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Always have an attorney make your estate plan
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
- Inheritance
- 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 contact@skillernlaw.com.
(Minor) Children in Your Estate Planning
When 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:
- What happens to the money and any other property when her minor child inherits or receives it?
- 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!
Funding A Revocable Trust
Whenever an attorney creates a Revocable Living Trust for a client, the trust needs to be funded. “What does it mean to fund a trust?” is a common question that our attorney at the Skillern Law Firm gets from clients. It is a very important step in the estate planning process. To see what a Revocable Living Trust can do for you, read our previous blog post about the types of trusts and their advantages. A trust, if funded correctly, will allow its creator(s) to avoid the probate process. An unfunded or partially funded trust does not allow your assets to avoid probate, because only the assets owned by the trust at your death or payable to the trust at your death avoid the probate process.
There are a few common misconceptions about the trust funding process.
Myth #1 – Since you formed a trust and have a Trust Agreement, the trust is complete and there is nothing else that needs to be done.
When you sign or form a trust with an estate planning attorney, signing to document is only the first step in the trust-creating process. The attorney, or the client, needs to make sure ALL of the assets held by the trust-creators (or “trustors”) are put in the trust’ss name, or has the trust as the listed beneficiary of the account. Otherwise, the Trust Agreement is an expensive pile of paper that will not help the creator’s avoid probate. The attorney at the Skillern Law Firm funds all of the trusts she helps create, taking this important step out of the client’s hands.
Myth # 2 – When the trust was created, there was a list of all the property on an Exhibit or Schedule that’s attached to my trust, so that transferred my assets to the trust… right?
Many trusts have an exhibit or schedule of property. This is a helpful document that helps a successor trustee in ascertaining what property they should be managing and accounting for. Updating this exhibit or schedule as the “big-ticket” items change is important so that the information on the exhibit is generally up to date. However, merely putting a description of the property on a schedule or property addendum does not legally transfer the ownership of the property into the trust. That needs to be done outside of these exhibits/schedules, most likely by property deeds and beneficiary designations.
How do you fund a trust?
To fund a trust, the attorney or client needs to file the property deeds with the county its located in, and put the trust as the beneficiary on all accounts. To fund business interest, you will need to assign closely held business interests to your trust. Like all things in life, there can be tax consequences and benefits to each course of action. You should always seek tax advice prior to making a transfer of property, because once transfers are completed, there is often no undo button for tax purposes. Whenever our attorney create a trust for a client, she makes sure she funds the trust at creation, but it is up to the client to keep the trust correctly funded after signing.
What are the benefits of a fully funded trust?
The biggest benefit of a correctly and fully funded trust is that it allows your beneficiaries to avoid probate. One more important benefit of a fully funded trust is that it allows for easier management of your property in the event of your incapacity. A truse can also can save on administration costs upon your death or incapacity, since your successor trustee and beneficiaries will not have to spend as much time and money locating your property.
Having a revocable trust in your estate planning portfolio is important for those who want to avoid probate and keep their estate administration as easy as possible. Funding your revocable trust is an absolute necessity if you want the benefits of avoiding probate and having management of your property in the event of your incapacity. Funding your revocable trust is a necessity that should be completed and worked on along with the creation of your trust. Call the Skillern Law Firm today to get your estate planning done today!
The Importance of Placing Your Timeshares Into A Trust
Most, if not all, timeshare owners will have to decide, at some point in their life, who they want to receive their timeshares after they pass away. Most timeshares are real property interests, that are deeded into the owner(s)’s name(s). If a timeshare is held in an individual’s name at death, just like any other piece of real property, it will have to go though probate. Most people, and some estate planning attorneys, do not realize that timeshares are a real property, and forget to put it into their Revocable Trust. The majority of real estate owners want their children to avoid the cost and delays of Probate proceedings after they die, and to avoid this, a Revocable Trust is one of the easiest and cost-effective ways.
Having a Will does not avoid probate, and especially does not avoid probate when it comes to real estate interests like timeshares. Many people think putting two names on a deed avoids probate. That is not entirely true. It is better to say it delays probate. If two owners, such as husband and wife, own the timeshare as “Joint Tenants” or as “Tenants by the Entirety,” probate is avoided when one owner dies because the co-owner has automatic “rights of survivorship” and becomes the sole owner. This can defer probate, but not avoid it; when the surviving co-owner or sole owner dies, probate will follow.
Some timeshare owners try to avoid probate for the timeshare or other real estate property by conveying the property into one of their children’s names while the owner is still alive. This can cause major headaches down the road though. First of all, there are gift-taxes associated with doing this. Also, if the child goes bankrupt, gets a divorce, or is sued, the timeshare or other real estate interest is included in their estate for these proceedings.
Not only does the timeshare or other real estate interest get included in those proceedings, but the original owner has lost full control of the timeshare. If the owner and their children disagree, they cannot act alone as they once were able to. The timeshare owner will need their child(ren)’s approval for all actions in relation to that timeshare. They could no longer sell, convey, change, or do anything without the child’s signature.
Our attorney encourages her client’s to use a Revocable Living Trust for estate planning purposes, probate avoidance and/or tax benefits. The problems of adding adult children on title to the timeshare are avoided with a trust. To read more about the benefits of a Trust, please read our previous post Living, Revocable, and Irrevocable. Let’s talk trusts.
If you have already created a trust, you need to make sure that you transfer your timeshare and other real property into the trust by way of properly prepared and recorded conveyance documents. Please feel free to call our office today and set an appointment to make sure your trust is funded correctly. If you do not have a trust but are interested in finding out if you need one, call our office today for a free consultation!
Should I Get A More Complex Estate Plan?
Most people that come into our office expect to need a “simple” estate plan. Usually, they mean a will, power of attorneys, and a living will. No trust, no tax planning, and no trust provisions for their children or other family members. Perhaps the initial motivator for this is the lower cost, but also the understandable desire to avoid taking the time and energy to understand the workings of a more complex estate plan.
First of all, of course simple plans are less expensive and easier to understand. However simple estate plans are usually for small, straight forward estates. Small usually meaning an entire estate worth less than 100-150 thousand, and straightforward meaning married couple with adult, healthy children with no complications. Most couples estates are worth more than the smaller, especially when you consider that your estate consists of EVERYTHING you own (Life insurance, real property/homes, cars, personal property, retirement accounts, bank accounts, etc. Also, if you have children, grandchildren, or others that you care about and wish to see benefit from your estate, a simple plan offers absolutely no assurance that that will happen.
Here’s a couple of brief examples:
- John dies and leaves all of his assets to his wife Jessica. They have one child, Joe. A few years later, Jessica marries Jack, and they buy a house together with Jessica’s money, and she names Jack as the beneficiary of the IRA that she rolled over from John. Jessica then dies, with a Will that names Joe as the sole beneficiary. However, despite what the Will says, her second husband Jack gets the house, the IRA, and under Oklahoma law, one-half of all other property. John and Jane’s son, Joe, is left with little of her estate.
- Lisse has three adult children, Larry, Louise, and Lisa. Louise and Lonnie each have two children of their own. Lisse’s Will provides that each shall receive one-third of the estate. Lisse dies, and each child receives $250,000. Larry uses the money to buy a home with his wife. They then divorce, and the judge awards her the house in the divorce settlement. He is left with nothing of Lisse’s original estate. Louise uses the money to start a business, risky since she has little business sense or experience. The business fails, and she and her children are left with nothing. Lisa puts the money in a savings account in his name, but his Will provides that her husband gets everything. Lisa dies, and a couple of years later her husband remarries. Sometime after that he dies, and the new wife gets everything, and leaves nothing for Lisa’s children. After all of these events, Lisse’s children and grandchildren are left with nothing of the original estate.
These types of circumstances occur everyday and impact many, many families. Second marriages are very common, and as a consequence, children and grandchildren are unintentionally disinherited, and in-laws, spouses or ex-spouses, and creditors end up with the family legacy.
How do you prevent these types of things from happening? Call our office today about using a trust or multiple trusts as part of your overall estate plan. It will cost a bit more (at this time, but do not forget it skips probate costs), and take some more time to implement, but the savings and peace of mind can be priceless.
Why Does My Will Need To Be Probated?
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.
A Common Error to Avoid Probate
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.
Simple Ways to Avoid Probate
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.
Living, revocable, and irrevocable. Let’s talk trusts.
Today on the Tulsa Estate Planning Blog, we’re going to explain the difference between a living trust, a revocable trust, and an irrevocable trust. Specifically, what are the advantages and disadvantages of the types of trusts. So let’s get started.
A living trust and a revocable trust are usually, if not always, the same thing. Both are trusts that are set up to hold assets during the life of the settlor or grantor (the person who created the trust) for the benefit of that person. It is called a “living” trust because it is established during the lifetime of the settlor. It is also called “revocable” because the settlor can revoke the trust at any time during his/her lifetime. The purpose of the revocable, living trust is to avoid probate of the settlor’s assets after he or she passes away. The estate will avoid probate if the trust is written well and the settlor does not do anything irresponsible after the trust is created (like forgetting to transfer deeds into the trust name). After the settlor passes away, however, the trust will become irrevocable in that it cannot change. The “successor trustee,” or the person who was named to take over the trust’s management, shall distribute the property as described in the trust. Sometimes a trustee is a bank or individual who is paid for their services, but often it can be family and friends who will do it without a fee. This is one reason why trusts are less expensive than probate. The major advantage is that a revocable trust will avoid probate, and it is flexible in that the trust can be amended and changed.
An irrevocable trust is a trust that cannot be amended, changed, or revoked once it is established. Irrevocable trusts are normally formed by a person or family who wants to give away assets to another person, subject to certain terms that they do not want to be changed. Once the settlor puts the assets into the trust corpus, the settlor no longer owns or has access to those assets. There are many practical advantages to an irrevocable trust. There are tax advantages as well as creditor advantages. Creditors cannot gain access to the funds in the irrevocable trust since it is no longer in the settlor’s estate. However, the disadvantages may outweigh the advantages for many people. The trust cannot be amended or changed without going to court, and the settlor cannot get the gift back, ever.
Skillern Law Firm, PLLC can create both types of trust for your estate planning needs. Please contact us today! If you are interested in creating a will instead of a trust, please read our last post – The Difference Between a Will and a Trust.
