A comprehensive estate plan is often either will-based or trust-based and includes powers of attorney and health care directives. Many people assume that an estate plan is only for wealthy people or older people. The truth is, if you want to decide how you and your assets are cared for if you become disabled and how your assets are managed and distributed after your death, you need an estate plan. In other words, if you do not decide how to direct your healthcare and distribute your assets, Oklahoma will decide for you. Whether you choose a will-based plan or a trust-based plan hinges on your unique situation, including your needs and your goals. In either case, having an estate plan in place ensures that it is you who decides what happens to you and your assets. A comprehensive estate plan brings peace of mind.

Choosing a Will-Based Estate Plan

A will is a legal document that serves four main functions. A will allows the person making the will (testator) to designate who receives what after death. The testator appoints an executor to carry out the will’s terms. The testator can appoint guardians for minor children and adult dependents. Finally, the will ensures that the estate’s final debts and taxes are paid.

All of this happens through a process called probate. The process includes settling all of the estate’s liabilities and taxes before its assets are distributed to the heirs. In Oklahoma, probate can take anywhere from several months to several years. Factors that determine how long probate will take include any disputes that may arise among heirs, the complexity and size of the estate, and unpaid liabilities that need to be resolved as well as how busy the probate court is. While Oklahoma does allow for expedited probate under certain circumstances, most estates will be tied up in probate for many months or even years. This is one downside to choosing a will-based estate plan. Another potential downside to choosing a will-based estate plan is that the probate process is not private. This means that the general public has access to who your heirs are and how much your assets are worth. This combination of information can put your heirs at risk for being targeted by scammers and other bad actors.

Choosing a Trust-Based Estate Plan

Many different types of trusts exist but the most common for estate planning is the revocable living trust or RLT. Generally, a trust is created by a legal document that allows a trustee to hold and manage property for the beneficiary. The trust must be funded, which is the process of re-titling assets to the trust. One misconception people have about trusts is that they lose control over their assets while they are still alive. This is not true in the case of an RLT. With an RLT, you–the grantor– transfer your assets into the trust during your lifetime and usually name yourself as the initial trustee. As the trustee, you maintain control over your assets during your lifetime. You name your beneficiaries and can set up how and when the assets are distributed to them. With the measure of distribution control an RLT offers, you can prevent your beneficiary’s creditors from reaching their distribution or prevent a “spendthrift” beneficiary from squandering their distribution all at once. In addition, an RLT can accommodate tax-planning strategies that can benefit the estate.

If you become incapacitated, the trust will handle your estate according to your instructions. Your successor trustee can step in and manage the estate while you are incapacitated. At your death, your assets are distributed to your beneficiaries according to your instructions, managed by your successor trustee. Unlike a will, which becomes effective upon the testator’s death, a trust becomes effective immediately. Further, a trust does not go through probate; instead, the assets are distributed quickly and privately. Downsides to a trust-based estate plan include the cost and complexity of setting it up, the lengthy process of re-titling your assets, and the potential for ongoing administrative costs. For some people, the benefits a trust provides outweigh these factors.

Will vs. Trust: Which Type of Estate Plan Is Best for Me?

The best type of estate plan for you depends on your specific needs and goals. Generally speaking, a will is the simpler and more straightforward estate plan. For some people, this may be the best strategy. For others, the quicker distribution, privacy, incapacity planning, and tax planning features of a trust may be the best strategy.

Bear in mind that your needs will likely change over time. A will may address all your needs and goals when you do not have a lot of assets to pass on and you simply want to appoint a guardian for your children. But as you age, your circumstances–such as increased wealth, a blended family, or a special-needs child–may warrant a more complex trust-based estate plan to ensure you pass on as much of your hard-earned money as possible with asset protection in place. For this reason, it is important to review your estate plan with your attorney on a regular basis.

Reasons to Revisit Your Existing Estate Plan

If you have an estate plan in place but you have not reviewed it in a while, consider scheduling an appointment with an estate planning attorney for estate plan upkeep. Regularly reviewing your estate plan is important for several reasons. For example:

1. The laws that affect your estate planning goals–including tax laws–often change and you want to be sure you have the best strategy in place.
2. Your needs and goals also may change over time. You may have a will in place but want to address some new family needs through a trust. Or perhaps your assets have grown and warrant a more robust plan that includes asset protection.
3. New circumstances, such as changing your state of residence, emerging healthcare concerns, or purchasing out-of-state real estate may require an update to your existing estate plan.

If you have an estate plan in place, you have already done the heavy lifting. A regular estate plan review is a simple way to ensure your needs and goals are still being served by the plan and to make revisions as needed.

Get the Peace of Mind That Comes with Planning

Whether you use a will or a trust, get the peace of mind you deserve with a comprehensive estate plan designed to meet your specific situation. At Titus Hillis Reynolds Love, we help Oklahomans create estate plans that best serve their needs and goals. To start planning or to revisit your existing estate plan, contact our team today at (918) 216-0687. We will explore your needs and goals and help you develop an estate plan to achieve them.