There Are Benefits To Having A Will And A Trust
Video Transcribed: Isaiah Brydie with Urban Legal. Lets talk about wills and trust and how you create them and some of the benefits that you actually get in creating a will. First, why are wills even important? Well, all your states actually have what’s actually called intestacy statutes that are designed to divest the dead person’s estate to all of their heirs.
Sometimes the intestacy statute actually follows what a dead person would generally want their property to go to. Like, all my property is split equally between my three children. Okay, yeah. That’s fine, but we want to get a little bit more sophisticated in our depths of a legal understanding with our intersections of the law.
Really, we want to get more specific with how and what we’re giving to who and what. Having all your property split equally between your three kids may be fine, but let’s say you want that car to go to one specific child. Well, you may not get that outcome under the Oklahoma intestacy statutes, so the best way to do it, to make sure that that car gets to that child or your house gets to that designated child that you want it to go to, is actually to create a will.
The question is, how do you make a will? Well, it’s actually kind of straight forward and easy. All you really need to do is actually have a written document that’s signed by the testator and that is also signed by two disinterested witnesses in the presence of the testator.
I got to explain the testator is the person who’s creating the will, because they are the ones who die, but the witnesses need to sign in the presence of the testator the will, and then that testator needs to have testamentary intent, meaning that they intend for that document to be their will.
And also testamentary capacity, which is basically meaning that you were of sound mind when you created the will. There was no undue influence on you in creating the will. Things of that nature, that you would usually associate with capacity.
What are some of the things that you can actually do when you have a will? Just like I said with that car, with that house, you can do a specific devise of that property to one of your beneficiaries under the will. You’ll notice how these names of parties change when you’re talking about a person who has created a will and a person who has not created a will. But that’s an aside.
You can make specific devices or bequeaths or bequests to your heir, your beneficiaries. Another thing that you can do, and this is actually something that you hear of a lot, which you don’t really understand what it is, is you can actually create a trust and a will. All that the trust is, is that you take a specific set of property and what you’re doing is you’re separating the legal title of that property from the equitable title of that property. Basically, all that means is that, let’s say for your house, for example, if you want to make a trust in your house. I don’t know why you would do that, but you can do that.
So, let’s say you want to make a trust in your house. Basically what you would be doing is you would be taking legal title of that house and putting it in a trustee. That’s a person who oversees the trust and makes sure that the trust is ran adequately. They have fiduciary duties and they make sure that the trust actually at least maintains its value.
You separate that legal title from the equitable title. The equitable title is the right to possess that property or to actually have a interest in that property. Things like that. You might give equitable title to a child, to where that child can then live in the house. That’s what you’re doing, and then that child is then protected by that fiduciary duty with the trustee and that trustee will oversee that house for that child.
You might run into situations like this, where you have an adult dependent child. Maybe someone with some mental difficulties or somebody who needs constant medical attention, things like that, you’ll see trusts being created. what are the benefits of even creating the trust? We kind of got into them a little bit before, where you were setting up a fiduciary duty with that trustee, for that trustee to oversee the trust for whatever individuals are the beneficiaries of that trust.
Another thing that you’ll see is when people die and they have minor children, they might set up a trust. Of course, not after they’re dead, but before they pass there might be a trust set up to where there might be large sums of money put into the trust. That trust is then kept open and money for that person, that child’s education, is paid out of the trust. And then, when that person hits 21, then they can get the whole trust for themselves.
So, there are things like that, where you can set up predetermined conditions on an individual receiving property at a later date that they would otherwise receive right then and now, upon the passing of a person. Those are some of the benefits of a trust. Oh, and yeah, you might also find that if you set up a trust you might be able to avoid some taxes as well, which when we were talking about substantial estates, that is actually a very, very big determiner on whether or not you want to establish a trust.
Those are some of the benefits and some of the reasons why you would want to set up a will and then subsequently set up a trust with that will. If you have any questions or comments or you want to call us so we can set up a will and trust for you, go ahead and get in contact with us with that information in the comments.