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Estate Planning for Your New Expanded Family

child momThe attorney of Skillern Law Firm, PLLC, Penni Skillern, recently had a baby girl in January of 2015. Yes, that is why there was a lack of blog posts and updates on our website. The first thing she did when she was able to go back to work was update her estate plan to reflect her new expanded family. Not only is it important to set up guardianship in your will, but its important to look at structuring your estate plan distribution for your new infant.

We have previously written about how to handle a minor infant in your estate plan before. Please read the blog post here.

For this blog post, we are going to discuss what to get done for your estate plan once you have the new baby. Having a child or children complicates life in many ways, and your estate plan is no exception. If you had an estate plan written when you were childless, it is important to reflect the monumental change in your situation in life in your estate planning. Most likely, you would want to leave part or all of your estate to your new child(ren).  You do not have to have anything fancy like a revocable trust, however, it does need to be done. Here are four simple steps to take.

1. Write or Amend a Will or Trust

Even without children, having an estate plan in place is important. Generally, most young people do not think about getting an estate plan done until they have children. That is understandable, as most single young adults do not own a lot of assets to be distributed at their demise. However, once you have a child, it becomes not only important to write a will to discuss distribution, but also to name a guardian for your child(ren). Make sure to read a previous post about how to chose the right guardian for your child.

Once you have a will with a guardian appointed in place, if your children ever needed a guardian, the court would appoint the person you nominated in your will, absent a serious problem with that person. You can even name a separate guardian for different children if you wish. If you have not made plain in your will or estate plan who you wish to be the guardian of your children, and you pass away unexpectedly, the probate court will have no idea what your wishes were. That can cause fighting among the families of the two parents, each wanting the child. This can be stressful for the families, and especially the children left behind. The court would have no way of knowing which family member of friend who you wished to watch over your children if you were to pass.

The other main reason to write or update your will is that if you do not, and then you pass away, a portion of your estate may not go to your spouse, but may go to your children. If you pass away and have a young child, most people prefer that the money go to their spouse, who will use it to support their children.

Getting a will written and signed is easy, quick, and inexpensive. You can easily set up an appointment with an attorney and have one done and signed within a couple of weeks or a month. This important step can help your new family in unexpected ways and can alleviate an amazing amount of stress in the future if something unforeseen were to happen.

2. Buy Life Insurance

While our attorney was pregnant with her new daughter, she and her husband added new life insurance to their financial portfolio. The reason is simple: their lives were about to get more expensive. It’s not surprising to know that life with a child is more expensive than one without one. If you or your spouse were to pass away unexpectedly, are you prepared to take care of your child(ren) without the other person’s income? Life insurance is there as a safety net, to help take care of expenses that your deceased spouse would have helped with if they remained alive.

Obviously, this is more of a financial planning than legal planning. However, it is good to get both done when you are preparing or soon after you have a child. It’s best to have both your financial and legal plans in place, working together, when you have a child.

3. Write Durable Powers of Attorney and a Living Will

Even without children, Powers of Attorney and Living Wills are extremely important documents to have for every adult. If an accident or sudden illness strikes, these documents will make things much easier for your family.The Powers of Attorney (both financial and health), are documents that designate an individual to take care of matters if you are unable to. We have previously written about these documents, and you can read about Powers of Attorneys here.

Living Wills, or Advanced Directives, are also very important to have in your estate plan. If you have been to the hospital recently, you have probably been asked if you have one when you checked in. An Advanced Directive is a document that sets out your wishes for end-of-life choices and care. Oklahoma allows you to set our your end-of-life health care choices for three scenarios. Read about those here.

 

Even if you are young, childless, and healthy, these documents are important to have done. If you were seriously injured, these documents would let your family know what you wanted, sparing them very difficult decisions, court costs, and disagreements. There have been many famous young people whose families have gone through courts and disagreements because these documents were not in place. (Terri Schiavo was 26 when her illness began and she fell into a permanent vegetative state.)

4. Designate Beneficiaries on Accounts

One last simple (and completely free!) action to take is to name beneficiaries on your accounts, whether retirement, banks, life insurance, etc. All you need to do is fill out the beneficiary form provided by the account holding institution. By naming a beneficiary, you make it possible for the funds in the account to go directly to the person (or persons) you name, without probate. It is important to know the repercussions of naming minors as beneficiaries, however, so make sure you keep that in mind when you are planning for your new child.

If you do all of the above after you have a child, you are ready. Having a new child is a huge change in your life, and your estate plan needs to reflect that change. You are doing a disservice to your child if you do not plan ahead in case you are not there to take care of him/her. Your family would want to know your wishes for your child(ren) if you pass unexpectedly. Make an appointment with your local estate planning attorney today!

(Minor) Children in Your Estate Planning

Travelers with Baby in StrollerWhen handling people’s estate plans, I am often asked how life insurance, retirement accounts, and other “beneficiary” property should be handled with regards to the young children. More often than not,  people with children want some or all of the proceeds of these accounts to go to their minor children.

For example, if a client has a $100,000 life insurance policy and has a minor child of 5 years old, she would most likely tell me or the insurance agent that she wants her child to be the beneficiary of the life insurance. The questions presented in this situation are:

  1. What happens to the money and any other property when her minor child inherits or receives it?
  2. Is there a better way to handle life insurance proceeds or other property that you want to leave to a child?

To answer the first question presented, let’s look at Oklahoma’s law on minors. Children or minors are legally incapable of holding and managing that property until the reach the age of majority, which, in Oklahoma, is the age 18. While they are still considered minors in Oklahoma, any property or money a minor owns must be managed by another person, such as a guardian or custodian. IMPORTANTLY, for the most part, the financial institutions will require the guardian to go to court and receive Letters of Guardianship  before the institution will release the funds into the guardian’s control. This applies to parents. Therefore, if a grandparent left a minor as a beneficiary of an account, the minor’s parent would have to go through the court process of Guardianship (which can be expensive), before the parent will gain control of the minor’s assets. This is an expensive complication to leaving an asset to a minor child, because court processes comes with attorney fees, accounting fees, filing fees, just to name a few.

In the above scenario, when the child turns 18, he or she can take over the management and control of the property or money. Oklahoma law generally does not require a specific level of financial literacy, planning, or common sense to manage or control your own property. Thus, the young teenager may squander the monies that was given to them very quickly, since they have full control of it once they turn 18. And how many 18 year old teenagers do you know that would know how to handle a lump sum of $100,000 responsibly?

THE GOOD NEWS is that there are other, more responsible approaches to leaving minors an inheritance. Rather than naming your child directly to receive the proceeds of a life insurance policy, or any other beneficiary account, you can set up a revocable or irrevocable trust that has your minor child as a beneficiary. This allows you to provide for appropriate use and management of the property with certain guidelines and control that will not let the minor child to squander their inheritance, and it won’t include any court process or fees. Unlike custodial arrangements discussed above, a trust does not necessarily terminate at age 18 and can continue to provide supervised management of the property into adulthood, including planning for education and other life-events. To read more about trusts, read a previous article by our attorney here.

The Trustee, or the person who manages the trust’s money and property, can also be empowered to use the Trust’s money for the benefit of the child, without the need and cost of court supervision. This can be helpful because it allows you to have more control over the types of expenses you want to provide for your child, including health, education, and general expenses one might occur as a young adult.

Remember, selecting a beneficiary for any type of monetary account is an important decision with potentially far-reaching consequences. There are important legal implications depending on your choice. Selecting a beneficiary is part of your overall estate plan, and the attorney at the Skillern Law Firm, PLLC can help plan for your minor children or grandchildren. Call our office at to speak to our attorney today!

It’s Important to Update your Estate Planning After A Divorce

Most couples, especially married couples, get their estate planning done together and draft them accordingly. Most of the time, married couples will get a Family Trust, rather than two individual Trusts, and all the beneficiaries/executors/trustees are listed as each other. After the unfortunate event of a divorce, it is extremely important to get your estate planning updated to reflect your life change. Most people’s wishes and ideas about who should receive and manage your property after your death changes after a divorce. The only way to effectively express that intent is to have a new estate plan drafted.

When you get divorced, you absolutely need to update your estate plan. Oklahoma law provides some safeguards for Wills, Trusts, and certain beneficiary designations. Under Oklahoma law, your former spouse does not benefit under your will or Trust, only if your Will or Trust follow the requirements of Oklahoma law. However, these few safeguards are incomplete and will not change your estate plan to exclude your ex-spouse in some situations. The default rule will not revoke any gifts to relatives of your ex-spouse, for example.

It is important to update your Will and/or Trust after a divorce, because the default Oklahoma rules that may or may not apply, and an experienced estate planning attorney will know which ones need updating. One of the best ways to express your new wishes after the divorce is to create or amend your estate plan. This way, you are able to accurately express your new intent with your estate, since divorce usually changes your intent (i.e. leaving the ex-spouse out), and this will ensure that your wishes are clearly communicated.

One important thing to update after a divorce is beneficiary designations on accounts. When you select beneficiaries for life insurance, retirement plans, or bank accounts, you are making a legally significant decision. After you pass away, the institution holding the account will look at your account information, including the death beneficiary, and distribute accordingly. Ex-spouses, if not changed on the account, have a strong chance of benefiting from the account.  Divorce has an very limited effect, if any, on these beneficiary type arrangements.

For example, most people hold a lot of assets in their IRA, 401(k), or other retirement plan. Most people do not realize that these retirement plans are governed by Federal law, and no state (including Oklahoma) can use a divorce decree/order to overcome the beneficiary designation on your retirement plan. This means your ex-spouse will benefit if the beneficiary is not changed. You absolutely have to change the beneficiaries after a divorce decree is final to express your new intent.

Most people have many other things on their minds if they have just gone through a divorce, but it is very important to contact an estate planning attorney, or be active in keeping your estate plan up-to-date. Please contact the Skillern Law Firm, PLLC if you need your estate plan updated or created.

How to Choose a Guardian for Your Minor Child(ren)

If you have children who are minors, it is very important to 1) get a will and 2) choose a guardian to take care of them should you pass away before they are the age of majority. This can be a very, very difficult choice, especially if the father and mother do not agree on a guardian. It is a common estate planning problem, since usually both grandparents volunteer, or the child has two favorite aunts, etc.

However, making sure that your child is taken care of if an unfortunate accident should happen to both parents is very important. If the parents do not stipulate who they nominate as guardian in a will, the children will be chosen a guardian through a court process, which takes months, is expensive, and puts a great emotional toll on the children after their parents’ death.

There are some important factors to think about when choosing your child(ren)’s guardian. From parenting style to finding a stable living condition, as well as the existing relationship between the children and their nominated guardian, here are countless issues to contemplate before you make the final decision.

What follows is a list of only some of the important questions parents may want to ask themselves as they consider their options for guardian of their minor children:

1. Where is your potential guardian located? Moving, especially after a traumatic event like a parents’ death, can be hard for minors. Does your potential guardian live in the same city or same State?Will your child be able to stay in a familiar environment during the emotional transition, or will he or she have to move to another city or state? What part of town does the potential guardian live? Is their house located around good schools and safe neighborhoods?

2. How close is the child(ren) and the potential guardian? If the minor child and the potential guardian have an existing, close relationship, it will make the transition much easier for the child.  There will already be a relationship of trust, comfort, and the guardian will already know the likes and dislikes of the minor child. If you end up choosing  a family member or sibling that lives far away, you should try to establish a familiar relationship with the child and their potential guardian in case something happens to you.

3. Is your potential guardian physically, emotionally, and financially prepared to take care of your child(ren)? While nominating grandparents seems like a great idea, since usually there is already a close bond and a relationship, an aging grandparent may not be physically  or emotionally fit to take care of your young child or your moody teenager. Similarly, a loved aunt, who has many student loans and lives in one-bedroom apartment, may not be financially fit, or have the time, to provide for the child(ren).

4. If your minor children have special needs, does you potential guardian have the knowledge or the skill to handle your child correctly?  A special needs child is a hard situation that can take the parents years to develop important skills that they need to have to correctly care for the child. When you are looking at potential guardians, be aware of their skills with special needs children, or encourage them to gain knowledge and develop skills in case they are ever needed.

5. Make sure to tell your potential guardian, and discuss it with them beforehand. It is very important to have a conversation with your potential guardian before you nominate them in you will. You can gauge how comfortable they are with the idea, and see if there is any reluctance before you nominate them for such an important task. Make sure you tell them of your parenting preferences, important features you want in your children’s care (religious, education), and tell them of your hopes for your children. Also, make sure your potential guardian knows that he/she can say no if they are unable to take on the responsibility, and make sure that you  have several backup nominations in case your first choice declines.

If you have minor children, it is very important that you nominate a guardian in a will. The task of nominating a guardian is not an easy one, and there may be disagreements between the two parents, but it is an important task that must be done. The minute you have children, you should be thinking of their futures and their safety, and that includes a situation if you and your spouse are no longer able to care for them. It will also give you a peace of mind, knowing that your children will be in good hands, and that the court will have little to no say in who will take care of your children.

If you would like to know more about creating a will and nominating a guardian, please call the offices of the Skillern Law firm today!

Estate Planning for Pets! Oklahoma Pet Trusts.

There is a popular trend among the states right now in estate planning law to allow people to make preparations for their pets in their will or trusts.  Oklahoma has recently joined the trend. Oklahoma now allows pet trusts since a relatively recent House Bill1641 that was signed into law and became effective August 27, 2010. If you want to read the statute in its entirety, click here.

A brief description of the law is essentially that the law has created a new section of the Oklahoma trust code that now legalizes trusts for the care of pets. The pet trust is terminated when there is no more living pets under the trust, so you can have a pet trust for more than one pet and it will exist until all the pets are deceased.  The statute then gives a description of what the rules for governing a pet trusts,  including compensation for the trustee, accounting requirements and provisions for terminating the trust. You can pick the trustee or pet caretaker, and trustees can be provided with compensation for administering the pet trust.

The code also states that the “The trustee may employ agents or contractors to provide any care and pay for the care from the assets of the trust. The trustee shall also ensure that the property of a trust authorized by this section is applied only to its intended use.”

The Oklahoma statute states that if you trust is below $20,000, the trust is exempt from fees, unless a court says otherwise. If the trust has a value of $20,000 or more, you will have to pay fees that include filing fees, periodic accounting, separate maintenance funds, and registration fees.

In the pet trusts, you can have complete control over your pet’s future needs, including their food, schedules, and even their veterinarian. The trust will be like most trusts: revocable, so you can make it go away or amend it at any time. You can make the trust be activated if you become disabled or incapacitated, which a will cannot do.

Overall, it is a good step forward in the area of pet estate planning.

Skillern Law Firm, PLLC can help you make preparations for caring for your pets when you are gone! Call or email us today.

Why Should I Get A Will Now?

The more clients and friends that we talk to, the more we see why so many people put off writing their will.  No one especially wants to think about their own future death, and no one really wants to plan for it. In reality, however, everyone needs to have a will prepared, even at a young age.  There are a multitude of reasons to consider, and any reputable wills and trusts lawyer should be able to go through the factors with you to make certain that you are protecting your assets as well as the people you love.

First off, it’s obvious people do not want to think about death. However, the reality is that it is inevitable. This does not only include your death, but your family members, such as your grandmother, daughter, son, and parents. If you, or your (especially older) family members have not prepared a will, then you are jeopardizing both your own wishes and the outcome for those you love.  This could be especially important for parents.

If you haven’t had a will prepared, then your children’s future can be in serious jeopardy.  For example, many assume that their property will pass automatically to their children, but the Oklahoma courts may have other ideas.  Other family members, like a new spouse or a child you gave for adoption, may go to the courts and inherit money and heirlooms that you intended for your children.

The most extreme and important factor to consider will likely be that of child guardianship. If you have children, or intend to have children, a will allows you to ensure that your children are raised by people you trust and in a way you deem appropriate. A will allows you to specify their guardians, should you die.  Without a will, the courts will decide who will take control of your children should you pass away, and who wants a court to decide the future of their children’s care?

Sadly, another case where a will is needed is when both spouses being killed at the same time.  In a circumstance like that, there is no surviving spouse to take care of the children, explain what should happen to them, nor have a say in the distribution of assets.  As expected, the courts will have more of a say in the distribution of your estate than you would probably want.

Creating a will doesn’t have to be a exasperating, complicated activity. A will is not generally very expensive, and a trustworthy wills and trust lawyer can tell you your exact benefits in creating a will.  Skillern Law Firm can help you create your will, and any other estate planning document you may need to ensure your family and assets are safe from court interference. Undoubtedly, it is not ideal to spend your time imagining what would happen to your family and assets after you have passed away, however, doing so now can make an incredible difference later.

If you are interested in other estate planning documents, or how they can help you, read other posts on Tulsa Estate Planning Blog.

Estate Planning for Everyone

A few years ago, my mother sent me the  Jessica’s morning affirmation video. I haven’t woken up every morning with Jessica’s joie de vivre, this morning I did. My whole house is great. I can do anything good. I realized that I can really make a difference for same-sex couples with estate planning. I’m not as sure about my hairs or haircuts, but that’s a moot point.

The actual point: estate planning can solve many problems that the law creates for same-sex couples living in states that do notrecognize same-sex marriages.

Same-sex couples are  not able to benefit from inheritance laws that enable spouses to take property under homestead laws. Oklahoma intestacy laws would not allow for a same-sex spouses to inherit anything. Therefore it is much more imperative for same-sex couples to invest in estate planning than hetero couples.

Both wills and trusts can establish inheritance for same-sex couples. Trusts offer basically the same inheritance options that wills do (please see our previous post), with the added benefit of privacy. Wills are open to the public when they are entered into the probate court after death, but trusts are only public in so much as that one has been created.

Same-sex families that adopt face unique child custody issues facing the death of one parent. Oklahoma laws allow only one parent of same-sex couples to be the adoptive parent. Parental rights follow this parent. If that parent passes away, then the other parent has no legal parental rights over the child. A will or trust can remedy the situation by specifying who will raise the child after death.

This is not to say that estate planning is a substitute for marriage. I in no way want to insinuate that signing a trust document provides the same joy that saying I do ever will. However, this is an option that Oklahoma provides that same-sex couples should take advantage of today. Skillern Law Firm  can set up a trust for you and your spouse to help you with your estate planning needs.

Check out other posts at Tulsa Estate Planning Blog.

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