This article continues our series on setting up a trust in Oklahoma. We explained the basic roles of the trustee and beneficiary before. Our last article highlighted why custom design matters in your trust and estate plan. We will continue that discussion here.
The purpose of a trust is to achieve specific goals
Before we create a trust for a client, we take the time to listen to you, our client. We listen to your short-term and long-term goals. How do you want your estate handled during incapacity? How do you want your property transferred after you die? What concerns about your family or children do you have?
Estate planning is a custom-built job. You would never want a “basic” or “one size fits all” estate plan. You want your estate plan to be customized to your situation. And a trust is just one aspect of your estate plan.
The purpose of your estate plan is to control future outcomes. The trust is just one tool that we use to deliver the outcomes you want.
The importance of designing a trust customized for you
Designing your trust is a crucial step in delivering an estate plan that achieves your goals. Thus, we take this step very seriously. We cannot design your trust over a phone consultation. We can’t even design your trust during an in-person meeting if you or our office are not prepared.
To effectively design your trust, we need to know about your estate. That means we need to know about your assets and what you own. We also need to know about your family dynamics. How you feel about certain family members. We also want to know your overall goals. Are you most concerned with privacy? Estate taxes? Passing on intangible values and creeds?
Are you concerned about asset protection? If so, we need to know more specifics. Are we concerned about protecting you from creditors, or your children from creditors? Or both?!
How important is flexibility in tax planning? How important is having joint decision making among multiple trustees? If we have co-trustees, should we require dual signatures on checks and deeds, or is one enough?
There are hundreds more questions like these to review. But our design meetings are not simply us asking a list of predetermined questions. After you book your Family Wealth Planning Session, you’ll find our design session to be fun, exciting, and creative. You will become more financially organized than ever before. Most importantly, you will feel empowered by the specific planning.
What kind of customization is possible when setting up your trust?
The sky’s the limit when designing a trust. That is a fancy way of saying there are many, many options.
Unlike a will, which only takes effect after you die, a trust immediately goes into effect. Therefore, we can start using your trust now, to make your life easier. For example, your trust can replace the need for a power of attorney.
One reason for setting up a trust is to seamlessly transfer your assets after you die. Trusts do not require judges and courtrooms to transfer assets. This is a huge feature that saves you and your family time and money (and stress!). After your children inherit your assets from your trust, ask yourself: do you want the trust to end? Or continue?
You can set up generational trusts when you create your trust. These trusts will keep going even after you pass away.
Trust planning also lets you control how and when someone gets their inheritance. For example, you dictate that a child receives one third at age 25, another one-third at age 35, and the rest at age 40. Or you could require a child to complete college, then medical school. Or you could write that a portion is not transferred until they are married and have children. There are literally endless design options when setting up a trust.
How to set up sub-trusts inside your trust
An important feature of trust planning is the creation of trusts inside a trust. There are multiple reasons for using this design feature. You can create asset protection trusts for beneficiaries and surviving spouses. When you pass your assets on to your children, you can require that the assets remain in trust. You have several choices for the trustee. You can decide if the children will serve as trustee and how to manage the assets.
Another benefit of trusts is that they can lower capital gains taxes. This happens because the beneficiary gets a “step up in basis.” This is tax language used by accountants and the IRS. We go deep into these topics in our design meetings. For now, just know that a step up in basis reduces taxes for the person receiving the inheritance. And each time the property passes through a trust, the asset receives another step-up in basis. A beneficiary inheriting from two trusts will pay less in taxes than if you gave them the asset directly.
Questions about setting up a trust in Oklahoma?
If you are curious about how this process works, I encourage to schedule a brief call with me. Simply call my office and let us know you’d like a 15-minute discovery call with an attorney. During that call, we will touch a few different issues. Next, you’ll decide if booking a Family Wealth Planning Session is a good idea. We will further explain what goes into that process while on the call. To schedule your session, call 405-607-7799 or send us an email.
Our next article will cover key steps to follow after setting up your trust. Continue reading our article on how to properly fund your trust in Oklahoma.