How to Set Up a Trust in Oklahoma
Trusts have a lot of benefits—minimizing taxes, avoiding probate, and more. Most of all, they can provide security for your loved ones. There’s a common misconception that they’re just for the wealthy, but the truth is that learning how to set up a trust in Oklahoma is a good idea for many different types of people. Let’s find out why trusts can be beneficial and walk through the process to set one up.
What Is a Trust?
A trust is a legal arrangement where one party, known as the trustee, holds and manages assets on behalf of another party, the beneficiary. Trusts allow you to control how your assets are distributed during your life and after your death. They can help avoid probate, reduce estate taxes, and offer greater privacy compared to a will. Trusts are also highly customizable, so you can tailor them to meet different needs.
Types of Trusts
The first step for how to set up a trust in Oklahoma is to choose the type of trust. There are two main categories of trusts: living trusts and irrevocable trusts.
Living Trusts
A living trust, also known as a revocable trust, is a type of trust that you can change or revoke at any time. This flexibility makes living trusts popular for managing assets during your lifetime. You can place various assets—such as real estate, bank accounts, and investments—into the trust and outline the rules for how they can be distributed.
Upon your death, the assets are divided according to your wishes without having to go through probate. That means they get to your loved ones faster and with less hassle. The steps for how to set up a living trust in Oklahoma are the same as any other type of trust.
Irrevocable Trusts
An irrevocable trust cannot be altered or revoked after you establish it. This type of trust is often used to protect assets from creditors and reduce estate taxes—plus, it avoids probate and gets your assets to your loved ones faster, just like a living trust. Also like a living trust, you’ll place your assets in the trust with instructions, and they’ll be distributed after your death. Many people find that the asset protection and tax benefits irrevocable trusts provide make the lack of flexibility worth it.
Do You Need a Trust?
Deciding to set up a trust depends on your financial goals and personal circumstances. They can benefit anyone who wants to manage their assets effectively, avoid probate, or plan for their family’s future. Here are some situations where a trust can benefit you:
- You want to avoid probate: Probate can be time-consuming and costly. A trust allows your assets to pass directly to your beneficiaries without going through probate, speeding up the process and keeping your financial affairs private.
- You own property in multiple states: Without a trust, your estate might need to go through probate in each state where you own property, which can take a long time. A trust consolidates your assets, avoiding the need for multiple probate processes.
- You have minor children: A trust allows you to specify how and when your children will receive their inheritance, so you know they’ll be supported financially in the long term.
- You have a blended family: If you have children from different marriages, a trust can give you the confidence that your spouse and all of your children will be provided for after your death.
- You have a loved one with special needs: A special needs trust allows you to provide for a loved one with disabilities without jeopardizing their eligibility for government benefits.
- You want to protect your privacy: A will becomes a public record after your death, but a trust is a private document. You don’t need to be wealthy to prefer to keep your finances confidential.
- You own a business: A trust can help ensure the smooth transition of your business after your death, protecting your business’s future and your employees’ livelihoods.
How to Set Up a Trust in Oklahoma
Whether you want to know how to set up a living trust in Oklahoma or create an irrevocable trust to protect your assets, the steps are the same. Working with an attorney can help you navigate the process and set your trust up correctly.
Hire an Attorney
The first step in setting up a trust in Oklahoma is to hire an experienced estate planning attorney. An attorney can help you draft the necessary documents and ensure you meet all the legal requirements. They can also advise you on tax implications and how to structure your trust to achieve your goals. Having an attorney guide you through the process can prevent costly mistakes and give you peace of mind that your trust is legally sound.
Choose the Type of Trust
Another important thing an attorney can help you with is choosing the right type of trust. There are many types of trusts, including marital trusts, property trusts, charitable trusts, and more. Your attorney can explain the differences between these types of trusts and help you determine which one is best for your financial situation and personal goals.
Identify and Value Your Assets
Next, you’ll need to identify the assets you want to include in the trust and how much they’re worth (you’ll need to know this for tax purposes). You can include real estate, bank accounts, investments, personal belongings, and even digital assets like cryptocurrencies or websites. Your attorney can help you figure out which assets to put in the trust and how to value them.
Select a Trustee
The trustee of a trust is responsible for managing the trust's assets and carrying out its terms. You can serve as the trustee of a living trust, and you’ll choose a successor trustee who will take over upon your death. For an irrevocable trust, you’ll need to choose a trustee other than yourself. In either case, you can choose a family member, friend, or professional trustee, like an attorney. The important thing is to avoid conflicts of interest and choose someone trustworthy and experienced.
Draft the Trust Document
With the help of your attorney, you’ll draft the trust document, which outlines the terms and conditions of the trust. A trust is a legally binding document that specifies how the assets will be managed, who the beneficiaries are, and how and when the assets will be distributed, so you want all the wording to be correct. That’s why it’s essential to work with an attorney who will know if the document follows Oklahoma law and accurately reflects your wishes.
Transfer Assets to the Trust
Once the trust document is finalized, you need to transfer ownership of your assets to the trust. This involves retitling assets, such as changing the title of your home from your name to the name of the trust. You’ll also need to update bank accounts, investment accounts, and other assets to reflect that the trust now owns them. If you have a lot of assets, this can be a complicated part of how to set up a trust in Oklahoma, but your attorney can guide you.
Finalize the Trust Document
After you transfer your assets to the trust, you sign the trust document in front of a licensed notary for it to become legally binding. In Oklahoma, trusts do not need to be filed with the court. You will need to keep the original document in a safe place, and somewhere your trustee knows where to find it. Some people choose to store their trust documents with their attorney or in a safe deposit box.
Review and Update the Trust Regularly
If you created a living trust, you’ll want to review and update it regularly, especially after major life events such as marriage, divorce, the birth of a child, or significant changes in your financial situation. Your attorney will be an ongoing partner who can help you revise the trust so that it continues to meet your goals.
Get Started Setting Up a Trust
Setting up a trust can provide you with peace of mind. You can be confident that your assets will go where you want them to go, both during your life and after your death. Plus, you can provide for your loved ones immediately so they can begin settling your estate.
Want to know more about how to set up a trust in Oklahoma? Ready to get started? Contact Plan Ahead Legal today. We’re here to guide you through the process, every step of the way.