This is the next post in the series on the utility of a revocable living trust as a powerful estate planning tool.  In this article, we aim to clarify the confusion surrounding the creation, purpose, and benefits of an Oklahoma Revocable Living Trust.  A trust isn’t just for the wealthy with a large estate, it can be an effective tool in all estate planning if used correctly.  My last article listed some questions and issues surrounding revocable living trust which we will discuss in this series.  It also stated the importance of hiring a knowledgeable estate planning attorney who can review the facts, assess the situation, and provide legal advice tailored to your needs.  This article will focus on the introduction to and the creation of a revocable living trust.  If you or a loved one is in seeking to create a revocable living trust, we are here to help.  Please contact us online or by telephone to get in touch with an estate planning law firm, and speak to an Oklahoma living trusts lawyer.

A revocable living trust is an estate planning tool that is created during your lifetime

The concept of trust has been around for centuries, with its roots dating back to medieval England.  Knights, while away on long journeys, entrusted their property to reliable individuals to ensure its care and maintenance for the benefit of their wives or children.  The Knight would then transfer the legal title of their property to this person.

Today, the creation process and the benefits of trust remain fundamentally the same.  Trusts come in various types, but for simplicity’s sake, we can categorize them into two main types: a living trust and a testamentary trust.  A living trust is created during the creator’s lifetime, while a testamentary trust is established through a will after the creator’s passing.

The trust created by its creator during their lifetime can further be divided into two types: a revocable and an irrevocable trust.  A trust that can be revoked or canceled by its creator is called a revocable trust, and a trust that cannot be revoked or canceled is called an irrevocable trust.  Our focus in this article is specifically on the introduction to and creation of a revocable living trust – a type of living trust that offers flexibility and control during your lifetime.

A revocable living trust, also known as a grantor trust or inter vivos trust, is a legal instrument created by its maker while alive that can be canceled or modified by them at any time before their passing.  It holds the maker’s property (real and personal) – still allowing them to retain full control over the property.  Let’s break it down further.  The person who creates the trust is called the settlor, trustor, or grantor.  So, if you create a revocable living trust, you are the settlor.  The person you appoint to take care of the trust is called a trustee, which is going to be yourself in this type of trust.  You must appoint a successor trustee who will take over after your passing.  An unfunded (empty) trust instrument is useless, so you must transfer property into it.  For example, if you decide to include your house in the trust, it becomes the trust asset, corpus, or principal.  So far, a settlor (you) created a trust, thereby appointing a trustee (you) and transferring corpus (your house) into the trust.  But we can’t forget about the beneficiaries.  Although you retain full control over the trust asset during your lifetime, these assets will be disposed of according to your wishes upon your death.  The person or party that will receive the trust asset after your death is called the beneficiary.

Steps to Creating an Oklahoma Revocable Living Trust: To summarize, the process of creating a revocable living trust involves the following steps:

  1. Creation: As the settlor, you establish the trust, appoint a trustee (yourself), and name beneficiaries.
  2. Successor Trustee: Designate a successor trustee to handle trust instructions after your passing.
  3. Funding: Transfer your assets, such as your house, into the trust, making it the trust property.
  4. Retitling: Ensure that the property is officially retitled in the name of the trust, with the deed recorded in the appropriate county.

If you are wondering why would anyone go through the trouble of creating a trust instead of writing a simple will to dispose of your estate upon your passing, you are not alone.  The various advantages of a revocable living trust will be discussed in our subsequent posts.  However to provide a glimpse, two key benefits are avoiding probate and guardianship proceedings.  These advantages significantly ease the burden on your loved ones, both financially and in terms of time.

A revocable living trust should be in writing and signed by its creator in front of a notary

After carefully considering your estate planning goals and deciding that a revocable living trust is the best tool for you, the next step is to create the trust document and ensure its proper execution.  So, how does one create a trust instrument and ensure it is executed correctly?  Trust is a complex legal instrument where an unsuspecting oversight can prove costly.  You should retain a knowledgeable estate planning attorney to draft and execute your trust instrument.  Oklahoma law neither requires a trust to be in writing nor to be notarized for it to exist.  However, if the trust is to hold real property (very common) or if you intend on notifying third parties of the trust, then you must memorialize its terms in writing and sign at the bottom of the document before a notary.  Generally, a trust instrument can be created by declaration or an agreement.  It includes crucial elements such as the maker, trustee, successor trustee, beneficiaries, trust assets, incapacity provisions, benefits, duration, and revocation provisions.  Although not required to be witnessed, a revocable living trust must be signed (subscribed) by the creator.

If you or a loved one is considering the creation of a revocable living trust, we are here to help.  We will give your case the attention it deserves, and help you navigate the process to ensure your needs are met and your wishes are honored after your passing.  Please contact us online or by telephone to get in touch with an Oklahoma City estate planning law firm to speak to a wills and trusts lawyer.  We proudly serve Oklahoma County, Logan County, Cleveland County, and Grady County.