Estate Planning – Not Just for the 1%
There is a common misconception that estate planning is only for high net worth individuals, but establishing an estate plan and creating a trust can be the correct decision for anyone. Anything you have ever accumulated in your life is your estate.
Having a plan to manage it is smart and often necessary. In essence, estate planning is giving what you have to whom you want, the way you want, when you want, and with the least amount of taxes and expenses possible. Failure to execute a plan can have dire consequences.
What is my estate?
Your estate is anything you own or have control over. Your estate includes:
- Your home or equity in your house
- Bank accounts
- Retirement accounts
- A business or other investments
- The proceeds of a life insurance policy
- Personal property such as:
- Your car
- Equipment or tools
What is an estate plan?
An estate plan is a combination of legal documents which dictate how to distribute your assets. A comprehensive estate plan will likely include:
- Trust documents
- Living Will or Advanced Directive
- Financial Power of Attorney
- Health Care Power of Attorney
A will is a legal declaration that names the person who will distribute an estate and determines the recipients. It is generally recommended that everybody, regardless of circumstances, delineate their desires in a will.
In the cases of those who die without a will and have assets that exceed debts and funeral expenses, their estates will be subject to “intestacy,” a process where state laws determine how the assets are distributed. If assets are being distributed via intestacy, lineage will usually govern over what the decedent would have preferred. This should be avoided as it has a tendency to cause unnecessary complications and family discord. Creating a will will ensure your wishes are followed regarding the distribution of your estate.
A Living Will or Advanced Directive provides for your wishes if you are incapable of making informed decisions regarding your health care and medical treatment. The living will also appoints a health care proxy who will become authorized to make medical treatment decisions regarding life-sustaining treatments if you are unable to make decisions regarding the use of such procedures. Creating a living will is an excellent gift to give your loved ones so that they will not be forced to make difficult decisions regarding your life-sustaining treatment since you have already indicated your wishes.
Powers of attorney are estate planning documents that help take care of you while you are living. There are two powers of attorney often included in an estate plan, a health care power of attorney and a financial power of attorney. These documents grant individuals of your choosing the power to oversee your finances and healthcare decisions in the event you become incapacitated and are not able to make decisions for yourself.
A financial power of attorney allows you to nominate another person to act as your agent to manage your financial affairs when you are unable to do so. You can grant your agent broad power over all accounts, limit that authority to only one account, allow your agent to act for a specified period of time or for an extended period of time.
A healthcare power of attorney allows someone else to make medical decisions on your behalf if you are incapable of making them. Without a healthcare power of attorney, your spouse and your parents might argue about medical treatment. The most famous U.S. case regarding health care decision making is the Terri Schiavo case. Terri Schiavo remained in an irreversible persistent vegetative state for nearly 15 years, while her spouse and her parents engaged in a lengthy legal battle regarding her medical care. An executed healthcare power of attorney would have avoided this situation. Powers of attorney are critical documents, especially if you are not married.
A trust will bypass the probate court while a will is subject to probate. Without a will, any creditor will have a chance to make a claim on your estate, even if you pass with no debt. Creating a trust avoids the probate process saving you and your heirs time and money. The delay caused by the probate process can lead to unpaid bills and default on debts including the mortgage. Proper estate planning can allow someone to step in quickly and pay bills to prevent default, saving time and money. The cost of not meeting with an estate planning attorney can be much greater than the cost to meet with one.
A trust also is not publicly accessible, but a will is not and can be contested by anyone. As a general rule with trusts you can avoid attorney costs and court fees associated with probate, although establishing some trusts require attorney involvement depending on their complexity. Trusts can also provide for distribution of inheritance at a later date for minor children and determine how much they receive and how the money should be spent (such as for education or medical expenses only). Trusts ensure your assets go where you intend them, especially in families affected by remarriage.
Create your estate plan – Contact Skillern Law Firm Today
Establishing an estate plan and creating a trust can be the correct decision for anyone. For more information and to set up an appoint to create your estate plan, contact the attorney at Skillern Law Firm, PLLC. The attorney will create the right estate plan for your situation, and budget and guide you through the process every step of the way. Contact us today at 918-805-2511 or email@example.com.
When is the last time you thought about your estate plan? If you are like most women, you probably do not think about it frequently. However, creating a comprehensive estate plan is especially important as a woman. If you’re a woman, you’ll likely be managing your finances on your own at some point and will be responsible for the ultimate disposition of your wealth if you’re single, and for your spouse’s as well, if you’re married. An estate plan saves time and money, and can also provide protections for your assets upon your passing. Women face unique estate planning challenges considering their potential roles as business owners, mothers, and wives. It’s important for women to create an estate plan that protects yourself while you are living and protects your loved ones after you have passed.
Women tend to live longer than men.
Women are living longer than ever before and on average live 4.9 years longer than men. A married woman may assume she does not need a will if her spouse has one, or she may think she simply does not have sufficient assets in her own name to warrant making a will. These assumptions are incorrect. Women are almost four times more likely to be widowed meaning women are often inheriting twice, once from their parents and then again from their spouse. A longer life-expectancy rate and potential to be widowed or remain single means that women have additional planning needs to consider. Women need to ensure their assets can last for a longer period and must plan their estate to ensure her own financial security and that of children or other family members.
Women are business owners and professionals.
More women are professionals, own businesses, or are entering professions with higher salaries such as doctor, lawyer, or business executive. Women who are business owners need to protect their assets and have a plan in place. Women in professions with high litigation risks like medicine, law, and real estate, can also benefit from asset protection planning. Some women may also face financial challenges due to shorter work histories, prompted by putting their careers on hold to raise families. This break in pay could reduce the amount of savings these women will accumulate for their retirement. Creating an estate plan can help ensure their assets can last for a longer period.
Women tend to earn less during their lives then men.
Women earn less money over their lifetimes than men. Full-time working women earned only 81.2 cents (81%) for each dollar a man earned according to the latest statistics. Considering that women often work fewer years than men in order to care for home and family, their ability to save is significantly reduced. Because women must plan to make fewer dollars last longer, it’s important for them to create an estate plan with this in mind.
Many women are mothers.
Women who are parents of young children need to plan for the continued care of those children if something unforeseen should happen. They also need to determine who will handle the children’s property until they are older.
Creating an estate plan
Women face unique estate planning challenges considering their potential roles as business owners, mothers, and wives. Creating an estate plan protects yourself while you are living and protects your loved ones after you have passed. If you have an estate plan, your wishes for the distribution of your assets are more likely to be carried out, tax liabilities can be minimized, and your loved ones will not be faced with an extended and expensive process of settling your estate. Failure to plan can lead to unnecessary negative consequences for loved ones such as distribution of assets to unintended beneficiaries, excessive and unnecessary tax liabilities, and forced sale of assets to raise funds to pay inheritance taxes and other estate liabilities.
Reviewing your estate plan
If you have not reviewed your estate plan in a few years years, it’s time for a review. It is important to review your estate planning documents every couple of years to make sure they are up to date. New tax laws may have changed the outcomes from your estate plan. Additionally, anytime there is a big change in your life such as births, deaths, marriages, divorces, purchases of a home or a business, or a major change in financial status, it’s time for a review.
If you do not yet have an estate plan, by creating an estate plan, you will gain full control over how your assets are disposed and create a plan for incapacity in case you become physically or mentally unable to make decisions.
The main takeaway
Regardless of marital status or net worth, women need to make decisions and arrangements to protect themselves, their spouses, and loved ones in case of incapacity or death. Whether you’re a single woman looking to develop a plan or a married woman preparing for a spouse’s passing, it is important to plan for incapacity or death and ensure that your assets are distributed appropriately.
Today women face unique circumstances that make it even more important for them to have a comprehensive estate plan. The fact that women are likely to outlive their spouses makes an updated, comprehensive estate plan all the more important. Millennial women, whether married or single, also ought to consider creating an estate plan.
It’s important to know what you should be doing to manage your wealth no matter your age or current income level. As women, it’s essential that we take an active role in managing our finances, protecting our assets and having a clear plan for distributing those assets in the future. Additionally, consider advising your parents (especially moms who will generally outlive dads) who might not have an estate plan to review their assets. Make sure they are in good shape in the event of a death or divorce.
Contact Skillern Law Firm Today
If you don’t have an estate plan, stop postponing and make an appointment with an estate planning attorney, as soon as possible. The attorney at Skillern Law Firm, PLLC will be able to help you navigate through establishing or updating an estate plan. Contact us today at 918-805-2511 or firstname.lastname@example.org.
When buying an investment property, you have the option of purchasing it in your own name or purchasing it under the name of another entity, such as a limited liability company (LLC). The LLC then becomes the legal owner of record, not you as an individual. Purchasing commercial investment property under an LLC has significant benefits including protecting your personal home and other financial assets in the event of a lawsuit and experiencing favorable tax treatment by avoiding the double taxation that corporations experience. These benefits are enjoyed whether the LLC is a single member LLC or a multi-member LLC.
What is an LLC?
An LLC is a business entity that is separate from its owners, like a corporation. But unlike a corporation, which is double taxed and must pay its own corporate taxes, an LLC is a “pass-through” tax entity. This means that business profits and losses pass through to its owners, who report them on their personal tax returns. An LLC is often the best way for some investors to purchase property because of this unique benefit. This is true whether the LLC is a sole proprietorship or a multi-member with several members.
LLC Liability Protection
The key drawback to buying under your own name is liability; your personal home and other financial assets, whether owned jointly or individually, are exposed to lawsuit risk in the event you are sued or enter a foreclosure. However, properties managed under an LLC have limited liability for the owner, meaning that should the property be subject to a lawsuit, the owners of the LLC can be sued only within the limitations of what the LLC owns and not beyond that. This means that if you bought a commercial property under an LLC and someone files a claim against that property because they tripped and fell, the claimant cannot access or be rewarded out of your personal assets. However, if the building was purchased under your own name, you risk exposure as the claimant could access your personal assets since you as an individual will be held personally liable if an accident occurs on your property or you are unable to make payments.
For example, if someone is injured while a guest at a property you own, it is not uncommon for the guest to pursue a legal claim against the property owner for their injuries. Assuming you have homeowner’s insurance to cover such incidents, your insurance policy likely has limits and will only provide coverage up to a certain amount. If the amount of damages the injured party seeks exceeds the policy limit, your personal assets could be at risk. Even if you successfully defend the claim, your insurance premium could increase merely because your property was subject to a lawsuit. If, on the other hand, you placed the deed and title to the property in the name of an LLC, only the LLC’s assets would be obligated to pay an award of monetary damages if the injured party’s suit is successful and your personal assets are not exposed.
Other benefits of owning commercial property as an LLC is a more professional appearance to the public, especially when advertising the property for lease. Additionally, an LLC can be sold through a transfer of membership interests which allow new LLC members to take over while allowing the real estate to remain in the LLC’s name.
Whether you are the sole owner of the LLC or one of several members, you benefit from so-called pass-through taxation. For federal income tax purposes, pass-through taxation refers to the fact that any income earned by the LLC—including profits generated through real estate (such as rental income from leasing an LLC-owned property)—will pass through the LLC to its individual members. Any income earned by the LLC is not taxed at the corporate level (as would be the case with a traditional corporation) but only at the individual level. Each LLC member reports the income on their individual federal income tax returns—usually on Schedule C. These pass-through rules help members of an LLC avoid double taxation.
If your property will have more than one tenant, such as an apartment building, or will house commercial retail tenants, it is wise to purchase and operate the property under an LLC. Commercial properties are more risky compared to a single-family home as commercial properties have a continuous daily flow of individuals versus one person or one family accessing a single home. Accidents can happen anywhere and even the most careful owners are still subject to lawsuits of any kind. Owning your commercial property under an LLC will limit exposure to claims in the event an accident occurs. Having an LLC as a double layer of protection is a smart way to make sure no one can come after your home or other assets, should your insurance fail to cover you. You may be thinking, what about a partnership instead of an LLC? Partnerships, however, are actually worse than individual investors jointly participating in an LLC because each partner is responsible for his own debts and obligations as well as the other partners.
Creating an LLC
Setting up an LLC is relatively simply. To do so requires submitting an application to the state along with a fee. If approved, which most are, states charge an annual fee to maintain the LLC. In Oklahoma, the fee to create an LLC is $100 with an annual renewal fee of $25. Once your application is approved the LLC is created. You will then receive the Articles of Organization, the legal document that officially creates your Oklahoma Limited Liability Company. Once the LLC is created, the LLC becomes the legal owner of record rather than you as the individual. If you already own commercial investment property under your own name and would like to transfer it under an LLC to enjoy limited liability and avoid pass through taxation, that is an option as well. To do so requires deeding the property from your name individual to the LLC’s name and then filing that deed with the court.
You may need to obtain a waiver from the mortgage lender before transferring already owned real estate from your name as an individual into the LLC. This transfer could trigger the due on sale clause, a standard provision in the mortgage, that requires the borrower (named property owner) to pay the mortgage balance in full at the time of sale. A waiver from the mortgage property acknowledging the transfer to the LLC should eliminate this issue.
Contact Skillern Law Firm, PLLC
If you have commercial property or are considering purchasing commercial property as part of your investment portfolios, you should strongly consider creating an LLC. Contact Skillern Law Firm, PLLC today. The attorney at Skillern Law Firm can help evaluate what the best option is for you. For more information, reach out to us today at (918) 805-2511 or email@example.com.
We are all well accustomed to the digital world. Nearly all of us go online daily to shop, bank, check the news, or update our social media accounts. We store our photos online, keep contact information, and even manage our financial assets online. Our online presence, emails, social media accounts, subscriptions and every other digital account reflect who we are and can often be an extension of ourselves. With the increasing digital world and new data generated nearly every day, you may be asking what to do with these digital assets when you die. Where do they go? Can anything even be done with them?
These types of assets are referred to as digital assets. Digital assets are your personal e-mail accounts, online bank and brokerage accounts, frequent flier accounts, Facebook accounts, and other social media websites. There are four main categories of digital assets:
- Personal assets
- Social media assets
- Financial assets
- Online business accounts
While you may not think your Facebook account or email account or other digital assets are that valuable, the value exists in the data they store, the sentimental value of your photo albums that you no longer keep in physical form, and other memories in the form of posts and status updates. These assets should be treated just as you treat your physical assets.
Until recently, very few laws helped to determine who could access these files and accounts if the user became incapacitated or died. If the deceased or incapacitated person wanted any of their digital assets to be deleted, modified, or distributed to loved ones, it was difficult to determine who had the legal rights to access them. Unless the person provided usernames and passwords, the executor of the estate would have no ability to access them. As a result, digital assets would often be deleted by the “custodians” (the businesses who make, store, or provide digital assets), or they would continue to linger on the Internet or on devices long after the person’s death. This gap in the law caused heartache for families who wanted to collect cherished items from their loved one’s online profiles.
Oklahoma attempted to correct this problem by implementing a statue which allows the executor of an estate to take control of a deceased person’s digital assets if they had already been authorized. The statue states, “The executor or administrator of an estate shall have the power, where otherwise authorized, to take control of, conduct, continue, or terminate any accounts of a deceased person on any social networking website, any microblogging or short message service website or any e-mail service websites.” It has not been determined if this statute allows the custodian company who owns the digital assets to set aside federal privacy laws and give the executory or administrator of the estate access to all of a decedent’s accounts. This issue may be irrelevant though as Oklahoma may enact the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).
The Revised Uniform Fiduciary Access to Digital Assets Act
The Revised Uniform Fiduciary Access to Digital Assets Act provides fiduciaries (executors of the estate and attorneys-in-fact) with the ability to manage the digital assets of deceased or incapacitated people. It is unsure if Oklahoma will adopt this law, but it is likely as most states have enacted the law or are in process of doing so.
RUFADAA provides access to your digital assets.
The following is provided in RUFADAA:
- If the internet provider has established an online tool for addressing issues of fiduciary access, and the user has filled out that form, then that controls the fiduciary’s access to that particular asset, regardless of what the user’s will, trust, or power of attorney might otherwise provide.
- If the provider has not established an online tool, or the user has not used that tool, then the user’s written direction in a will, trust, power of attorney, or other record overrides a general direction in the internet service provider’s terms-of-service agreement.
- If a user provides no specific direction under, then the internet service provider’s terms of service will govern fiduciary access. If the terms of service do not address fiduciary access, the default rules of UFADAA 2017 will apply.
RUFADAA also protects your privacy.
RUFADAA balances the interests of the owner of the digital assets, the business who makes, stores, or provides the digital assets and the executor of the estate. The revised law reduces the executors ability to access the digital assets and protects your privacy in the event you do not want the executor to access your information.
- Unless the deceased person explicitly consented to disclosure, an executor no longer has authority over the content of electronic communications (private email, tweets, chats).
- An executor must petition the court and explain why they need access to other types of digital assets.
- If a fiduciary does not have explicit permission through a will, trust, or power of attorney, custodians can look to the terms-of–service agreements to determine whether to comply with requests for access to a deceased person’s account.
- Custodians may not provide access to deleted assets or joint accounts.
- Custodians may request court orders, limit their compliance by providing access only to assets that are “reasonably necessary” for wrapping up the estate, charge fees to comply with requests for access and refuse unduly burdensome requests.
How to manage and protect your digital assets?
The best way to protect your digital assets is to draft a will or create a trust. Specific provisions can be written in to protect your digital assets and make arrangements so that the executor of your will can access your accounts and information. One way to do this is to provide usernames and passwords of your computer and back up hard drives to the executor of your will or your family members. If you use online cloud based storage, a plan needs to be in place to access that information as well. However, providing usernames and passwords is often not enough. There are frequently limitations which deny successors the ability to access, manage, distribute, copy, delete, or even close accounts. The most important way to avoid these potential problems is to draft a will which properly disposes of your digital assets. The attorney at Skillern Law Firm, PLLC can help you draft a will to ensure your digital assets are protected and stored appropriately.
If you don’t want anyone accessing your digital assets when you die or become incapacitated, see a lawyer to discuss ways to protect your privacy. The attorney at Skillern Law Firm, PLLC may be able to craft a provision for your will that explicitly prohibits your personal representative from accessing certain assets. Or the attorney could help you set up a trust that appoints a trusted person to guard the assets on your behalf.
Contact Skillern Law Firm, PLLC
If you have digital assets you wish to protect or want to protect your privacy, contact Skillern Law Firm, PLLC today to discuss drafting a will which will provide for protection for your digital assets. The attorney at Skillern Law Firm can help evaluate what the best option is for you. For more information, reach out to us today at (918) 805-2511 or email firstname.lastname@example.org.
Two Oklahoma Statutes offer an alternative to probate for small estates valued under $50,000. If you have a valid will, these provisions will not apply to you even if your estate is under $50,000. However, those without a will and an estate under $50,000 can take advantage of these provisions and avoid the probate process with the use of a Small Estate Affidavit. Small Estate Affidavits can be filed by successors in Oklahoma to claim personal property like bank accounts, real estate, or vehicles of decedents who owned property in the state and died without leaving a last will and testament. The Small Estate Affidavit covers real estate and mineral rights, and a separate small estate affidavit covers vehicles like boats, cars, and trucks.
Different Types of Small Estate Affidavits
There are three different types of Small Estate Affidavits: one for financial accounts worth $50,000 or less, one for vehicles only, and another for real estate property such as houses or land. Successors can file a Small Estate Affidavit as long as the total value does not exceed $50,000 or, if the decedent passed away more than 5 years ago, the estate may value as much as $200,000. This allows family members to avoid the time and expense of probate court by filing an affidavit.
Small Estate Affidavits for Financial Accounts
The first type of “Small Estate Affidavit” allowed in Oklahoma is one for financial accounts worth a total of $50,000 or less. This affidavit is authorized by 6 OS § 906. Banks, credit unions and savings and loan associations are permitted under Oklahoma statutory law to pay out bank accounts under Fifty-Thousand Dollars ($50,000) upon affidavit. The account must be in the name of a sole individual (not two persons) and have no beneficiary designated. An original certified death certificate must be presented along with an affidavit, and the affidavit must establish the time and place of death and residence of the decedent. Also, the affidavit must state that the decedent did not leave a will. If the decedent left a will, probate will be necessary. The affidavit must set out the names of the heirs of the decedent. The affidavit must be signed and sworn to by at least one of the known heirs of the decedent.
Small Estate Affidavits for Vehicles
The Small Estate Affidavit for vehicles in Oklahoma requires a second form called the No Administrator Affidavit, which allows vehicles valued below $20,000 owned by a person who has passed away to be transferred to successors. Along with a certified copy of the death certificate, successors can avoid probate and claim and sell a deceased loved one’s vehicles.
Small Estate Affidavits for Property
Oklahoma also allows an affidavit to take the place of probate for the distribution of tangible personal property (property other than money or land) or an instrument evidencing a debt, obligation, stock, chose in action, or stock brand belonging to the decedent upon the presentment of an affidavit. This form of affidavit is authorized by 58 OS § 393. The limit is also $50,000, so any debt or personal property worth more than that must go through probate. Any person indebted to the decedent is authorized to accept the affidavit and make the distribution, so this affidavit can also be used for creditors as well as heirs at law. Anyone who is a successor to the decedent may sign the affidavit. The affidavit must state: (1) the fair market value of property located in this state owned by the decedent and subject to disposition by will or intestate succession at the time of the decedent’s death, less liens and encumbrances, does not exceed Twenty Thousand Dollars; (2) No application or petition for appointment of a personal representative is pending or has been granted in any jurisdiction; (3) Each claiming successor is entitled to payment or delivery of the property in the respective proportions set forth in the affidavit; and All taxes and debts of the decedent’s estate have been paid or otherwise provided for or are barred by the statute of limitations.
An original certified death certificate must be presented along with the affidavit. This affidavit would be useful for the transfer of household contents, a vehicle, a stock brokerage account or the transfer of private or public corporate stock which does not exceed $50,000.
Contact Skillern Law Firm Today
If you have small assets and are wanting to avoid probate, contact the attorney at the Skillern Law Firm, PLLC. The attorney at Skillern Law Firm can help you get these small assets out of probate by drafting a valid Small Estate Affidavit that can keep you out of probate. Contact us today at 918-805-2511 or email@example.com.
An Affidavit of Heirship is a sworn statement that can be used by heirs as an alternative way to transfer property and establish ownership when the original owner dies intestate or without a will. Affidavit of Heirships allow for heirs to take possession of the estate without going through probate. The Affidavit of Heirship outlines the deceased person’s family history and the identity of heirs. It is then filed in the public records in the county where the decedent’s real property is located. An Affidavit of Heirship can be useful to establish ownership of mineral interests; however, it is important to note that an Affidavit of Heirship is not a formal adjudication of who inherits the decedent’s property upon death. An Affidavit of Heirship only creates a rebuttable presumption that the facts in the Affidavit are correct versus a judicial determination which conclusively determines heirs of an estate.
When do you use an Affidavit of Heirship?
An affidavit of heirship can be used when someone dies without a will, and the estate consists mostly of real property titled in the deceased’s name. An Affidavit of Heirship can be an appropriate alternative for some, but a probate proceeding is usually the safer alternative to establish a link in the chain of title when dealing with real property. However, when establishing ownership of a mineral interest, Affidavits of Heirships can be very useful. Title to mineral interests can be established with an Affidavit of Heirship and will usually be sufficient for a company to sign a lease with you or to release payments. However, this will not vest you with ownership of the property for up to ten years.
What is included in an Affidavit of Heirship?
An Affidavit of Heirship outlines the deceased person’s family history and the identity of the heirs. The Affidavit should be signed by two disinterested witnesses who are knowledgeable about the deceased and his or her family history, but cannot benefit from the estate financially. Each disinterested witness must swear under oath as to specific information about the deceased including the following:
- They knew the decedent.
- The decedent did not owe any debts.
- The true identity of the family members and heirs.
- The person died on a certain date in a certain place.
- The witness will not gain financially from the estate.
The affidavit must state whether or not a decedent has died testate or intestate (with or without a will). If the decedent died testate, the affidavit must state whether the will has been probated in Oklahoma. If the will has not been probated, a copy of the will must be recorded with the affidavit. If the will has been probated, but the severed mineral interest was omitted from the final decree, a copy of the final decree and the will must be filed with the affidavit of heirship. After being filed of record for at least ten years, an affidavit of heirship may pass marketable title, so long as the affidavit meets the statutory requirements and no other document was filed which contradicts the heirship provided in the affidavit.
Limitations and risks associated with Affidavits of Heirship
Because an Affidavit of Heirship is not a formal adjudication of who inherits the decedent’s property upon death, there are risks with establishing property ownership using an Affidavit of Heirship. An Affidavit of Heirship does not transfer title to real property. Once it has been on file for ten years though, the filed an Affidavit of Heirship becomes evidence of the facts contained in it about the property. The legal effect of the affidavit of heirship is that it creates a clean chain of title transfer to the decedent’s heirs.
This means an Affidavit of Heirship cannot permanently establish the heirs of the individual who died without a will until the expiration of the ten year period. Upon the ten year mark, there is a clean transfer of title. Until then, a risk exists that ownership by the heirs will not be recognized by third parties such as purchasers, banks and title companies. It is also important to remember that an omitted heir or creditor of the decedent can challenge the ownership claim and claim an interest in the property owned by the decedent at any time.
An Affidavit of Heirship can be an appropriate alternative for some, but a probate proceeding is usually the safer alternative to establish a link in the chain of title when dealing with real property. However, when establishing ownership of a mineral interest, Affidavits of Heirships can be very useful.
Establishing Mineral Interest Ownership
Title to mineral interests can be established with an Affidavit of Heirship and will usually be sufficient for a company to sign a lease with you or to release payments. However, this will not vest you with ownership of the property for up to ten years. After being filed of record for at least ten years, an affidavit of heirship may pass marketable title, so long as the affidavit meets the statutory requirements and no other document was filed which contradicts the heirship provided in the affidavit.
A party relying on an affidavit of heirship should do so with an awareness that the claim to ownership could be challenged at any time during the ten year period before title completely vest. Most likely, large mineral estates should never be distributed via affidavits of heirship. There are several situations where an an Affidavit of Heirship could fail, even if it goes unchallenged ten-year statutory period. For example, scenarios that involve property rights which cannot be taken without proper statutory notice and parties who were not given a fair opportunity to claim their property interest could present issues for situations in which an Affidavit of Heirship was used. Until properly accomplished notice happens, the period for challenging distribution of an estate via affidavit of heirship will theoretically never expire.
Contact the attorney at Skillern Law Firm, PLLC today at (918) 805-2511 or firstname.lastname@example.org to discuss if an Affidavit of Heirship is the right avenue for your to pursue to establish ownership to property or minerals.
Tenants in Common (TIC) and Joint Tenancy (JT) represent different ways to own property. It is important to determine how you wish to own your property, either as Joint Tenants or Tenants in Common, because the ownership approaches provide different methods for transferring the property when and if the co-owner dies.
While there are several common characteristics that each ownership designation shares, Tenants in Common and Joint Tenants vary in important ways specifically with the probate process. Probate is the legal process of transferring ownership of assets from a deceased individual’s name into the names of beneficiaries. Owning property as Joint Tenants avoids probate automatically while owning as Tenants in Common does not avoid probate unless additional steps are taken. Joint Tenants carry the right of survivorship meaning that when one tenant or owner dies, that owner’s share automatically passes to the surviving tenant by law thus making probate unnecessary.
Important attributes of Tenants in Common include:
- TIC can be created at any time.
- TIC allows two or more people to have an ownership interest in property.
- TIC allows for individuals to own or control equal or different percentages of the total property.
- TIC can give their share of property to anyone after their death.
- TIC do not have right of survivorship and do not avoid probate automatically.
Important attributes of Joint Tenants include:
- Joint Tenants must be created at the same time.
- Joint Tenants must obtain equal shares of a property with the same deed.
- The deceased owner’s interest is automatically transferred to the surviving owner.
- Joint Tenants avoid probate automatically.
How does Tenancy in Common effect property ownership rights?
Tenancy in common is an arrangement in which two or more people have ownership interests in a property, commercial or residential. Tenants in common can own different percentages of the property; however, all of the property is owned equally by the tenants in common group. For example Ann, Bob, and Callie own property as tenants in common. Ann owns 50% of the property and Bob and Callie each own 25% of the property. While they each own a different percentage of the property, they all own the property equally and none of them can individually claim ownership to the property entirely. An individuals ownership percentage is typically correlated with the person’s contributions.
TIC can be created at any time. Considering the example above with Ann, Bob, and Callie. If Ann decides to later split her 50% portion equally with David, all four individuals, Ann, Bob, David, and Callie would own 25% of the property as Tenants in Common.
TIC can also sell or borrow their portion of the property independently, without the consent of the other TIC. Returning to the example above, if Bob decides he no longer wishes to own the property and wishes to sell his portion to Ethan, he can do so without the consent of Ann, Bob, or Callie.
When a tenant in common dies, the property passes to that tenant’s estate. The tenancy in common partner has the right to leave their share of the property to any beneficiary as a portion of their estate. Each independent owner may control an equal or different percentage of the total property. Tenants in Common have no automatic rights of survivorship. Unless the deceased member’s last will specifies that their interest in the property is to be divided among the surviving owners, a deceased tenant in common’s interest belongs to their estate. This type of ownership is popular with owners who do not necessarily want their share to automatically go to the other owners. Owning property as Tenants in Common does not avoid probate, the legal process of transferring ownership of assets from a deceased individual’s name into the names of beneficiaries, unless additional steps are taken.
Dissolving a TIC
To dissolve a Tenancy in Common, one or more co-tenants may buy out the other members. If the co-tenants should develop opposing interests or directions for the property’s use, improvement, or want to sell the property, they must come to a joint agreement to move forward. In cases where an understanding cannot be reached, a partition action may take place. The partition action can be voluntary or court-ordered, depending on how well the co-tenants work together.
If the co-tenants are not adversarial, the court will divide the property via a partition in kind. This is a legal partition proceeding where the court divides the property among the tenancy in common members allowing each member to move forward separately from other members. A partition in kind is the most direct way to divide the property.
Should the co-tenants refuse to work together, they may consider entering into a partition of the property by sale. Here, the property is sold and the proceeds are divided among the co-tenants according to their respective interests in the property.
How does Joint Tenancy effect property ownership rights?
Joint Tenancy must be created at the same time and requires that Joint Tenants obtain equal shares of a property with the same deed. Owning property as Joint Tenants avoids probate automatically because Joint Tenancy carries the right of survivorship. This means that when one tenant or owner dies, that owner’s share automatically passes to the surviving tenant by law thus making probate unnecessary. For example, if A and B own a property as joint tenants, and owner A passes first, owner B will receive ownership of the entire property automatically. Accordingly, owner B will not have to sell the property if they do not wish to. Some states set joint tenancy as the default property ownership for married couples, while others use the tenancy in common ownership model.
Owning property as joint tenants can be useful if you feel there is a risk that someone may apply to the court for further provision from the estate and if you have specific wishes that your family home be protected. If you as the will maker pass before the other owner, the property will not form part of your estate which may be the subject of a claim.
If you have any questions regarding the meaning and effect of holding property as joint tenants or tenants in common, or if you are considering gifting a property to a beneficiary under your will, please do not hesitate to reach out. The attorney at the Skillern Law Firm, PLLC can help. For more information, contact us today at (918) 805-2511 or email@example.com.
Each time a piece of property changes ownership, defects or errors in the title may occur. A cloud, or any potential claim on the title may also arise. It is important if you are establishing ownership that you receive a good and marketable title. A quiet title action, also known as an action of quiet title, is a legal proceeding that is intended to clarify and ownership of a given property. Quiet title actions are typically used in cases where title ownership is in question such as following mortgage lender disputes, the death of title owners, cases of adverse possession, and long periods of time where the property is unoccupied. A party with a claim of ownership to land can file an action to quiet title, which serves as a sort of lawsuit against anyone and everyone else who has a claim to the land.
A quiet title action occurs when one property claimant challenges one or more other people in a court of law for the purpose of determining who is the rightful legal owner of the property in question. It is intended to remove, or “quiet,” the conflicting claims on the property by clarifying the question of legal ownership and eliminating any discrepancies in the title. If the owner prevails in the quiet title action, no further challenges to the title can be brought and the plaintiff will be in full possession of the property, as will be his or her heirs. As the established owner of the property, the plaintiff will also be protected from any further claims of ownership made against the property by other outside entities.
Title defects can have a negative impact on your property:
You may need to file a quiet title action if a link in the chain of title, or list of people who have owned a property before the current owner, of a property is either broken or incorrect. If an ownership link is broken, for any reason, a person can begin the process of quiet title action. Even if the parties involved in the action know who the property should belong to, a quiet title action can and should still be initiated. A quiet title lawsuit would allow you, as property owner, to establish and confirm ownership of a piece of property. Many times, the process is complicated by the fact that the land has changed possession several times over the years, requiring a thorough review of all documentation. It is important to cure title defects because title defects and other potential claims can have a negative impact on your property. Title defects can:
- Prevent an owner from transferring the property free and clear
- Decrease value of the land or property
- Challenge an owner’s ability to exercise rights
When to initiate a quiet title action?
A quiet title action might be used to clear up claims on the ownership of real property, or other property that is titled, following the death of the owner, particularly when there is a question regarding whether all of the heirs have been notified of the sale of the estate. It can also be used to resolve issues with a mortgage lender whose interest in the property was not properly dealt with after the loan was paid off. Quiet title actions can also be used to clear the title to a property that has been unoccupied for some time, allowing for outside parties to make bids for its purchase.
Other grounds for a quiet title action include the conveyance of an interest in the property via a quitclaim deed in which the previous owner disclaims interest, but does not promise that the title is clear. Additionally, quiet title actions could be used to convey title to a property in the case of adverse possession, in which a party occupies property that is legally not theirs for purposes of laying claim to it. It can be used to settle tax issues with a property; boundary disputes; errors in surveying; fraudulent conveyance of the property by coercion or forged deed; or competing claims by lien holders or missing heirs.
The best course of action in this scenario is to hire an attorney with experience in this area that will know the correct steps to take in order to repair the chain of property ownership.
A quiet title action attorney will:
- Describe the title defects to the court;
- Ask the judge to fix the defects with an order by declaring the true owner of the property; and
- File the order in the county property records.
Through these legal actions, you could effectively fix the chain of title. If, however, there is a dispute over the property, the issue may become a legal dispute where a judge will determine who the rightful owner is before filing a declaration order in the county records.
Contact Skillern Law Firm, PLLC
If you are having trouble establishing ownership of a property, get in touch with Skillern Law Firm, PLLC today. Our law firm is dedicated to providing our clients with strong legal representation. The attorney at Skillern Law Firm can help you seek the results you deserve. Whether you are a landowner seeking to confirm your ownership or another party with a viable claim to the property, the attorney at Skillern Law Frim is committed to achieving the best outcome possible.
The attorney at the Skillern Law Firm, PLLC can help. For more information, reach out to us today at (918) 805-2511 or firstname.lastname@example.org.
The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) was signed into law on December 20, 2019 and became effective on January 1, 2020. The SECURE Act makes over two dozen changes to the law affecting retirement benefits and inherited IRAs (Individual Retirement Accounts). The revisions also apply to other defined contribution retirement plans, including 401(k) accounts. As a result, the changes impact estate plans that include assets in an IRA or 401(k) account.
When there are changes to the legal infrastructure of estate planning, such as this, some estate plans will require modification to accommodate the new rules. Whether that is the case for a particular estate plan depends on a number of factors that must be evaluated on an individual basis. If you have an IRA or 401(k), you should consult with a knowledgeable estate planning lawyer about how the SECURE Act affects your estate plan provisions for inheritance of those assets.
Lifetime Payout Period Replaced by Mandatory Full Distribution Within 10 Years for Inherited IRAs and 401(k) Plans
IRAs that have been inherited from a participant who died before January 1, 2020, should be grandfathered and thus free from the new SECURE Act requirements; however, Section 401(b) includes a provision that would apply the SECURE Act payout requirements to a successor designated beneficiary when a designated beneficiary dies before life expectancy.
For example, Father died in 2018, and daughter (age 50) was the designated beneficiary. Daughter dies in 2021, with her son as successor designated beneficiary. Under the old law, because original designated beneficiary died before her life expectancy, the successor designated beneficiary could have continued the stretch-out using the life expectancy of the original designated beneficiary. However, the language of the SECURE Act suggests that the successor designated beneficiary would now be subject to the 10-Year Rule and would not be able to continue the stretch-out even through the original account holder died prior to January 1, 2020.
Elimination of the “Stretch” IRA
The ability to stretch certain inherited IRAs over a designated beneficiary’s life expectancy has been eliminated. An IRA now must be distributed by December 31st of the tenth year following the year in which the retirement account owner dies (herein referred to as the “10-Year Rule”). As a result, designated beneficiaries—the definition of which is unchanged—can no longer stretch an inherited IRA over their lifetime.
Exceptions to the 10-Year Distribution Requirement for an Eligible Designated Beneficiary (EDB)
Though the definition of designated beneficiary has not changed, a new category of five beneficiaries has been created, each known as an eligible designated beneficiary (EDB). An EDB is an exception to the 10-Year Rule. The five EDBs are:
- A surviving spouse;
- A surviving spouse still benefits from life-expectancy withdraw from an IRA or 401(k) account, as an exception under the new law. In addition, RMDs for a surviving spouse who inherits in 2020 or later must begin in the year the deceased spouse would have turned 72 (rather than the previous age of 70½).
- The child of the decedent who is a minor (note that this exception is narrowly drawn; for example, it does not apply to grandchildren even if the child predeceased the participant—so, no “predeceased child step-up” rule as exists);
- A minor child of the account owner is also an EDB. However, when the minor reaches the age of majority, the exception ceases to apply, and the account assets must be distributed within 10 years of the child reaching the age of majority.
- A disabled person;
- A “disabled” beneficiary is eligible for life-expectancy distributions, but the law provides a very limiting definition for a “disabled” beneficiary, as follows:
- “[A]n individual shall be considered to be disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration. An individual shall not be considered to be disabled unless he furnishes proof of the existence thereof in such form and manner as the Secretary may require.”
- In order to qualify as an EDB under this provision, if a beneficiary is able to engage in “any substantial gainful activity,” the exception does not apply.
- A chronically ill person; A “chronically ill” beneficiary also is eligible for lifetime distributions, but the law includes a specific and complex definition for this category that is restrictive and limiting.
- An individual who is not more than 10 years younger than the decedent. If the account owner names a beneficiary who is not more than 10 years younger than the owner, the beneficiary is exempted from the 10-year requirement.
Some of the Changes to Retirement Plans Are Taxpayer- Friendly
Under the old rules, once an individual attained age 70 ½, or would do so by the end of the year, no additional contributions could be made. This has been repealed and contributions can continue to be made so long as the participant is employed.
The age at which required minimum distributions (RMDs) must begin has been extended from the year the taxpayer attains age 70 ½ to 72.
An inherited IRA with no designated beneficiary is ineligible for stretch treatment (both lifetime and 10-Year Rule). Such an inherited IRA remains subject to an accelerated withdrawal period. The length of that period depends on whether the participant had died before or after the change to age 72 as the required beginning date (RBD):
- If the death was before the RBD, then the entire account must be withdrawn before five years after the death (more precisely, by December 31 of the year that includes the fifth anniversary of the participant’s death).
- If the death was after the participant’s RBD, then the account must be distributed in annual installments over what would have been the remaining life expectancy of the participant had he not died (some practitioners euphemistically refer to this as the ghost life).
In 2010 a tax law eliminated this adjusted income cap of $100,00 for conversions from traditional IRA to a Roth IRA. This resulted in many conversions, especially given the safety net of recharacterization (tax-free conversion back to a traditional IRA if done before the tax return due date for the year of the conversion). However, the 2017 Tax Act diminished the safety of conversion by eliminating the ability to recharacterize.
Conversion triggers current income taxation of the IRA, so the typical analysis was whether the participant or the beneficiary would be in a lower income tax bracket. With an accelerated payout under the 10-Year Rule, it now may be more likely that the beneficiary will be in a higher bracket.
Rarely does it make sense to convert if withdrawals would need to be made to pay the income tax. Plus, as an offset, however, we know that if the participant were in a taxable estate, the dollars used to pay the income tax are in a sense discounted by the avoided estate tax. For example, a client has a taxable estate that includes a $1 million traditional IRA and $1.5 million in cash. If, for simplification, we assume her assets are subject to a 40 percent estate tax, her other assets pay the tax on them, and her cash is used to pay the estate tax on the IRA and the cash, her heirs will receive:
Modifications to Your Current Estate Plan
The SECURE Act will be disruptive for many estate plans and the acceleration of payout may be concerning. When there are changes such as this, some estate plans will require modification to accommodate the new rules. Whether that is the case for your particular estate plan depends on a number of factors that must be evaluated on an individual basis. If you have an IRA or 401(k), you should consult with a knowledgeable estate planning lawyer about how the SECURE Act affects your estate plan provisions for inheritance of those assets.
The attorney at the Skillern Law Firm, PLLC can help. For more information, reach out to us today at (918) 805-2511 or email@example.com.
A healthcare power of attorney (HCPA) refers to both a legal document and the person named in the legal document which empowers the named individual to speak with others and make decisions about your medical condition, treatment, and care. When you, the patient or creator of the HCPA, become to ill to communicate your wishes about your medical care to others, the HCPA is activated and the person named in the document has the power to make life and death decisions. A HCPA allows the proxy to communicate with the doctors, prevent unwanted treatments, avoid making wrong decisions, and make medical decisions in the event you are incapacitated.
A HCPA can outline specific directives, such as your wish to have or not have life-saving measures in the event you are unable to breathe on your own, or more general insights into your beliefs, morals, and ethical values.
Why you need a HCPA?
Appointing a HCPA provides peace of mind to yourself as well as your loved ones. By naming a HCPA you can be confident that in the event you are unable to communicate with a medical provider, a trusted individual with your best interest in mind will be in place to communicate with others for the sake of your wellbeing. Having a HCPA lets everyone, including your doctors, know your exact wishes regarding big medical decisions if you are unable to communicate.
Additionally, naming a HCPA removes the burden from your loved ones of having to make difficult medical decisions because they no longer have to try and guess what your wishes are. Creating a HCPA provides you peace of mind and is a gift to your loved ones.
Who should you choose?
When choosing a HCPA is is important to appoint an individual whom you trust. The person you list as your HCPA becomes your agent or healthcare proxy and may be charged with making life-and-death decisions on your behalf in the event you are unable to communicate your wishes regarding your medical care and treatment.
Anyone may serve as a HCPA. For example, a friend, partner, relative, or colleague may act as your HCPA as long as you feel the individual is capable of making important decisions regarding your medical care in the event you are unable to communicate your wishes. Additionally, the law allows you to appoint co-agents (two people who will serve together as equals) or successive agents (a second person who will serve in case the first agent is unable to do so). However, confusion or conflict may result if you appoint more than one agent.
In the event you no longer want your named HCPA to serve as your proxy, you have the freedom to change your mind and reverse your decision at any time. If you wish to assign a new HCPA, all that is needed is a new document designating the new HCPA.
When should you appoint your HCPA?
While a HCPA may not seem necessary if you are young and healthy, it is important to appoint someone in the event of an unforeseen accident. You have a right to decide what kind of medical treatment you do and do not want. If you have specific wishes about your health care, a HCPA will ensure that those wishes are honored even if you are physically or mentally unable to tell your doctors what you want.
Even if you do not have specific wishes about your health care, a HCPA will ensure that someone you trust will make your medical decisions if you cannot do so. If you do not have a HCPA and are physically or mentally unable to tell your doctors what you want, the following people, in order of priority, are legally authorized to make your health care decisions for you:
- Your court-appointed guardian or conservator;
- Your spouse or domestic partner;
- Your adult child;
- Your adult sibling;
- A close friend; or
- Your nearest living relative.
How do you appoint your HCPA?
If you’re are interested in appointing a healthcare power of attorney, make sure to guarantee its validity with the help of an attorney. Attempting to create your own HCPA without qualified legal representation can leave you in the in a much worse position. Plus, you’ll enjoy peace of mind knowing you’ll have ongoing support during the process, and after. We are just one phone call away for all of our clients.
An attorney will listen to your goals and concerns and provide counsel based on your specific situation making sure to correctly document your intent. We will make sure your HCPA is explained, detailed, and done correctly to reflect your wishes.
If you’re ready to craft a health care power of attorney, the attorney at the Skillern Law Firm, PLLC can help. For more information, reach out to us today at (918) 805-2511 or firstname.lastname@example.org.