How Does The New Federal SECURE Act Affect Your Estate Plan for IRAs & 401(k) Plans?
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.
Like we have discussed before on a previous post, every adult needs a Last Will & Testament or a Revocable Trust in place. However, more than half of all Americans have no planning in place! For simple estates, or at least the bare minimum for everyone, a Last Will & Testament is a good start. A Will is a legal document that tells the probate court your wishes about where and whom your property should be distributed to after death. To skip the probate process all together, one should get a Revocable Trust. A trust has two purposes. First, it is to take care of the creator (Also known as a Grantor or Trustor) while they are alive, and then distribute similar to a will after the Grantor passes away. Another difference is that the distribution part of the Trust skips the court process altogether, which makes the distribution faster, easier, smoother and may help avoid unnecessary taxes and creditors and keeps your wishes private.
It’s easy for people to feel overwhelmed about getting their estate plan done, especially right now during the pandemic. However, at the most basic, it is essential to plan what will happen to your assets after death. it is unavoidable and easily planned, with the help of a qualified attorney. While a lot of people would like to avoid the subject matter altogether, it’s the best way to take care of your loved ones financially (and save them the stress of end-of-life planning) after you’re gone. Also, people do not realize that it’s mostly the attorney doing the work!
Since these are the most important documents you’ll ever get done, it’s important to plan ahead, and hire an attorney to get it done correctly.
Attorney-made vs. Do-It-Yourself Estate Planning
Our attorney sees a lot of online and “DIY” estate planning, and all the simple mistakes that are made via those instruments (read our previous post about why online wills are harmful). A single drafting mistake could make the whole trust invalid, or change the make the distribution different than what you desire. Most of these “DIY” platforms use laws from California, New York, and Texas (none of which follow the type of Trust law that Oklahoma has). These products are unlikely to meet your needs. You do not want to risk your property going to the wrong people, showing up in court to be fought over, or the trust being ambiguous and requiring a court’s interpretation just to save a dollar. All of these things are avoidable with an attorney who know what they are doing.
More complex estate distributions, like ones that include minors, special needs beneficiaries, unequal distributions, and more, absolutely need to have an attorney drafting them.
Four Reasons to Hire a Lawyer to Review Your Estate Plan
- Estate planning varies by state.
State laws can be very particular on what may or may not be included in Will, Power of Attorney, or Trust. It can even get as localized as the county judge and his/her requirements for a Will to be valid. Location may affect who may serve as personal representative; be a witness, where and how they need to sign the estate planning documents. Like referenced above, Oklahoma does not follow a unified Trust code like most states, so it’s important to recognize that we do things differently here than you see on most online blogs and sites.
- Online estate planning programs are limited and not specialized.
Online wills and trust drafting don’t support common complexities you find in Wills and especially Trusts like minor children, unequal distributions, complex real estate planning, and graduated distributions. They also cannot account for your personal situation in the family, like family dynamics (including infighting, drugs, and spendthrift family members). With simple software and templates, if you make an error, the document can become invalid or misleading. Additionally, these options don’t always update or upgrade to account for new changes in estate planning laws.
- Most people have certain complications that can affect your estate plan.
Unlike what most people think estate planners do, we do not just pop in names on our forms and call it a day. Every plan at the Skillern Law Firm is specialized, and created specifically for the client at hand. Not only do we not just go off of one form for all clients, but we do specialized planning outside the documents – like making sure our client’s beneficiary designations and business planning are done as well. Various circumstances can affect how you’ll draft your plan. As mentioned before, any mistakes can cause additional complications, expenses or make it invalid altogether. Some of these scenarios include:
- Multiple marriages
- Business ownership
- Mineral Rights
- Minor Beneficiaries
- Real estate in multiple states
- Incapacity or disability needs
- Bequests to charity
- Substantial investments
- You don’t see the whole picture – and that’s okay!
Here’s the thing: you’re not an attorney, and that’s okay! You probably don’t know which questions or scenarios to be ask or think about. You don’t know how to find the big problem areas (and sometimes the smaller issues that creep up on you in the estate plan). An attorney will also make sure to document your intent and state of mind, which is important if a dispute arises after death. An attorney will also listen to your goals and concerns and provide counsel based on your specific situation. We will make sure your estate plan is explained, detailed, and done correctly to reflect your wishes.
Have an Attorney That is There to Work for You
If you’re are interested in getting your estate plan done (and done correctly), make sure to guarantee its validity with the help of an attorney. Although educating yourself is wise, you’re hardly expected to be an expert in this complex area of law. Attempting to create your own estate plan 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.
If you’re ready to craft an individualized estate plan, 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.
Today, let us tell you a cautionary tale:
Recently, our attorney was hired to represent an heir in a probate here in Tulsa County, Oklahoma. The person who passed away was an 87 year old male who passed away unexpectedly. He was unmarried, had no children, no living parents, siblings, etc. His living heirs are his great niece and nephews (who do not really get along).
When he passed away, none of his heirs knew if he had a Last Will & Testament, and if he did have one, where they were. No one knew what assets he owned, where his money was invested, or anything else. He had managed all of his assets by himself, and he lived by himself, so there was not a caretaker who would have more information. The heirs were left with no information, no plan, and no way to access any of the assets. The heirs do not get along, which means multiple attorneys got involved, which is very costly.
For three months now, our attorney has been working with another attorney and their clients trying to go through the home and see if there was an estate plan in place, and to secure the assets. No Will has been located, and it looked like the deceased male met with roughly 4-7 estate planning attorneys in the last year, but never got an estate plan in place. Due to that, this probate is now going to be a lot more costly and long. The heirs are going to get their share, but this may not have been what he wanted. Everything would have been a lot easier had he gotten an estate plan done. Even a simple Will could help tremendously.
Use this cautionary tale as a way for you to know that you should not wait to get an estate plan. You do not know when the worst could happen. Call us today to set up a free consultation to see what kind of estate plan you should get in place!
Skillern Law Firm is moving locations starting in May of 2020! We are moving just a few miles west to 16th and Cincinnati, located near downtown. We will have a designated parking lot in front of the new building that is also handicap accessible. This building is a one-story renovated home that is perfect for document signings!
Our new office location is:
1613 S. Cincinnati Ave.
Tulsa, OK 74119
Hope to see you there!
Before 2008, there was no way in Oklahoma for real property or mineral rights to skip probate except for a revocable trust. In 2008, the Oklahoma legislature passed 58 O.S. Section 1251-1258. This statute codified Oklahoma’s Transfer on Death Deed (“TODD”), otherwise known as a “beneficiary deed.” This allows the owners of real property, including surface owner or mineral rights, to deed the property to beneficiary(ies), which skips the need for probate to transfer legal title. These have been a very effective and cost-efficient way for real property to skip the probate process and the title to real property to be easily transferred after the passing of the owners.
However, Transfer on Death Deeds are not a good instrument to use in a variety of situations, and usually a revocable trust is recommended to skip probate in these situations. These are generally situations where a Transfer on Death Deed are not advisable:
- Complex distributions: Transfer on Death Deeds are very good for very simple distributions, like you want to transfer your home to your children, split equal. When you want distributions to be gradual, over time, with strings attached, creditor protected, or any other complication to a distribution, then a TODD is not a good idea.
- Per Stirpes distribution: When you want your children to inherit, but if one of them passes away, you want their children to receive their share of the real estate. Essentially, if you want your grandchildren to inherit if their parent does not survive you, then a Transfer on Death Deeds are not good for this type of distribution.
- Unequal distributions: When you want beneficiaries to receive unequal shares of the home. TODDs are great for equal distributions, but nothing more complex than that.
- Minors as beneficiaries: Minors cannot own real estate in Oklahoma, so you cannot leave a piece of property to a minor through a TODD. It would need to be held in trust for the minor until he/she reaches the age of 18.
If you have a piece of land or mineral rights that you want to leave to one or more people, split equal with no strings attached, then a Transfer on Death Deed is a great option.
There is a catch to Transfer on Death Deeds that must be said: First, the Transfer on Death Deed MUST be filed before the passing of the Grantor, or owner of the real estate. If the deed is filed after, it is not effective. Second, after the passing of the owner of the deed, the beneficiar(ies) must file a Transfer on Death Deed affidavit within nine (9) months of the passing of the Grantor. If this affidavit is not recorded within this time frame, the deed is voided and it would pass via the probate process. This is an easy thing to accomplish, but it is a time-sensitive action that is widely overlooked.
If you are interested in getting a Transfer on Death Deed done in Oklahoma, please call or contact the Skillern Law Firm today! They are inexpensive and easy to accomplish with the help of an attorney.
As most of you will be aware, the virus called COVID-19 or “coronavirus” has changed our everyday lives during this time. As of this post, more than 340,000 people in the United States have tested positive for the virus, and it has cause around 9500 deaths. Around the country, including in Oklahoma, courts are shut down due to the quarantine initiative of the governments. In Tulsa County, the courts are shut down, including court personnel, until May 15th, 2020 (which will likely be extended). Only emergency orders and hearings are being held, and usually via an electronic video stream.
In Oklahoma, all estate planning documents need to be signed “wet ink to paper.” This means that no electronic signatures are valid, and no video-stream witnessing is allowed. There is a new law in Oklahoma that allows for electronic notaries, but a Will is exempt from this new notary allowance. In Oklahoma, estate planning documents need to be signed in person, with the testator, witnesses, and notaries all together while the signing commences. This can be a problem in the time of COVID-19, but most estate planning attorneys are taking safety precautions during this time, including us at the Skillern Law Firm.
What does this all mean for you? This means, if you do not have some basic estate planning documents in place, you should do it sooner rather than later. If the government continues to become more restrictive about gatherings and work, the chances to get your estate plan done becomes harder and harder. You should also review your beneficiary designations, and make sure they are all up-to-date.
What documents should you have done is a very common questions we receive. There are four basic documents, regardless of ones wealth or health, that everyone should have:
- You should have a Last Will & Testament that tells the probate court what you want to do with your estate should you pass away.
- You should have a power of attorney for finances. This would allow your agent to pay your bills, talk to your insurance, and make other time-sensitive decisions during a period of your incapacity.
- You should have a healthcare power of attorney. This would allow your attorney-in-fact to make medical decisions for you, and also consult with your physicians, if you were unable to make those decisions for yourself.
- You should also have an Advanced Directive in case you become so ill that end-of-life decisions need to be made.
One of the biggest reasons to get your estate plan done ASAP is the fact that the court systems are shut down in Oklahoma. If you do not have a power of attorney for finances or health, the usual way for people to be granted the authority to act would be through the guardianship process. However, since courts are shut down except for emergency situations, these guardianship proceedings are not being held. Also, if this is an emergency situation and it does qualify to have a hearing, these hearings are hard to have and can be time consuming to set up (and very stressful). This means that if you are in a situation where you need to be taken care of, and you do not have documents in place, the changes of setting up a guardianship is unlikely.
Also, since hospitals and nursing homes are not allowing outside visitors due to safety precautions, the changes of you getting emergency documents done by your attorney is extremely improbable. You cannot wait til you are on your death bed to have your documents executed during this time. You can save a lot of hassle, heartbreak, and stress by being proactive and getting your documents in place immediately.
If you want to set a free consultation (right now being held via the phone), please call the Skillern Law Firm today!
I have many clients that come into my office that have written, scribbled, crossed-out, or marked all over their estate planning documents. This can be a big mistake with big consequences!
What should you do if you have a Will or a Trust that you wish to change, amend or revoke? One thing people frequently try to do when they want to amend a Will is to cross out whatever change they want, and write in new directions and initial next to their marking.
A thing to remember is that your Last Will and Testament and/or Revocable Trust typically serves as the foundation for a comprehensive estate plan. Similar to most legal documents, your Will or Trust should be reviewed and formally amended on a regular basis (usually every 3-5 years); however, this needs to be accomplished with the assistance of an attorney, and done in the formal matter required by statutes. For a Will, that includes two witnesses and a notary. For a Trust, that includes whatever way the Trust document prescribed (usually a notary). Your Will and Trust is not like other legal documents where simply marking or crossing something out and initialing the change will suffice. In fact, usually it revokes the entire document.
I recently had a client who did such a thing – she wanted to get rid of a beneficiary, and simply crossed out the beneficiary she wanted out and initialed and dated next to the marking. She then passed away before we could do a formal amendment. The problem with this action is, at least in Oklahoma, marking and changing any Will or Trust without the formal amendment process actually revokes the entire document! The small amendment my deceased client wanted actually completely changed her entire estate plan. Her intention was for a friend to receive the entire estate. However, due to her scribble on her Will, her estate went through the intestate probate process, which means her (distant) family inherited her entire estate, which was completely against her intention.
Wills and Trusts have formal statutory requirements to keep fraud and misunderstandings from happening in the important process of estate administration and probate. If there is a question as to the authenticity of a Will, the Will, with markings on it, would no longer be clear as to what the Testator’s intentions were. This is precisely why the execution of your Last Will and Testament must be witnessed by an uninterested witness and a notary authenticating the signatures. Requiring a Will to be witnessed and notarized is the only way to be sure the Testator actually signed the document. If, however, you write on the Will or Trust after the original signing, there is no sure way to determine if you actually wrote the words or if a third party took the liberty after your death. If the probate court declares the Will or Trust to be revoked , your estate may end up being distributed as an intestate estate which could have very different results than if the Will is used to probate your estate.
If you desire to amend your Will or Trust, or even revoke it entirely, don’t try to do it yourself by writing on the documents. Take the time to consult with your estate planning attorney and make the changes or the revocation the right way, in front of witnesses, to ensure that your estate doesn’t wind up in costly litigation after your death.
If you have additional questions or concerns about wills, trusts, or estate planning in general, contact the experienced Oklahoma estate planning attorney at the Skillern Law Firm by calling 918-805-2511 or email firstname.lastname@example.org to schedule your appointment.
Most of our clients come to us to help make their loved ones’ lives easier – not more difficult. Many people will come in wanting a very simple estate plan because of the cost or because they believe their estate is not large enough to cause anyone any issues. However, often, very simple estate plans can complicated matters and cost heirs and beneficiaries more time and money in the future.
In general, even with a perfect estate plan, heirs and beneficiaries have numerous tasks to attend to, including paying the death expenses, handling creditors and transferring ownership of assets. If the deceased person did not properly complete the estate planning process before his or her demise, or did not execute the right estate plan, complications could arise.
There are several issues and events that could make an estate plan less effective. One of the most common mistakes in estate planning is to never update your estate plan. Our attorney recommends reviewing or updating your estate plan after every major life event (death of a family member, marriage, divorce, inheritance, etc.). It is important to update your documents in case there is a significant change in the situation from when you drafted it. Also, it is good to have your estate plan reviewed by an estate planning attorney in case important updates are needed in your will/trusts/power of attorneys/advanced directives due to change in the law.
Furthermore, conflict could arise if a person did not provide enough detail about how his/her assets should be distributed. It is allowed for individuals to leave the distribution decisions up to surviving family or even state law, however, some individuals may not agree. This often leads to contention and conflict that could build to a point where costly and prolonged litigation is necessary. In order to have a more effective plan, parties need to consider their assets and make decisions themselves, and they should put specific directions and details inside their estate plan to ward off any future issues and conflicts.
Sometimes, people may start out with an estate plan that simply consists of a Will and Power of Attorney. While young and without a lot of assets, that may be enough for your beneficiaries and heirs to handle your estate efficiently. However, as we age and accumulate more property and our lives become more complex, a Trust is often better for more complex estates. This is another area in which people keep their estate plan stagnant, and yet reviewing their plan or even making an entirely new one would’ve been a better option for their particular situation.
Many people do not realize that having an estate plan is an ongoing process. Just as your life changes through the years, so should your estate plan. It may seem inconvenient, but it can help ensure that your wishes and desires are known and executed correctly at the time of your passing. If any Oklahoma or Tulsa area residents are concerned about whether their plans cover all their needs and desires, they should review those plans and have their documents reviewed by a professional, including the attorney at the Skillern Law Firm. Gaining more information on planning tools and possible errors to avoid could also prove useful.
Estate planning is not just for after you pass away, it can also be very important for when you become ill or incapacitated during your life. The attorney at the Skillern Law Firm can assist with the creation of a comprehensive incapacity plan, as well as your estate planning for when you are gone. It is hard to contemplate and plan for if or when you will experience a major medical issue, but it is also necessary. Illnesses and medical issues can strike at any time, either through a disease or illness, or a carwreck or accident. Let’s go through some reasons how you can plan for an illness, and why you should.
The most common estate planning documents to get done so your affairs can be handled by someone you trust while you’re alive but ill are the Durable Power of Attorney and the Advanced Directive. Please read those previous blog posts about those documents for more information. Our attorney usually creates and implements those documents in conjunction with a Will or Trust, taking care of our clients both through their life and their passing. Why are these recommended? There are three major reasons:
1. To Have A Say In Your Future Medical Care
Through a Health Care Power of Attorney and an Advanced Directive, you are able to direct your health care when you are too ill to talk to the doctors. In the Advanced Directive, you are able to have a say in if you’d like to accept or decline life sustaining treatment or heroic measures (like CPR or the defibrillator). You can also have a say in whether you’d like to be kept alive using a feeding tube. You can answer these important questions that will need to be answered if you suffer a serious medical emergency. If you suffer from an illness or get into a sudden medical emergency, these documents can be valuable to answer medical questions.
2. To Protect Your Assets And Staying Out of Court
If you become ill or incapacitated, and you do not have your estate planning documents set up, your family will have to go to court to obtain authority to manage your assets. This is usually through a court process called ‘guardianship” or ‘conservatorship.’ Anytime court is involved, there are time delays, and usually some surprises. Going to court can also have high stress on the family while you are ill (which is already a stressful situation), and can cost thousands of dollars in unnecessary legal expenses. Also, these delays can cause your investments to suffer losses due to lack of management, and your real estate to become abandoned. There is also the risk that the court may select someone you do not want to manage your assets. You can get rid of those delays and risks by being proactive and getting a written incapacity plan, outlining who you want managing your wealth if something happens to you.
3. To Spare Your Family Difficult Decisions
An Advanced Directive can take away stress and anxiety from your family members, who will not be forced to decide whether to pull the plug or withhold lifesaving care from you. If you express your preferences in legal documents, ahead of time, it can alleviate that stress. A Durable Power of Attorney can also alleviate stress because the Power of Attorney you nominate to take over your financial affairs will be able to seamlessly take over your accounts, so your day-to-day bills and medical bills can be paid.
The attorney at the Skillern Law Firm can help guide you through the available methods, including advanced directives, trusts, powers of attorney and more. We can explain the different ways through which you can plan ahead for incapacity and help put a plan in place that provides you and your loved ones with the protections you deserve. Call us for a free consultation today!