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Living, revocable, and irrevocable. Let’s talk trusts.

Today on the Tulsa Estate Planning Blog, we’re going to explain the difference between a living trust, a revocable trust, and an irrevocable trust. Specifically, what are the advantages and disadvantages  of the types of trusts. So let’s get started.

A living trust and a revocable trust are usually, if not always, the same thing.  Both are trusts that are set up to hold assets during the life of the settlor or grantor (the person who created the trust) for the benefit of that person. It is called a “living” trust because it is established during the lifetime of the settlor. It is also called “revocable” because the settlor can revoke the trust at any time during his/her lifetime. The purpose of the revocable, living trust is to avoid probate of the settlor’s assets after he or she passes away. The estate will avoid probate if the trust is written well and the settlor does not do anything irresponsible after the trust is created (like forgetting to transfer deeds into the trust name). After the settlor passes away, however, the trust will become irrevocable in that it cannot change. The “successor trustee,” or the person who was named to take over the trust’s management, shall distribute the property as described in the trust. Sometimes a trustee is a bank or individual who is paid for their services, but often it can be family and friends who will do it without a fee. This is one reason why trusts are less expensive than probate. The major advantage is that a revocable trust will avoid probate, and it is flexible in that the trust can be amended and changed.

An irrevocable trust is a trust that cannot be amended, changed, or revoked once it is established. Irrevocable trusts are normally formed by a person or family who wants to give away assets to another person, subject to certain terms that they do not want to be changed. Once the settlor puts the assets into the trust corpus, the settlor no longer owns or has access to those assets. There are many practical advantages to an irrevocable trust. There are tax advantages as well as creditor advantages. Creditors cannot gain access to the funds in the irrevocable trust since it is no longer in the settlor’s estate. However, the disadvantages may outweigh the advantages for many people. The trust cannot be amended or changed without going to court, and the settlor cannot get the gift back, ever.

Skillern Law Firm, PLLC can create both types of trust for your estate planning needs. Please contact us today! If you are interested in creating a will instead of a trust, please read our last post – The Difference Between a Will and a Trust.

The Difference Between A Will And A Trust

Lions, tigers and bears! Oh my! Sometimes thinking about estate planning is as scary as a pack of wild animals. Understanding wills and trusts might make one feel as if they aren’t, perhaps, in Kansas anymore, but the differences and similarities are easy to learn.

Let start small. Wills and trusts both dispose of property after death. Both are documents that dictate your wishes in written form. Wills and trusts do differ in the following ways:

  • Privacy. Wills are private documents until they are entered in a probate proceeding. Probate proceedings are open to the public, and anyone can see how your estate was distributed after your death. Trusts are private documents. The public will be able to see that you have created a trust, but the public will not know the contents of the trust. Further, trusts are not entered into probate, and the distribution of assets will never be open to the public.
  • Disability. A will makes no provisions for disability. A trust allows for a successor trustee to manage assets without the need for a court proceeding.
  • Cost. Wills are less expansive in the short term, but heirs might incur more costs after death in probate attorney fees.
  • Effort. Wills require only the effort to write one. Trusts require a little more time investment, in the transferring of assets into the trust. However, this process can (and should) be done by your trust attorney.
  • Creditor protection. Neither wills nor trusts can shield their makers from creditors. Trusts can include provisions that shield its assets from heir’s creditors.
Skillern Law, PLLC is more that happy to provide this peek behind the curtain. If you have any questions about your estate, please contact us today. Don’t forget to refresh your memory about debt and marriage read our last blog post.

Power of Attorney

Some people do not know the importance of having a power of attorney form within your estate planning documents, or what it even does. Today on Tulsa Estate Planning Blog, let’s break it down to see if you might need to consider getting one executed.  People I meet do not often stop to reflect on the expense, time, and legal hassles that are passed on to family and loved ones to set up a legal guardianship, when all they needed to do was have a power of attorney form to take care of the problem.

If you become incapacitated or incompetent by a matter of law and cannot make important medical, legal, or practical decisions, a power of attorney form should help solve the problem. People can become incapacitated by events such as an illness, an accident, an absence (either planned or not), or simply when you decide you cannot do it all by yourself. The Power of Attorney will decide who will make sure: banking deposits and slips are dealt with, the bills are paid on time, and insurance, medical, and benefits paper work are dealt with.

Disability and incapacity can hit anyone at any time. If you become incapacitated and haven’t appointed an attorney-in-fact, then a court will have to intervene before anyone may sign contracts, pay bills, sign a deed to transfer property, or decide other important matters. A Power of Attorney may be needed for the guardian to get access to joint accounts and conduct other business that is necessary when a person becomes incapacitated. If someone becomes disabled without a power of attorney form at hand, the parent, relative, or interested party must begin expensive and lengthy legal proceedings to be appointed as guardian of the incapacitated person. Guardianship proceedings typically cost thousands of dollars. The importance of a Power of Attorney is that, by creating a durable power of attorney before incapacity, a proceeding to establish guardianship can usually be avoided and the designated agent can usually act as representative for the incapacitated person in most situations.

There are two types of Power of Attorney forms: one for durable power and one for medical decisions. Skillern Law Firm can help you create both at a fraction of the cost of a guardianship proceeding. Call the Skillern Law Firm, PLLC today to talk about your estate planning needs.

Also, check out the last blog post about  in terrorem clauses.

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