For articles 3 and 4, I think we'll fill out a few of these documents and emphasize the top takeaways as well as honing in on what I feel is the proper mindset when considering your estate plan.

Those of you still awake and with us, I guess it's time to talk Trusts. There are dozens and dozens of Trust types out there, but most folks in the Midwest are going to be using a probate-avoidance Trust in their planning. So that's what we'll run with today.

A revocable living Trust (RLT) is a Trust that you set up in your lifetime to hold your assets. Once transferred, those assets are commonly referred to as your Trust Estate. This Trust estate is then to be managed during your lifetime and after your death, according to your specifications. Like all Trusts, a revocable living Trust is an independent legal entity. This allows it to carry on after your passing and distribute its assets to your heirs. It is called a revocable Trust because you can change any part of the Trust as you like, or revoke the entire Trust at any time so long as you have the decisional capacity to do so.

When you establish a revocable living Trust, you name a Trustee who will oversee and manage its assets on your behalf. While not a requirement, it is common to name yourself the Trustee initially. You will also need to name what is called a successor Trustee who can distribute the Trust estate and ensure compliance with your wishes after your death.

Once the Trust has been established you next fund the Trust. ‘Funding’ is done by transferring your assets from your name into the name of the Trust for the Trustee to manage. Each type of asset has specific requirements in transferring them appropriately, so seeking the help of an experienced attorney can help ensure this is done properly.

Once funded, the Trust terms protect your right to continue using and managing those assets so long as you are able. Upon your death or incapacity, the successor Trustee would take over to follow your intentions as the Trust directs.

Next, we'll cover the Last Will and Testament. This brief description relates to a Will being used as your primary estate planning tool. You will typically see a different type of Will used when Trust planning is completed, that document serves as a companion piece to the Trust. Wanted to mention that here, I'll discuss that part more in a later article. Possibly.

A will is a document that speaks for you after your death. A will can address how your assets are to be handled (like a Trust does) but also can direct how to manage your bodily remains, burial and other final arrangement preferences, who is to care for your dependents and how their expenses will be handled, and other finer points of estate management.

In Oklahoma, it is important to remember that a Will is designed to give these directions to those left behind in a courtroom setting. Outside of a probate court process, the Will is not something that any bank, hospital, or other provider has to abide by. The Executor of your estate (the person chosen to carry out your wishes) only gains this authority through a court process.

A probate process takes time, and can seem like a burden. However, in many cases the process is necessary to make sure your wishes are carried out and protected from those that do not want to honor them. Many clients wish to have a Trust drafted to avoid this time-consuming process, but a Trust is no more or less secure or valid than a Will. They just handle similar items in a different fashion.

Maybe a more concise way to envision how to think about these documents would be: A revocable living Trust is a legal entity which allows you to distribute property after your death while typically avoiding the probate court process. A will is a final set of instructions for how to manage your affairs. While a living Trust can distribute assets, it cannot handle rights, responsibilities and care decisions for your body and your dependents in the same way that a Will can.

While a person could create a revocable living Trust or a Will on their own, it's advisable to engage an attorney and a CPA to provide assistance whenever possible.

I hope this has been at least a bit helpful. Let me know if you have any general questions in the Comments, and be sure to ask an attorney in your state about these documents when you can.

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Legal Disclaimer: The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any subject matter. Except the last part above; it is absolutely my legal advice to you that you should talk to a licensed attorney in your state about estate planning. Right now. Go.

More Disclaimer: This article is written to provide a surface-level introduction to the basics of wills and trusts. This space, unfortunately, isn't big enough to cover all the ground you would need to for a comprehensive look. I'll be getting more out there at some point in the future, just not sure when.

Also important to keep in mind that i practice in the states of Kansas and Oklahoma, so this information is provided with those laws and background in mind. Each state has their own quirks, verbiage, and approach to these things. So make sure to discuss these general ideas with an attorney in your area if you have questions.

One thing that I hope everyone will remember is this: not every person needs either of these documents to accomplish their estate planning goals. It is very important to talk about them with a competent attorney in your area so you are well-informed, but it is not a guarantee that either of these will be necessary to accomplish your estate planning goals. Beware of any person telling you that you 'need' or 'must have' a will or trust if they are not an attorney or CPA that is well-informed of your personal financial, family, and planning situation. While you may find it true that you really should have one or both of those documents in your portfolio, it isn't automatic. There are a whole lotta people/media personalities out there that say a particular type of document is necessary like that; unfortunately most of them don't really know your situation and are just trying to sell you something.

Stay safe out there.

Until next time.

Copyright: ?2024 Zac Hargis, Attorney for Riggs Abney Law Firm. All rights reserved.

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