The Difference Between Will And Trust
A will is a legal document that describes how you want your assets distributed at death. The actual distribution, however, is controlled by a legal process called probate. Upon your death, the will must be filed with the court and becomes a public document available for inspection by all. And, once your will enters the probate process, it’s no longer controlled by your family, but by the court and probate attorneys.
Probate can be cumbersome, time-consuming, expensive, and emotionally trying in a family’s time of grief and vulnerability. Statutory guidelines in the probate process means that it will take a minimum of four months to complete. Typically this time is longer. What that means is that your heirs will not have access to the estate until that time period is completed.
Con artists and other unscrupulous types have been known to use their knowledge about the contents of a will to prey on survivors. A Living Trust avoids probate because your property is owned by the trust, so technically there’s nothing for the probate courts to administer. Whomever you name as your “successor trustee” gains control of your assets and distributes them exactly according to your instructions as rapidly as they can.
This greatly shortens the time required to distribute your estate because a trust does not have to be filed and the distribution is not under the supervision of the court. Because it is not filed with the court it is not a public record so in addition, it is a much more private process.
5 Reasons You Will Need A Will
Many people believe that they do not need a will because they think wills are only for the wealthy. Others do not see the need for a will because they are not married or do not have children. There are many reasons why it is important to have a will, and here are five of them:
To Dictate How Your Assets Will Be Distributed Upon Your Death
In order to understand why it is crucial for you to dictate who gets your assets, you must first understand what would happen if you were to die without a will (“intestate”). If you die without a will, your assets will be distributed according to the Oklahoma laws of intestate succession, which are found in Title 84 of the Oklahoma Statues. These rules are very complex, and in some cases, not quite what you would expect, nor what you might want. Contrary to what some think, not having a will does not bypass probate. An estate without a will must still be probated.
According to the Oklahoma Statutes, when a person dies without a surviving spouse, everything goes outright to the children. Although there are some statutory safeguards requiring that the property be put in trust for the child until they turn eighteen, when that child turns eighteen, or if they already are eighteen or older, they will get everything outright. This thought scares many parents, who feel that eighteen year old children, barely out of high school, are not quite mature enough to handle large sums of money or property. In a will, you will have the opportunity to spell out exactly when you want your children to get their inheritance. Perhaps you do not want them to have access to it until they are twenty-five. Or perhaps you want someone else to monitor or control the use of their inheritance, so that they do not go blow it all on a Porsche when they should be using the money to pay for college. You can even arrange for your children to have certain distributions each month, until they reach a certain age, when they will get the rest outright. All of these protections can be made in a will and or trust. You may also want to pay special attention to the section on appointing a guardian for your children, discussed later in this article.
When a person dies without a will it is said that they are intestate. Oklahoma law sets out a formula for how your estate is to be distributed if you do not have a will. This is called the intestate succession law and is found at Title 84 of the Oklahoma Statutes, Section 213. As you will see it is quite complicated and may not express your wishes in how you wish for your estate to be distributed.
To Name a Guardian for Your Children
This is perhaps the most important function of a will to anyone with children under the age of eighteen. In a will, you can designate who you would like to be the guardian of your children in the event that something happens to you. There are many people out there with children who have done nothing to ensure that their children wind up with a trusted person in the event that something happens to the parent(s).
If you do not choose a guardian in writing, then it will be up to the probate courts to determine who will be the guardian of your children. The courts may appoint someone that disciplines children in a different manner from you or practices a different religion from you. The court will do what it thinks is in the best interest of the child, but the outcome may not always match what the parent would have liked. Who better to pick a guardian for the child than the parents themselves?
To Reduce Taxes on the Estate
In many cases, wills are used as estate planning vehicles. With careful planning, the estate taxes owed on some estates can be reduced. Moderately wealthy clients may benefit from some type of estate planning, including the setup of bypass and marital trusts. Since the estate taxes will be paid out of the estate proceeds, many parents want to minimize the taxes due in order to pass on more of their hard earned money to their children. This can very easily be accomplished through a will that creates trusts.
To Make Specific Bequests of Personal or Real Property
- Do you have jewelry that you want your daughter to inherit when you die?
- Do you want to leave your car to your best friend?
- Do you want to be sure that your house goes to your sister?
These are all situations that would be best addressed through specific bequests in a will. As stated previously in this article, when someone dies without a will, their property will be distributed according to the Oklahoma Statutes for Intestate Succession.
For instance, let’s say that Mary died without a will, leaving a house worth $150,000, a car, some jewelry, stock, and other assets. Her total estate is $200,000. She has no husband, one daughter, and three sons. One of the sons lived with her and cared for her during her battle with cancer.
Since Mary died without a will and is not married, her estate will simply be divided by four, so that each of her children gets $50,000. In order for this type of distribution to work, the house and other assets will have to be sold, or transferred until each of the children has $50,000 worth of assets.
What if Mary felt strongly that her daughter should keep the jewelry, and her son Joe should get the car? And what if she wanted her son Bill, who lived with her, to keep the house? The only way Mary could have ensured that any of this would happen would have been through specific bequests in a will.
Peace of Mind
Planning for the future by having a will gives you one less thing to worry about and it ensures that your wishes are carried out and your property is not distributed by preset designations that may or not reflect your desires. It will also allow you to go about your daily life without worrying every time you take a vacation or when you get sick or wind up in the hospital. By planning for the future now, you can stop worrying and start living!
The last thing to consider is that while a will is important to ensure that your estate is distributed as you desire many of the functions of a will can be accomplished with a revocable living trust and avoids probate.
At Pope & Edgar Law Firm, we help you to develop the best plan that serves your needs.