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Why Online Wills Can be Harmful to Your Estate Planning

In September of 2010, a non-lawyer wrote an article about her experience trying out four different will-making computer programs. This article appeared in the New York Times. After she got all four different wills drafted, she took the wills to an established estate planning lawyer in New York City, and had them reviewed. The results were poor, to say the least. The lawyer found that one of the Wills was so defective that it did not even identify which heirs got which of the author’s assets. Each of the other three wills had different problems, including problems that could harm the probate process.  The attorney stated,  “The thing that most surprised me is how different your will comes out depending on what program you pick.” Some of the more common problems with the online-made wills include:

Problems with Coordinating Probate and Non-Probate Assets.
Most people have property that your Will does not cover since it passes outside of probate. For example, many couples own a house in joint tenancy, that the house will pass to the surviving owners, and not to the beneficiaries named in your Will. While you can name contingent beneficiaries in the will, it’s not understanding which property passes through probate and which does not that can derail your estate plan.
Trouble Naming Contingent Beneficiaries.
If one or more of the beneficiaries you name in your Will passes away before you, and you haven’t named an alternate beneficiary to take that person’s place, then your property passes to your heirs-at-law. If you’re not a lawyer, chances are you don’t know who your heirs-at-law are, and you probably do not want your property going to them. A Will that does not name contingent beneficiaries may have the result of taking your property away from your control, and giving that control to the state through the state’s intestacy statutes. Most online websites forget or do not have a contingent beneficiary estate plan as part of their package, and this can cause all sorts of problems for people with relatively simple life situations. If your family’s situation is more complex than normal, say you are a blended family or you have complex estate, than contingent beneficiaries and similar provisions can make your estate planning problems even worse. Qualified estate planning attorneys know these problems and can work with you to figure out what is the best plan for your estate planning needs. An experienced attorney can adapt, and should will know what the appropriate questions to ask for your situation, and no computer estate planning model can do that.
Inability to Create Trusts for Minors.
When a person leaves anything to a minor, that minor cannot take legal control of the money or property he or she inherited or benefits from. An experienced estate planning attorney would put a clause that would put any of these assets in to a trust, with a named trustee, to manage the money or assets left to the minor until the child turns eighteen (18).  If your will has no minor’s trust clause, and your estate plan leaves money directly to a minor, then a person would have to start a court proceeding to appoint a guardian or conservator. Guardianships are expensive court proceedings, and having a clause in the will can avoid these complications and expense you did not expect.
If you are needing to get any estate planning done, please consult an attorney. The online wills and trusts market are booming, but that does not mean it is the best choice for your planning. Do you really want to save money when it comes to providing a future for your spouse, children, or grandchildren? Call the attorneys of Skillern Law today.

Federal Assistance Programs are Running Out of Money

Social Security and Medicare, are the two most expensive federal social programs, and it has been recently announced that they will run out of money three years earlier than original estimates indicated. Trustees estimated that Social Security will run out of funds in the year 2033, and Medicare will be insolvent in 2024. More and more pressure is being put on lawmakers to reform these programs for millions of Americans, so that future retirees have a security net for their retirement years.

It is extremely important to get your portfolio and documents reviewed by a financial adviser and an attorney, to make sure you will not be ready if these programs go away. Please call Skillern Law Firm today to set up an appointment.

See Reuters, US Retirement Fund to Run Dry Earlier: Trustees, CNBC, Apr. 23, 2012.

Do You Need to Update Your Advance Directive (Living Will)?

Many clients of the attorneys at Skillern Law Firm, PLLC believe they do not need a new Advance Directive since they had one drafted many years ago. Well, if you got your living will completed before 2006, you may need yours updated.

During the 2006 Legislative Session, the Oklahoma Legislature amended the Oklahoma Advance Directive Act (“the Act”) in response to an Attorney General Opinion.  It became effective on May 17, 2006.The Attorney General’s opinion argued that, in its then old form, the Oklahoma Advance Directive Act was unconstitutional.  Before May of 2006, individuals could only designate refusal of life-sustaining treatment only if they were persistently unconscious (in a vegetative state) or if they were diagnosed with a terminal condition. The old act had no provision to allow people to choose if they want treatment or not if they were diagnosed with an “End-stage Condition.”

The Oklahoma Legislature listened to the Attorney General, and added this category to the statute. Now, individuals can discuss what they would want in an “End-Stage Condition.” An “End-stage Condition” is a condition caused by injury, disease, or illness, which results in severe and permanent deterioration indicated by incompetency and complete physical dependency for which, to a reasonable degree of medical certainty, treatment of the irreversible condition would be medically ineffective.  Importantly, this includes Alzheimer’s disease in its late stages.

At the Skillern Law Firm, our updated Advance Directives forms allow you and your spouse to refuse life-sustaining treatment and/or artificial administration of nutrition and hydration, if you so choose. It will allow allow you to designate that you absolutely want all the treatment you can receive.  Whether you choose to refuse life-sustaining treatment or to continue all treatment options, executing a new advance directive should be on your priority list.

If you have not updated your Advance Directive, or have never had one drafted with your desires, contact the offices of Skillern Law Firm, PLLC today. For more reading on what an Advance Directive can do you for, please read a past post all about living wills here.

Special Needs Planning

It seems everyone knows at least someone with special needs, whether it be a family member, a church member, or a friend. When it come to estate and financial planning, the term “special needs” applies to family members who cannot, for some reason, take care of themselves. The reasons are varied, whether it be a child with a condition, such as Down’s syndrome, a teenager with mental problems, or an elderly person with a condition like dementia or Alzheimer. Another reason someone may need special needs planning can be someone with a physical disability, such as a quadriplegic, or many other disabilities.

Most of our clients who come to us wanting special needs are parents or grandparents that need special needs planning for their children or grandchildren.  Most clients are people who want to provide for their special needs family member through inheritance, however, leaving money as inheritance or life insurance to a special needs person will usually not improve their life, in fact, it generally has a detrimental effect on their financial well-being and stability.

One of the main reasons why leaving inheritance or life insurance benefits to a special needs person can be detrimental is that it can disqualify a special needs member from Supplemental Security Income (SSI). SSI is a federal financial support program that gives money to special needs individuals. Medicaid is another federal and state program that gives financial support to special needs individuals. Your inheritance can disqualify the special needs person from Medicaid support as well, since in order to qualify for Medicaid a person must have less than $2,000 in assets (which is really, really low for someone with special needs).

Special needs estate planning can help give your family member with special needs the ability to qualify for federal and state financial support programs, while also inheriting some money from your estate. Making sure your family member with special needs is left with enough money to support their health, care, and maintenance costs, while at the same time qualifying for federal programs, requires complex planning that is best done with the advice of a qualified attorney. Skillern Law Firm, PLLC is happy to explain the benefits and inter-workings of special needs estate planning. Please call today to schedule your free appointment.

The Problems with Handwritten Wills

Oklahoma allows the probate courts to admit holographic (or handwritten) wills. There are certain considerations that are very important to consider if you think a holographic will is right for you. Today on Tulsa Estate Planning BlogSkillern Law Firm, PLLC will help you figure out if its right for you.

First, there are important, strict formalities that Oklahoma requires for a holographic will to be valid. First, the will must be dated. Second, it must be signed by the testator. Third, it must be completely in the handwriting of the testator/testatrix. And lastly, it must be clear that the document is the intended last will and testament of the testator/testatrix.

These four requirements are very strict. Without all four, and with a variation on all four, Oklahoma courts have refused to admit certain holographic wills.

One such error is the belief that getting a holographic will notorized or witnessed is a great thing. This is not true. If you remember from above, the document must be entirely written by the testator/testatrix. A notory or a witness’s tesatament are not the same handwriting. There have been some Oklahoma courts that have held that in the event it is notarized or witnesses, that does not defeat the will since it is not required to be witnessed or notarized. If you do choose a holographic will, do not chance this, and avoid a notary or witness.

Many people insist they should save the money and create a holographic will. I remember in law school, someone asked the teacher in our estate planning course whether there were really any benefits to a formal, attorney-made will. Of course there is, she said, otherwise there would be no estate planning attorneys!

There are some very common problems with holographic wills. Here are some common mistakes:

  • Proving the authenticity of the will. Getting a handwriting expert, proving it was the intent, and making sure the entire document was written by the testator/testatrix is expensive, time-consuming, and doesn’t always result in probating of the holographic will. A formal, notarized, witnessed will is much easier to prove the authenticity, and many times, that is not even an issue with formal wills.
  • Testator/testatrix omits important features of a formally prepared will that can have a severe impact of your estate. For instance, not having a residuary clause, spend-thrift clause, or many other important clauses that attorneys know are necessary.
  • Vague/Confusing/Unmanageable instructions. Attorneys are good at using legal language that the probate court will be familiar with, and understand what the testator/testatrix desired. Many individuals are not. Furthermore, most holographic wills are vague and confusing, with different instructions concerning the same property, and avoiding discussing other property. For instance, leaving everything to “mother” does not exactly tell the court who you meant. Using vague terms, without using full names, and also using vague descriptions of property is a common mistake.
  • Failure to distribute the entire estate. A problem arises when the holographic will distributes less than all of the testator’s estate. If, for instance, the will gives away his house, car, and bank accounts, but neglects to mention furniture and other personal property, there is a partial intestacy as to the assets not covered by the will. These assets will then pass to surviving legal heirs as determined by the state intestacy statutes, the result of which may not be what the testator intended.
  • Many, many, more!

Just remember, all of these problems above (and the ones not listed) involve the probate trying to figure out what the testator/testatrix intended with their holographic will. This will eventually include probate attorneys charging hourly rates on your estate and beneficiaries. The cost of holographic wills may be free when they are made, but when they are probated, the cost is often much higher to the estate than a traditional, attorney-made will due to the probate costs.

Formal, Attorney-made wills is the best idea to make sure your estate is distributed as you desire, without the added probate costs of holographic wills. Let Skillern Law Firm, PLLC help you distribute your assets effectively, clearly, and easily through a will today. Please contact us to set up a free appointment today.

Why A Joint Will Is A Bad Idea.

One common question about wills and trusts is about joint or mutual wills. Many people ask attorneys why joint wills are never recommended by attorneys. The reason is not that attorneys want to get more of your money by drafting two wills instead of one.  Also, most people may see it as an extra expense that is unnecessary since a couple can just get a “joint will” or “mutual will.” Those assumptions, however, are incorrect. Today, the attorney of Skillern Law Firm and the  Tulsa Estate Planning Blog will explain why no (rational) attorney would recommend or even draft a joint will.

First, let’s go through the different types of Wills.

A Joint Will is one document that covers the Wills of two (or more) people, usually a husband and wife. When each of them passes away, the Will is probated and administered for the deceased spouse, and the Will is supposed to then serve as the Last Will and Testament of the surviving spouse. This can and most likely will be problematic for most people. One problem, for example, is what happens if the surviving spouse moves on with their life and has a change of circumstance or even a remarriage. What if a child, who was an angel during the lifetime of the deceased spouse, suddenly abandons their family? The surviving spouse’s right to disinherit the child, or even lower the child’s rights in the joint will is unclear. It is always ambiguous how strictly a surviving spouse is bound to the terms of an old Joint Will. This can be a bigger problem when the couple created a joint will while young. What if a young spouse unexpectedly dies, leaving the spouse with a will that may bind the surviving spouse for 40, 50, or 60 years? This is a risk easily (and cheaply) avoided by each spouse creating their own will.  Historically, Joint wills were common since they were regarded as a money-saving and labor-saving technique, but through all these complications and the use of computers, these concerns are now moot.

Mutual Will is another type of will sometimes used in Oklahoma. Mutual wills are two separate wills created with a legal agreement that neither will can be cancelled or altered after one of the spouses has died. This is a difficult situation to protect legally and attorneys often encourage spouses to make a moral obligation to each other, rather than a legal obligation.

The most common solution, and one that the attorney at Skillern Law Firm supports, if  for spouses to get Reciprocal Wills or Mirror Wills. In these wills, each spouse has their own document, and each name their other spouse and the main beneficiary, with maybe their children as alternative beneficiaries.  This is very common not only for married couples but also for civil partners or those in civil unions. Each reciprocal will is separate and there is no binding, legal agreement applied to the surviving partner who is perfectly entitled to amend this Will or prepare a brand new will in the future.

Skillern Law Firm does not support joint wills and we discourage them to clients and friends. We also do not support mutual wills for the preceding reasons.

We do however allow for people to create Reciprocal or Mirror Wills and this aligns with our philosophy that every single person needs to have a Last Will and Testament in place. If you are thinking about a will, or want to know why you may need one, please read another entitled, “Why Should I Get A Will Now?” Or, if you and your spouse has decided to get a will, feel free to contact us today to set up a free appointment.

Resolutions

It is a new year, and everyone is listing things that they want to accomplish in 2012.

You might be interested in a new healthy eating regimen, or workout schedule, but why not add updating your estate planning to that list? Twenty-twelve is the year of the estate plan!

If you haven’t established a way to distribute your estate after your death, or you need a power of attorney, we can help you accomplish your New Year’s Resolution!

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.

The Season of Charitable Giving

In the season of giving, clients often ask us about charitable giving and its tax implications. There are several options to those individuals with a generous heart. Charitable Foundation Trusts, or “private foundations” with Tax-Exempt status are expensive and time-consuming to create. Individuals with thousands of dollars to donate, however, would be wise to create a private foundation or public charity for tax reasons. If you are not one of the lucky individuals with thousands of dollars, however, charitable giving is a admirable choice. Charitable donations can also reduce tax liability. Certain kinds of gifting, however, is income and estate tax deductible, so lets go over the the IRS’s guidelines.

To take advantage of the income tax benefits of charitable giving, a donation must meet requirements established by the IRS. These include these rules: 

  1. The donor cannot benefit from the donation. This includes giving to foundations or organizations where you or your family can benefit, or you are directly benefiting.
  2. The donor must be able to substantiate the donation. You must be able to keep a written record or bank record of the donation that you could prove as valid to the IRS.
  3. The donation must be made to or for the benefit of a qualified charitable organization, and;
  4. The donation may not exceed the current statutory ceiling. As of right now, the amount of your deduction for charitable contributions is limited to 50% of your adjusted gross income.

Now, let’s make a distinction between the income tax and the estate/gift tax sides to charitable giving. If it goes to charity, it can be deductible from your estate. If it goes to loved ones, it cannot. Remember, the donor cannot benefit from the donation, and giving to your family is seen as a benefit to the IRS. Pretty simple distinction, right? The gift-tax limit, as of right now, is $13,000. You can give up to that limit to a family member or friend and not pay tax on the gift. If it goes above that – you’re out of luck and the gift and tax must be reported to the IRS.

Another part of this complicated IRS tax equation is instance in which you can give to charity and it will be deductible if  the charitable gift it is made as part of your will or trust. This is why people like Bill Gates and Warren Buffet can give their kids up to 5 million dollars – and pay no estate tax if they give their other billions to charity through their will or trust. You can give after you are deceased through your will or trust, and not have to pay estate tax! While there is no current estate tax in Oklahoma right now, it will likely come back in the future, so you should consider this when drafting your will or trust.

While it is the season of giving, you can give wisely and help your estate by using tax-savings benefits that the IRS has set up for generous individuals. Please consult with us today if you are interested in creating a private foundation, or would like to create or put charitable givings in your will or trust to save your beneficiaries some taxes in the future.

Don’t forget to read other posts at the Tulsa Estate Planning Blog.

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.

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