Will vs Revocable Trust vs Nothing Which is the Better Option
Hi, my name is Steve Cortes at the Cortes Law Firm, and this is the first of six quick educational videos in a series on estate planning. You'll receive a link to each new video every two to three days, either by email or text, depending on how you chose to communicate with us.
If you have any questions along the way, don't hesitate to give us a call. But let's get started.
Different Estate Planning Options
Today's topic is one we get asked a lot, and that's what is the difference between Will vs Revocable Trust vs Nothing? I think most of us understand that having some sort of an estate plan is a good thing.
Unfortunately, many of us don't take the steps necessary to get an estate plan in place. And I think that's usually because folks don't understand the differences between a will, a trust and what happens when you don't have either one of those documents.
So in this video, I'm just gonna go over generally those three scenarios. First, dying intestate, and that simply means passing away without a will or a trust.
Second, I'll discuss passing away with a valid will, and finally passing away with a revocable living trust. And like I said, I'm just gonna go over these generally, and we'll cover these in more detail in later videos, or if you sign up for one of our webinars or live seminars.
You can find links to our calendar of upcoming events below this video.
Last Will and No Last Will
Okay, so if you die intestate, your estate will go through probate, which is a very public process. Notices will actually appear in the newspaper, and anyone who wants to will know everything that you owned and everybody you owed money to.
After that, the State of Oklahoma will decide who gets what and when they get it. That's right, the State of Oklahoma, a judge will decide, not you.
So for example, if your only heirs are your children, and you've not provided any instructions like a will or a trust, then state law requires your estate to be divided equally between all of your children.
Your older children will get their shares immediately if they're adults. And you might think well, that's not a bad idea. That's exactly what I want.
But what if you have minor children, or even grandchildren? The court, a judge, will appoint a guardian to manage the money for your minor children until they actually become adults.
That guardian can charge a lot of money. Now they will usually try to find family members, but what's worse is the court could appoint a total stranger to raise your child. Yes, if you die without a valid will, the court, a judge, not you, will decide who raises your minor children.
So the bottom line is dying intestate allows Oklahoma to make the decisions on your behalf, regardless of what your intent might have been.
Now let's talk about having a valid will. If you die with a valid will, your estates still go through the probate process. However, after creditors have been satisfied, the remaining assets go to whom you want.
If you want to leave your money to your children and name a guardian for the minor ones, the court will usually abide by your wishes.
However, the probate is still a very public process, and it provides a forum for anyone who wants to to appear and contest your distributions, or even who you've chosen as the guardian for your minor children.
The bottom line is having a will allows you to tell the court exactly how you want your estate to be handled, but it's still a very public process.
Revocable Living Trust
If you have created a revocable living trust, you have taken control of your estate plan and your assets. Trust assets are not subject to the probate process, and one of the most important benefits of a trust is that it's private.
Notices are not published in any newspaper, and with a trust, you name a trustee, somebody that you trust, to manage your estate with specific instructions on how your assets should be distributed and when they should be distributed.
Now I do see folks make a big mistake with trusts, and that is failing to fund their trust. Funding simply means titling all of your assets in the name of the trust. So if you think of your trust as a basket, if an asset is not in that basket, then it's not covered by the trust.
If you leave an asset out of the trust, then we use what's called a pour-over will to pour that asset back into the trust for distribution.
But in order to make that happen, we have to probate that one asset. So it's very important to fund your trust.
You will still need a will to name guardians for minor children, but their inheritance will not be part of the probate because your trustee is in charge of their money.
The bottom line is trusts, a revocable trust, allows you to make control of your assets through your chosen trustee. A trust avoids probate.
A trust leaves specific instructions so that your children are taken care of without them receiving a lump sum of money at an age where they are more likely to squander it. So for most situations, I believe a revocable trust-centered estate plan is the best option.
However, there are situations when a will is the best option. So the best thing you can do is educate yourself by watching this video series, attending webinars and seminars and reading books on estate planning.
I've put links to some of the estate planning books that I like below. When you're ready, we can help you decide and put together an estate plan that works for you and your family.
Until then, be on the lookout for our next video, and if you're ready, sign up for one of our estate planning webinars or give us a call. And until then, we'll see you next time.
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