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A lot of clients seem to be under the misconception that, if your will is valid, self-explanatory, and clear as to your intent, then it does not need to be probated. However, your Last Will and Testament is not effective until it goes through probate. It does not matter if it is clear and unambiguous! The deceased persons’ assets and liabilities cannot legally pass to the beneficiaries named in the will until after the Probate Court enters an Order that shows that the assets pass to the beneficiaries.
For example,many people that own a home in their name and may leave it to their children in a will. During the life of the owner, in order to be able to sell the home, they would need to sign a deed over to the new buyer in the closing process. After they pass away, a buyer will not accept a signed deed from the deceased children since there has been no legal determination or court order granting them the legal right to sign over the deed, since it is still in the deceased person’s name. It will not work to simply provide the buyer with a copy of the will, since it does not solve ownership problem and they cannot be assured that the will is valid until the probate court has reviewed it. Therefore, only until an Oklahoma Probate Court has reviewed and decreed the will to be a valid Last Will and Testament of the deceased, and that the will legally passes the home onto the children, the children have no legal authority to sign a deed, sell the house, or have any ownership to the house. As a result, there is no will that is effective until it has been probated and through the probate process.
Many people are flustered and upset that their estate has to go through probate when they have a valid will, but they can solve this problem by establishing and funding a Revocable Living Trust. Let Skillern Law Firm help you in this process by calling the law office today.
When creating any type of trust, the creator of the trust (called a “trustor” or “settlor”) needs to nominate someone or an organization to be their trustee. Usually the Trustor nominates himself or his spouse to be the original trustees, but some may nominate their bank, attorney, financial planner or children to be a trustee. Many people do not know what is involved in managing a trust as a trustee or successor trustee. Many people view being nominated as a trustee as a showing of confidence and judgement of their abilities, which is very true. However, it is also a major responsibility. Today on the Tulsa Estate Planning Blog, the offices of the Skillern Law Firm will help you realize the duties of a trustee.
- Duty to Administer the Trust by Its Own Terms. The trustee has a duty to administer the trust, as well as manage the trust assets, in a way that follows the exact terms of the trust agreement/document. The trustee needs to follow the terms of the trust as they are written on the document’s face, without trying to interpret the language. If there needs to be interpretation, then the trustee should use their best judgment or seek out legal advice on how to correctly follow the terms of the trust. No deviation is allows from clear and concise language of the trust, unless a court of law has shown them to be against public policy.
- Fiduciary Duties & Responsibility. A trustee has a “fiduciary” duty to the beneficiaries of the trust. The beneficiaries include current or “remainderman” beneficiaries (like grandchildren that may inherit if their parents pass away). As a fiduciary, the trustee shall be held to a high standard. This means that the trustee must pay closer attention to the trust investments and disbursements than you would for your own accounts.
- Investment Standards: When acting a trustee, the investments you make cannot place the trust’s assets in speculative or risky investments. In addition, as stated similarly above, the investments must be made with the beneficiaries and contingent beneficiaries in mind. As trustee, you may need to balance the benefits of many types of investments, since some may benefit certain types of beneficiaries more than others. For example, some beneficiaries may need some long-term investments as compared to others, who will not be depending on the income as much. All of these questions, and more, need to be considered when deciding on an investment scheme for the trust.
- Distributions. Many trusts give the trustee complete discretion when it comes to hanging out distributions of the trust assets to the trustee. The trustee needs to decide when to hand out distributions, based on the beneficiary’s needs, his/her future needs, and their other sources of income. The trustee must also look at the total amount of trust assets and what would be the best way to hand out distributions based on the total amount of beneficiaries. Many times, beneficiaries will repeatedly ask the trustee for a distribution, and the trustee must have the discretion to say “no” when it would not benefit the trust or the trustee.
- Accounting. One of the most important jobs of a trustee is to keep track of all income, distributions, expenditures, and general accounting of the trust estate. Most trusts, including the ones created by the Skillern Law Firm, include provisions in the trust document that makes it to where the trustee must give the beneficiaries of the trust an accounting at least once a year. Many trustees hire qualified CPA’s for this duty, and the trust most likely has the ability to pay for those services.
- Taxes.Another duty of a Trustee that needs a qualified CPA is paying the Trust taxes. Depending on the type of trust created and being handled by the Trustee, the trustee will need to file an annual tax return in the trust’s name, and may need to pay income or trust taxes. A trustee will need to keep accurate records and keep a qualified CPA on hand to handle this duty well.
- Delegation. As you can probably already tell, a Trustee will need to have great delegation skills to be able to maintain and manage the trust assets. This includes hiring an attorney, qualified CPA, financial adviser, or any other professional needed. The duties of a trustee can be much better handled with the help of professionals, and the offices of the Skillern Law Firm recommends using professionals when making any important decisions about the trust. Communication is also very important when you delegate, so you and your professional knows what the goal of the trust, and how that can be best handled.
- Fees and Expenses. In Oklahoma, Trustees are entitled to a statutory fee that is considered “reasonable.” Usually family members and friends do not accept fees, but they may and can request such fee. Professionals will charge a fee, and those can be paid from the trust estate. Trustees can decide what professionals to pick, and can base their decision based on the expense, however, price is not always the best choice.
Acting as a trustee or successor trustee for a Living Trust is a great opportunity to help a friend and/or family member, and can build some great relationships. The work is hard, but it is manageable, especially when using professionals to help manage the trust. Being a trustee is a wonderful opportunity to grow, but please be aware that it is not a job to be taken lightly.
If you are a trustee of a trust or are interested in creating a trust, call the offices of the Skillern Law Firm, PLLC today.
One common scenario that estate planning attorneys encounter is clients who believe that deeding their home to their children solves the problem of avoiding probate. Most retired individual’s main asset is their home, which many have paid their mortgage off.
Such a situation is common for many of our clients, and the attorneys at Skillern Law Firm almost always advise against it. There are several practical and legal reasons to keep your home in your name, some of which are discussed in this article in the Huffington Post. The two main points that this article relates are property taxes and your child’s liabilities.
There are several more important reasons to avoid transferring your property rights to your child to avoid probate. These include:
- The relationship with your child could go south, or change once you transfer all your property rights to him/her. It’s amazing how a relationship can change once money or any inheritance is involve. Once the house is in their name, they have all the legal right to the home, and there is no obligation for them to let you live in it or transfer it back to you if you ever change your mind.
- If you have more than one child, this can put complications on some of your relationships with the other children, and it can create rifts between siblings. Putting your house in the name of one child can create relationship complications, but putting the house into all of your children’s names’ can create paperwork headaches, errors, and inheritance complications.
- There are other ways to avoid probate. One of the easiest ways to avoid probate is to create a Revocable Living Trust. You can read more about trusts on a previous post here. Essentially, a Revocable Living Trust are flexible, customizable depending on your situation, and usually cheaper than what probate will cost your heirs.
Do not make a common estate planning mistake that could possibly cost you to lose your home and cause problems within your family. Contact Skillern Law to discuss how they can assist you to protect your family and heirs, as well as your assets, from probate, liabilities, and common misconceptions about avoiding probate.
There is currently a legal battle in the federal courts regarding a Federal law mandating that marriage is between a man and a woman. EdiTh Windsor challenged the federal law in DOMA (Defense Of Marriage Act) as unconstitutional on equal protection grounds. The U.S. District Court for the Southern District of New York recently held that Section 3 of DOMA that created this mandate was unconstitutional. She is skipping the Circuit Court, and has petitioned for the United States Supreme Court to hear and review the case. Many legal experts expect the court to take up the case for their October term.
This legal case is important for Constitutional Law, in that it may finally rule on if gay marriage is a constitutional right or the U.S. Constitutional sees homosexuals as a protected class. However, it has further implications in the estate planning legal realm.
When Edith Windsor’s partner and wife died, she left her entire estate to Windsor. But since the Federal government does not recognize under DOMA, Windsor owed $363,000 in Federal estate tax. If Edith’s wife had been a man, and they were a heterosexual couple, there would have been no Federal estate tax. Usually a married heterosexual couple does not incur any taxes because they can use the Federal estate tax exemption. In 2012, this was up to $5,000,000. The Federal estate tax exemption, however, does not apply to same-sex couples. To many people’s surprise, Edith has managed to win the first battle at the New York Federal district court. Now, the Supreme Court is more than likely going to hear the case this fall. President Obama and his administration has stated that they will not defend the law, and so the Bipartisan Legal Advisory Group took the position to defend the law. The legal argument for DOMA and the case against Edith is that the representatives in Congress have Congressional decided that children should be raised by both a mother and a father. The legal argument against DOMA is that it is a violation of the Equal Protection Clause and Due Process.
As this legal case develops, Skillern Law Firm will continue to write about this important legal case. If you are a same-sex couple in Oklahoma, and you need your estate planning done, please feel free to call for a free consultation. We would love to help you. For more information on why estate planning is especially important for same-sex couples living in Oklahoma, please see our post Estate Planning for Everyone.
See Manuel Roig-Franzia, Edith Windsor’s Fight For Same-Sex Marriage Rights Continues, Even After Partner’s Death, Washington Post, July 19, 2012.
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:
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.
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.
Most people know that Revocable Living Trusts are a great way to avoid probate. And if you don’t, please read a previous blog about probate and how a trust can help here. On today’s blog post, Skillern Law Firm is going to discuss other ways to avoid probate if you already have a trust, or simple solutions if you have a small estate.
First of all, we’ll say it one more time for emphasis – Get A Revocable Living Trust. I know that you’ve already been told this by our attorneys, and possibly other attorneys, but it is a very simple way to avoid probate (and probate is generally much more expensive than a trust!). If you do not have a trust, and you own anything when you die, your estate will be probated, and your estate will have to hire a probate attorney. This includes if you die with a will or not. A will is a good idea if you absolutely cannot afford a trust, since it helps move the probate process move faster. However, if you want your family to avoid probate altogether, you need to set up a living trust.
After you get a trust, you will need to fund it. The offices of Skillern Law Firm help you fund your trust, so that you are not wasting your money. A trust is only good if it is funded, otherwise a trust is just a pile of documents without any meaning. However, if you do not follow our instructions, or you get a trust done from an attorney who does not fund his/her client’s trust, then you will need to find your trust. Funding includes transferring all your real and personal property into the trust’s estate, or “corpus.” Essentially, it is making sure your bank accounts, financial accounts, home and land, and any other property is transferred into the trust. You can opt to transfer your property into the trust on your own, but our clients often rely on the services of our attorneys to be confident that all probate-able property is properly titled in the name of your trust.
Next, you will need to make sure that all your retirement accounts, life insurance, annuities, and any other assets have beneficiaries named. This can help you whether you have a trust or not. One thing to make sure, if you do not have a trust, is that you do not have your estate as your beneficiary. If you place your estate as your beneficiary, without a trust, that property will need to be probated, and if you just named a person, the money would have passed outside of probate. Another thing to make sure that you have multiple contingent beneficiaries in case one of your beneficiaries dies before you do, and you forget to change it or are incapable of changing it. If you have your estate, no beneficiary, or a deceased beneficiary on any of these accounts, then your heirs will have to go through probate court (and all that’s involved with that) to gain access to these assets. One more small note is to make sure none of your beneficiaries are under the age of eighteen. Otherwise, the bank or institution will hold that account until they reach this age, or you will have to get a conservatorship over the minor to gain access to those funds before they reach 18.
Another thing you can do is to make sure nothing is payable to your “Estate,” as referenced above. Many families have to go through probate because the nursing home refused to write a refund check (after death of a resident) to anyone other than the “Estate of Resident.” Like said above, this would require this refund check get probated through the courts to get received by the heirs. To avoid probate, make sure the nursing or assisted living facility will make any refund check payable to a surviving heir or your trust account, if you have one.
One really important step that clients often forget is that they need to put the later acquired property into their trust. If you purchase a home or other asset later in life, you have to put it in the name of your trust. Or if you open a new bank account, open the account in the name of your trust . It’s steps like these that will make your estate get probated, even if you have a trust.
Some of these steps above can be done if you have a trust or not. For example, putting beneficiaries on accounts can be done by someone who does not have a trust, and can make their probate process move much quicker. Getting a will is also a good idea if you cannot afford a trust, since it will also speed up the probate process. Contact the offices of Skillern Law Firm to discuss your estate planning needs today.
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.
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.
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 Blog, Skillern 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.