While most documents drafted for estate plans are similar, the details within the documents are customized to fit an Oklahoma individual's goals. A trust may be necessary to provide asset protection for heirs, but you must decide which trust will benefit your particular objectives.
Estate planning decisions involve more than the transfer of property. Living trusts are active during and after your lifetime for the benefit of a grantor - the creator - as much as beneficiaries.
A revocable trust can be undone by the grantor, while an irrevocable trust cannot. A grantor forfeits decision-making power over assets placed in an irrevocable trust. A trustee assumes the right to manage the assets, which may be sold, invested or gifted. Revocable trusts are transformed into irrevocable trusts when a grantor dies.
You may be wondering, with assets out of reach, why anyone would use an irrevocable trust.
Since assets are transferred to an entity that you don't control, the property is no longer part of your estate. What's not yours cannot be taxed. That can be important when state or federal estate taxes threaten to devalue what you leave to beneficiaries. Irrevocable trusts also protect assets from creditors, under the same "you-can't-claim-what-I-don't-own" rule.
When an irrevocable trust earns income, the trust is responsible for the tax, unless a distribution of income is made to a beneficiary. In that case, taxes are the beneficiary's responsibility. Trustees decide when a beneficiary distribution is appropriate.
Assets in living trusts do not pass through probate court. Trustees may step in when a grantor is incapacitated without interruption to the management of finances. Irrevocable trusts also may be used to reduce your net worth in order to qualify for long-term health care benefits.
These are a few of the reasons Oklahoma individuals choose irrevocable trusts. Consulting with an estate planning attorney about your concerns can help you determine whether an irrevocable trust is right for you.
fedweek.com, "Assessing the Different Types of Trusts" No author given, Nov. 21, 2013