Trusts can be very effective financial tools for diverting assets to another individual or for a specific purpose such as providing cash flow for a foundation. They can be either revocable or irrevocable as well, which means that revocable trust assets can be redistributed later or reclaimed by the originating party who established the trust. These are also known as grantor trusts, and they are very common for Oklahoma residents for a wide variety of projects. But before establishing a revocable grantor trust, it is good to understand both the advantages they provide and disadvantages they carry.
The primary advantage of revocable trusts is the fact that the grantor can also name themselves as the designated trustee. This also gives the grantor the capacity to manage all financial transactions and make decisions regarding how the assets are used. Additionally, the trust can be dissolved at any point in time by the grantor as well.
The primary disadvantage of a revocable trust is that the grantor is still obligated to assume the tax burden. The fact that the assets are still considered property of the grantor also means that the trust is still subject to an estate tax in the event of an untimely passing of the creator.
It is also important to note that trusts are not as simple as they generally appear. They still fall under the governance of Oklahoma financial laws, and they can be complicated to maintain based on the details of the intended purpose.