If you are you are preparing your Oklahoma estate plan, there are different types of trusts to consider. Although many think wills to be the primary means of conveying their last wishes, trusts are a more definitive way to pass on assets. Heirs can contest wills, resulting in a lengthy probate process before asset distribution.
What is a trust?
A trust is a legal agreement between two individuals, namely you, the person who establishes the trust, and the trustee, who manages it. Just like wills, trusts have beneficiaries. You can transfer different types of assets into trusts, including:
- Real estate
- Accounts held at banks and credit unions
- Business interests and assets
Trusts also fall into two broad categories; revocable and irrevocable. The first designation simply means you can change the trust’s terms and assets, while the second doesn’t allow you to do so.
What advantages do trusts have?
Trusts have advantages for the grantor and beneficiaries, including:
- Pass on assets without probate
- Designate assets to care for a special needs dependent
- Create a care plan for incapacitation
- Reduce estate and gift taxes
- Preserve assets for minor children
What type of trusts should I consider
Every individual and family is different, requiring customized estate planning. Some individuals may need to shield some of their assets for tax purposes, while others are primarily concerned with ensuring their children and grandchildren receive their wealth. Discussing your needs with a financial advisor can help determine which type is best.
Some people use several types of trust in their estate plan to achieve different purposes. Among the trust types you can consider are marital, credit shelter, generation-keeping, life insurance, special needs, spendthrift, testamentary and Totten trusts. Each has specific advantages and disadvantages that you should carefully consider.