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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!

The Problems of Successor Co-Trustees in a Trust

trusteesA creator or grantor of a normal revocable living trust usually serves as the trustee of a trust until their incapacity or death. After one of those events, a successor trustee takes over the trust to manage and administer the trust assets. Some trust creators have two children or have two people they trust enough to make them successor co-trustees of their trust, which puts two people in charge of the trust simultaneously. This can create problems if the co-trustee duties are not clearly spelled out.

One common problem associated with co-trustees is if the two trustees have to act jointly with each other, meaning they need to sign deeds, checks, and other financial documents together. This can slow down the process, especially if one or both trustees do not live near one another or are not communicating with each other. This can also slow down or cause problems when one trustee goes out of town for vacation, is incapacitated, etc.  A well written trust agreement should provide for replacement of a co-trustee who cannot serve for some reason, or state that the remaining co-trustee can act alone in this scenario.

Another common problem with co-trustees is what happens if there is a disagreement between them about the administration of the trust.  It is amazing how many problems and family strife can occur when the matriarch or patriarch of the family passes away. If co-trustees do not trust one anther, do not get along, or just do not agree with the decision of the other co-trustee, it may require court intervention to break the disagreement. For example, if one trustee wants to sell some property and distribute cash and a co-trustee wants to retain the property, there is a stalemate. If there are three co-trustees, the majority prevails, so an odd number of co-trustees are not such an issue in regards to disagreement.  However, if co-trustees are assigned equal authority and responsibility in the trust agreement, some third-party intervention will be needed, and that can get costly.

A common way to avoid common co-trustee problems is to name a trust administrating institution, like a bank or trust company, as the principal trustee, with children or other beneficiaries as co-trustees. That essentially places control of trust with an independent third party, who can be an mediator if the co-trustees cannot agree. Another way is to just name one sole trustee, like your oldest or most responsible child or friend.

One of the best ways to avoid this problem is to talk to a qualified estate planning attorney who can help solve problems like this. Consider getting your estate planning done by the attorney at the Skillern Law Firm. She can help make sure your estate plan is well written and will not problems in the future that can be easily avoided.

Call for a Free Consultation!

 

Penni Skillern, Esq.

Penni Skillern, Esq.

Know you need an estate plan, but don’t know what you need or where to start? Call our offices today for a FREE CONSULTATION with our Attorney, Penni Skillern, Esq.

Our attorney takes a comprehensive and integrated approach to estate planning. Your estate plan should complete your vision, goals, values, and needs for the future. To learn more about how estate planning can assist you in furthering your goals, contact our office in Tulsa, Oklahoma today at (918) 805-2511.

 

Exit Strategies for Small Businesses

business partnershipBecoming a small business owner is a big decision. People, for the most part, begin working on operating agreements and articles of incorporation, and then move on to working on the business to make it successful and profitable. Few, if any, ever work on their exit strategy for their business from its inception. Most only start to worry and think about their business exist strategy before its too late.

The reason why you should consider this early on is because you may need to plan and act differently depending on how you intend to proceed in the future. For example, if you desire the business to remain in the family after you retire or pass away, you will need to plan differently than if you intended to sell the business to the highest bidder to finance your retirement.

There are also different planning needed if the business is an “owner-dependent businesses.”  Those include professional practices like accountants and/or doctors, contractors, and others. These individuals are faced with another type of situation because their businesses may not be financially viable after they decide to stop working, so special planning is needed in these situations.

Another consideration is if the business is a partnership. If you are a partner in a small business,  you and your partner(s) must work together to devise a strategy that works for all the partners, and this often involves the execution of a buy-sell agreement.

Business planning is an important step in business formation, and seeking out legal help to make sure your are prepared to sell or pass on your business if the worst happens is very important. It is not as easy as simply stepping away when you decide to retire when you own a small business. Every situation is special and unique, and this is why personalized planning with the benefit of expert guidance is recommended.

To be sure that you are working within an informed framework that leads to the ideal exit, take action right now to set up an appointment to speak with an experienced and knowledgeable attorney who specializes in small business planning.

The Importance of Placing Your Timeshares Into A Trust

timeshare postMost, 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!

Avoiding the Terri Schaivo Case – The Oklahoma Advance Directive

???????????????????????????????????????????????One of the most prominent cases of Living Wills or Advance Directives was the Terri Schaivo case in the early 2000s. It is prominent for Living Wills, in that Terri Schaivo did not have one, and her situation caused a legal battle that lasted years and costed thousands of dollars for her family.

In this case, there was a emotional and nationally-known legal battle in Florida over whether a woman, Terri Schaivo, would be kept alive through treatment of artificial food and water, or would pass away from the disuse of the treatment.  If you remember, her husband, who was still legally married to her but estranged from her family, wanted her to pass away, but her family wanted her to remain alive through the artificial means.  Since Terri Schaivo did not have a Living Will that told her family and husband what her wishes were, her family and spouse went through ten years of litigation, one-hundred thousand ($100,000) of dollars in legal fees, and endless pain and frustration for everyone involved.  A Florida court ultimately decided Ms. Schaivo should be allowed to pass away.

Terri Schaivo and her family could have avoided the entire situation if she had a Living Will or Advance Directive in place. Our attorney highly recommends this document since it takes the heart-breaking and agonizing decision away from your family members, and allows you to get your end-of-life wishes. In Oklahoma, there are three situations that the state allows you  to make your end-of-life wishes known. See our previous post about those specific situations here. This document is inexpensive, easy to execute, and could save you and your family money, emotional stress, and it grants you all peace of mind.

If you already have a Living Will in place, see if you need to update it by reading a previous post here.

Call the office of The Skillern Law Firm, PLLC today to schedule a meeting to discuss this document as well as other your other estate planning needs today!

Beneficiary Designations

One of the most common questions I receive from clients is the question of beneficiary designations and how they relate to their Will or Trust.

One important thing that must be said is that beneficiary designations, including IRA’s, life insurance, annuities, bank accounts, etc., go outside probate and the trust. What is said in the Will does not effect what is said in a beneficiary designation.

For instance, if you want to leave your two children 50/50 of your estate, and you put that in your Will or Trust, but leave only one as a beneficiary or joint owner of an account, that one child will receive the entire amount of the account, and the other child has no legal right to the other half. Beneficiary designations  trump whatever your Will says about the other assets.

This can also play a role in Guardianship designations in a Will or Trust. Some people believe that if they designate a guardian for their child in their Will or Trust, and then leave that Guardian as a beneficiary on an account, that the guardian will be obligated to use that money for the child’s use once they become legal guardian. This is not true. If the named beneficiary is left as a beneficiary on an account, then it is legally their money, not the child’s. You can leave the child as the beneficiary, and once the legal guardian is approved by the Court, they can access the account for the child’s use.

That being said, it is great to have beneficiaries on accounts, because it makes a lot of sense and allows the executor or trustee to focus on fewer assets to disburse. However, always keep in mind the distinction between beneficiary in a Will or Trust, and a beneficiary on an account.

If you do not have a Will or Trust set up, please contact our office today to set up an appointment!

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.

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.

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.

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