Many people throw around the terms Will (“I got left out of Grandma’s Will!!”) and Trust (“That kid won’t have to work a day in his life, he’s a Trust Fund baby”), but a lot of times they are thrown around carelessly and at the wrong times and in the wrong situations. What do they really mean, and when should a person use a Will or Trust?
On a surface level, a Trust is a means of transferring one’s assets, whether that be real property (land) or personal property (basically anything else, including money) out of their legal possession and into a Trust for the benefit of someone else (this is sometimes referred to as a “beneficiary interest” or “equitable interest”). While the original owner of the property loses legal title to such when they create the Trust (the creator is sometimes referred to as the “Settlor” or the “Trustor”), the perk of a Trust is that this owner can essentially control every aspect of this transfer. This control ranges from who gains legal title to the property by designating a Trustee, to who the beneficiaries of this property are; to how often disbursements from the Trust are made from the Trustee to the beneficiaries. What this means is that while someone may indeed be a “Trust Fund Baby,” the creator of the Trust may designate that the Trustee only give the beneficiaries enough money “as is needed for college education” or real property distributed in a manner such as “my vineyard property when beneficiary turns 30.” Only under very limited circumstances may a beneficiary change the way in which these distributions are made once the trust has been created.
Why would someone create a trust? While some of the finer details of creating a trust can become fairly intricate, some general advantages include protection from creditors that may be trying to reach the property for debt purposes, staying away from Court Probate, and the ability for another person to control assets on the Trustor’s behalf.
A Will is another way for a person to control how their property is distributed, but in this case the property will be transferred according to the Will provisions after the owner of such property has died. Without a valid Will, a person’s property will be distributed in accordance with your state’s statutes, usually working from your closest relatives and moving outward. If you don’t want state law to dictate how your property is distributed upon your death, it is a good idea to create a Will to avoid such a situation. Many people avoid making a Will because the thought of their mortality is tough to cope with, they don’t think they can afford it, or because they simply procrastinate. But a proper Will can ease the mind of many and provide comfort knowing that the people they care for will be taken care of after they pass away.
Under the right circumstances, both of these instruments can be extremely beneficial in managing personal assets and ensuring these asset end up where you want them to go, whether during life or after. Whether you simply own your house, your vehicle, and some farmland and mineral rights underneath, or whether you have an extremely diverse, advanced portfolio, creating at least one of these instruments is highly recommended.
This link is a great start in understanding when either of these options is proper. Whether you have questions about how to get started in the right direction, questions about an instrument you have already created, or questions involving a Trust or Will you are the beneficiary under, feel free to contact our firm, Hartsfield & Egbert, PLLC at (405) 285-685, or visit our website www.helawedmond.com and ask your question in the comment box.