Consider the cost/benefit analysis in determining whether to do an Oklahoma probate

To probate or not probate:  A cost/benefit analysis.

One of the primary questions that needs to be answered is whether a probate case is necessary? As we discussed, my goal is always to try to find a way to avoid doing a probate case if possible and still allow my client to access the assets.
Whether you do an Oklahoma probate is a cost/benefit analysis:  The cost of doing the probate (attorney fees, court costs, etc.. .) versus the benefit you hope to receive from the process (control over property, inheritance of property you would not otherwise get).  To be able to perform a reliable cost/benefit analysis, you need to understand why probate happens.  The answer is that while probate happens for many reasons, the primary reason is when there is property to inherit, but it can’t be inherited unless you do probate.
Although a lot of effort is put into avoiding Oklahoma probate, there are times when it is simply the only option to change the title to a piece of property or free up funds held in a bank account. The result of a probate proceeding is usually a Judge signing an order that transfers title to the property.

Why probate happens

Below are some scenarios in which you might need Oklahoma probate:
  • Real Property.

An unmarried person dies owning a house and title to the house is solely in the deceased person’s name; although other states provide a process where title to real property can be transferred by affidavit, I am not aware of any similar process in the state of Oklahoma. I believe that the only way to transfer title to real property, where the person who died is the sole owner of the real property, is to get an order from a judge transferring title, out of a probate case.
  • Life insurance.

A person dies leaving a life insurance policy with beneficiaries who are no longer living;
  • Not transferred to Trust.

A person who has a living trust dies, but has property that was never transferred to the trust such as real property or investment accounts;
  • Accounts with no beneficiary.

Typically, with retirement accounts, investment accounts and many times on bank accounts, there is the opportunity to name a beneficiary.  The beneficiary is the person or people who automatically receive the proceeds of the account (with proof of death of the owner and proof of beneficiary identify of course).  If a person does not name at least one beneficiary on an account such as this, that usually means the account is going to probate.  Without probate, the company holding the account will not release it (there are two small exceptions to the general rule: Oklahoma small estate affidavit and Oklahoma affidavit of delivery of personal property); and
  • Mineral Interests.

A person dies owning an Oklahoma mineral interest, but the interest is not held in a trust, and the title is solely in the name of the person who dies.  Many times, the operator of the Well will not continue to pay royalties without an order from the Oklahoma probate court specifying who the heirs are.
As you might expect, this means that sometimes the question of whether to do probate or not is difficult when the value of the assets in the estate are small because that value must be weighed against the cost of doing the probate.

Who would end up with the property in probate?

The other question is assuming the person who passed away did not have a last will and testament, who would end up owning the property?  His property would pass under Oklahoma law of intestate succession, which is found at Title 84 O.S. sec. 213.  Section 213 is a difficult statute to interpret, but generally, the order of inheritance would go as follows:  spouse, children, grandchildren, the parents of the decedent, children of parents in equal shares (your uncle’s siblings), grandparents of the decedent; children of the decedent’s grandparents.

Summary Probate

Sometimes the question of whether to do a probate or not is difficult when the value of the assets in the estate are small because that value must be weighed against the cost of doing the probate.
The Estate may qualify for the summary probate process. This is an abbreviated version of a full probate, with the emphasis being on speed and reducing some of the cost of the normal probate process. That being said, there are still cost. In my experience, this type of probate cost 3,000.00-$3500.00, plus out-of-pocket cost.  You can read more about the summary probate process here.
Posted by Shawn Roberts in Blogposts, Oklahoma Probate

Should your Oklahoma series LLC have one bank account or multiple bank accounts?

One goal in using an Oklahoma series limited liability company is to separate the liabilities of different assets within one limited liability company.  For example, the series LLC creates cells within it, and we call the cells “series.”

The magic of the series model

Each series has a name and is intended to be legally separate for all other series.  Series “A” for example, may own a rental home and Series “B” may also own a rental home.  The magic of the series model is if a water heater explodes on the Series “A” property, causing property damage and physical injury, only Series “A” is responsible for the damage, not any other Series.  Liabilities from one series don’t leak into any other series (pun intended).

The need to maintain series separately

One key to securing series LLC protection is to maintain and operate each Series separately.  That means you need to account for each series separately.  As to bank accounts, ideally, each series would have its own bank account, into which all revenue would be deposited and out of which account all expenses would be paid. However, for people with many properties (meaning many series), it is cumbersome and difficult to maintain a separate bank account for each series.  I have clients who own as many as 30 rental properties, and such clients have no interest in using 30 bank accounts.

Using one bank account

When not using separate bank accounts, you must still maintain the ability to track all revenue and expenses for each series separately.  That means the accounting software (e.g., like Quickbooks) can sort and then generate reports for each series’ revenue and expenses.  While not ideal (separate bank accounts would be ideal), depositing funds into one bank account with the ability to track and report funds for each series separately is an alternative.

Posted by Shawn Roberts in Blogposts

Should your automobiles be transferred to your Oklahoma revocable living trust?

It is a good question.

The short answer is “yes,“ automobiles should be transferred to a person’s Oklahoma revocable trust, to receive the full benefits of Oklahoma estate planning. Below is a bit longer explanation:

Purpose of Estate Planning with a Revocable Trust

One of the purposes of doing estate planning with a revocable living trust is allowing a person’s family to avoid Oklahoma probate when the person passes away. The trust helps a person avoid probate because assets that typically force a probate case are owned by the trust when a person passes away (more on that here).

 
For example, if an individual owns real property at the time of his death, titled solely in his name, with no mechanism to pass the title to the property (such as a transfer-on-death deed), the real property is going to have to be probated to change the title to the heirs.
Contrasting that scenario with the revocable trust scenario, upon a person’s death where his revocable trust owns real property, the trust can continue as the owner and eventually transfer title to the property to the beneficiaries. Since a change in title is accomplished by the trust, there is no need to do a probate case based on the real property.

Automobiles and Revocable Trust

Automobiles come up a little bit short in terms of forcing an estate to be probated. There are scenarios where one can change the title to an automobile following a person’s death, by taking the original title to a tag agent and demonstrating that they are the beneficiaries entitled to receive the automobile. This showing of beneficiary status is usually accomplished with a last will and testament. This method is inconsistent and sometimes varies from tag agent to tag agent, so I do not recommend this method to my clients.

Instead, I recommend that my clients transfer title to their automobiles to their revocable living trust by signing the back of the original title at the tag agent. It’s a relatively simple process and allows people to get the full benefit of the revocable living trust.

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate

How does Oklahoma law protect an employee’s social media accounts?

Social media has existed long enough to become common in our lives. 

Although it not the only way to use social media, public broadcasting and interaction is the norm for many people (as opposed to say protecting your Twitter account from public consumption).  It is quick and simple for one to broadcast any thought, feeling, question, rant or tangent into publicly-occupied cyberspace.  With the ubiquity of social media, Oklahoma employer and employees are likely to encounter “issues” from the use of social media.    Recognizing this reality, in 2014 the Oklahoma legislature enacted a law to address employer actions regarding personal social media accounts.  The statute is titled § 173.2. Prohibited actions regarding personal social media accounts–Exemptions–

Below are some of the actions that an Oklahoma employer is prohibited from taking related to employees’ social media accounts:

1. Require an employee or prospective employee to disclose a user name and password or other means of authentication for accessing a personal online social media account through an electronic communications device;
2. Require an employee or prospective employee to access the employee’s or prospective employee’s personal online social media account in the presence of the employer in a manner that enables the employer to observe the contents of such accounts if the account’s contents are not available to the general public, except pursuant to an investigation as provided in subsection D of this act;
3. Take retaliatory personnel action that materially and negatively affects the terms and conditions of employment against an employee solely for refusal to give the employer the user name or password to the employee’s personal online social media account; or
4. Refuse to hire a prospective employee solely as a result of the prospective employee’s refusal to give the employer the user name and password to the prospective employee’s personal online social media account.

You can find the Oklahoma Statute here. As always there are exceptions and qualifications, so if questions arise for you, please feel free to reach out to me.

 

Posted by Shawn Roberts in Blogposts, Oklahoma Employment Law

When can an Oklahoma employer deduct from an employee’s paycheck?

An employee’s paycheck is semi-sacred and rightfully so because it is the sole source of income for most people in Oklahoma.

The sacrosanct nature of the paycheck means that it cannot be withheld or deducted from except in certain circumstances.  Generally, an Oklahoma employer cannot deduct from or withhold out of an Oklahoma employee’s paycheck unless:

  • The deduction is permitted by state or federal law (taxes, unemployment compensation, etc. . .), or
  • The employer and employee have agreed in a written document that is signed by parties and only in these circumstances:
    • repay a loan or advance or to recover a payroll overpayment,
    • for the cost of merchandise purchased by the employee,
    • uniforms,
    • insurance premiums,
    • retirement or other investment plans,
    • for breakage or loss of merchandise, inventory shortage, or cash shortage so long as the employee was the sole party responsible for the cash shortage or item damaged or lost.

This material came out of the Oklahoma Administrative Code Section 380:30-1-7 and with the assistance of this website.

This is a general summary of allowable withholdings from paychecks of Oklahoma employees.  For assistance with a specific matter, please feel free to reach out to me.

Posted by Shawn Roberts in Blogposts, Oklahoma Employment Law

In Oklahoma is continued employment sufficient contract consideration?

If an Oklahoma employer presents a new contract to an employee and tells the employee that he or she must sign the contract to keep their job, is the contract enforceable?

Answer:  Probably Not.

I talked about what consideration is in a contract in this blog post.  The question for this post is whether an Oklahoma employer can enforce a non-compete covenant against a former employee when the only consideration provided to the employee for agreeing to the covenant is continued employment? In other words, “sign the agreement or you will lose your job.”

And I can definitively tell you that . . . I don’t know.  From my research, Oklahoma courts have not decided this issue. While this issue has been resolved in several other states, I am not aware of any Oklahoma court decision or statute which definitively resolves this issue (this federal court case discusses the question but does not provide an answer). However, there are several decisions which suggest that the court would not consider continued employment as sufficient consideration to support a non-compete covenant.

In one of Oklahoma’s older employment law cases, Hinson v. Cameron, the Oklahoma Supreme Court recognized that one of the five critical factors in determining whether a particular set of facts may imply a contract restricting or limiting an employer’s discretion to discharge an at-will employee, was  “evidence of ‘separate consideration,’ other than the employee’s continued services, to support the implied contract . . .”

My prediction

While it is difficult to predict what any court will decide, it seems there is a decent chance considering Oklahoma’s strong public policy opposition to non-compete covenants, that if faced with the question, an Oklahoma would find that continued employment, by itself, is not sufficient consideration.
The moral of this story? Employers: Do not rely on continued employment to support a contract, get something more.
Posted by Shawn Roberts in Blogposts

Parsing the many meanings of the phrase “Oklahoma non-compete”

The phrase “Oklahoma non-compete” is thrown around quite often, indeed it is a popular Google search term.  Yet “non-compete” is often used to describe 4-5 separate employee restrictions without specifying whether it is intended to include all of or even any of the component parts of the phrase.

It is important to distinguish the type of restrictions we are discussing. Many people lump all employment restrictions under the broad term non-compete.  Below I break down what I see as the component restrictions often included in the phrase “Oklahoma non-compete”.  Then, I provide examples of contract language corresponding with each component part.  My purpose is to help you better understand and be able to parse the word “non-compete” when you encounter it.

Pure Non-Compete

There is the pure non-compete which prevents an employee from working in the industry. The pure non-compete, as I discussed in this blog post, is typically unenforceable under Oklahoma law.

Employee shall not, within a radius of fifty (50) miles from anywhere that Employer maintains an office or facility from which Employer’s business is then-conducted, serve as an incorporator, director, officer, partner, employee, manager, consultant, agent, independent contractor, advisor, stockholder or otherwise, or directly or indirectly own an interest in, provide any financing for, or perform any services for himself herself, or on behalf of any person, business, corporation, partnership~ entity or organization that directly or indirectly engages in competition with. the Business engaged in by Employer.

Non-Solicitation – employees & contractors

There is the non-solicitation restriction which generally prohibits a person from taking direct or indirect action toward an employee or contractor of the former employer, intended to convince the employee to leave their current employment and join a new venture.   Oklahoma law authorizes this type of employment restriction in this statute.
The Employee agrees and covenants not to directly or indirectly solicit, hire, recruit, or attempt to hire or recruit, any employee or contractor of the Company or any employee who has been employed by the Company in the 24 months preceding the last day of Employee’s employment (“Covered Employee”), or induce the termination of employment of any employee of the Company.

Non-solicitation – customers

There is the non-solicitation of customers restriction which prohibits a person from taking direct or indirect action intended to convince a customer of the former employer to join the former employee in a new business.

The Employee agrees and covenants, for a period of 24 months, beginning on the last day of the Employee’s employment with the Company, not to directly or indirectly solicit, contact, or attempt to solicit or contact, using any other form of oral, written, or electronic communication, including, but not limited to, email, regular mail, express mail, telephone, fax, instant message, or social media, including but not limited to Facebook, LinkedIn, Instagram or Twitter, or any other social media platform, whether or not in existence at the time of entering into this agreement, or meet with the Company’s current, former, or prospective customers for purposes of offering or accepting goods or services similar to or competitive with those offered by the Company.

Non-disclosure

The non-disclosure restriction prohibits a person from using or disclosing a former employer’s confidential information.
Except when directed in writing to do otherwise by EMPLOYER, and except as required by law, court order, or subpoena, EMPLOYEE shall keep confidential and shall not divulge to any other person or entity, during the time of the Agreement any Confidential Information.  In any case where EMPLOYEE is compelled by law, court order, or subpoena to disclose any Confidential Information to a third party, EMPLOYEE shall advise EMPLOYER in advance of such requirement and shall permit EMPLOYER to object, contest, intervene, and/or obtain appropriate protection of such information prior to disclosure to any person unless commanded by law officials or advised against doing so by legal counsel representing EMPLOYEE.
Posted by Shawn Roberts in Blogposts, Oklahoma non-compete

Oklahoma Probate: Per Capita vs. Per Stirpes

Contrary to what it sounds like, stirpes is NOT something one visits the doctor to have treated.  

However, there are enough questions about the probate terms “per capita” and “per stirpes” to merit this blog post containing an explanation.  These terms describe different methods of sharing a deceased person’s estate when someone below the deceased person in the family tree has died before the decedent.  So, for example, Per Stirpes might be involved if a person, who had three children, passes away, leaving two living children and one child who died before the person who passed away. 

Per Stirpes 

Per Stirpes is a method of dividing an intestate estate where a class or group of distributees take the share which their deceased would have been entitled to, had he or she lived, taking thus by their right of representing such ancestor, and not as so many individuals.”** Essentially, Per Stirpes means that the relatives of the deceased person take the share their deceased parent would have taken.

Per Capita

Per Capita is a method of dividing an intestate estate by which an equal share is given to each of a number of persons, all of whom stand in equal degree to the decedent, without reference to their stocks or the right of representation.”**  Essentially, Per Capita means relatives in the same generation each receive the same share of the estate.

**Both definitions are from the Oklahoma Court of Civil Appeals case Matter of Estate of Kinnamon, 1992 OK CIV APP 92, 837 P.2d 927, 928.

Per Capita with Representation

Per Capita with Representation is the method that Oklahoma uses for distribution when a person passed away without leaving a last will and testament.  With this version of per capita distribution, the number of shares is determined by reference to the generation nearest the testator which has at least one surviving person.  The image below shows a per capita with representation distribution, with the number of shares being determined at the grandchild level, since that is the first level where there is a surviving person.


This table summarizes the different distribution methods including per capita with representation, the method use in Oklahoma probate.

Posted by Shawn Roberts in Oklahoma Estate Planning

Closing down an Oklahoma business with the IRS


When you are closing your Oklahoma business (corporation, limited liability company or other), the one party you want to be certain to square up with is the Internal Revenue Service. Fortunately, your friends at the IRS provide a checklist to guide you through the process of closing down your Oklahoma business.

The meat of the IRS Checklist is included below for your viewing convenience:

Posted by Shawn Roberts in Blogposts

The Oklahoma series LLC is not only for real estate but also for . . .

Bernard Spragg. NZ

You probably know that an Oklahoma series limited liability company provides excellent protection for owning multiple tracts of real properties (think rental homes).

But did you know that the Oklahoma series limited liability company may very well work with other non-real property assets and forms of doing business such as:

◊High value medical & business equipment.

For example, a doctor or dentist who owns medical imaging equipment valued six figures, where such equipment can (in remote scenarios) generate substantial liability. Think diagnostic imaging where the machine doesn’t deliver a reliable image . . .

◊Separate divisions of a company

A business owner might use an Oklahoma series LLC to segment a large business in separate departments or divisions. In this context, the terms “department” or “division” don’t have a particular legal meaning but rather describe business segments.

◊Separate product lines offered by a company

You can create a department (or a division – they mean similar things and are sometimes used interchangeably) without filing or drafting any legal agreement at all. However, some companies appreciate the formal separation that accompanies separate series. You can do the same thing for product lines, employee teams, projects, business locations and for other business components.”

◊Equity Compensation Program within a business

As a spinoff of the separate product lines topic about, this use might work in a business with multiple divisions. With each division segregated into a separate series, the LLC can give the key employees of each series some sort of equity interest tied to that series only rather than equity interests in the entity as a whole. This rewards employees in productive divisions and protects them from the potential downside of other divisions.


The Oklahoma law series LLC law allows real property and other assets to be owned by a series. This means that the possible series LLC uses listed above are but a few items. I touched on this topic briefly in this post on the practical uses of an Oklahoma series limited liability company.

By the way, in listing these items I am not endorsing them as the correct use for you or your property. Before you implement a series LLC, take the time to talk with an attorney to discuss the plusses and minuses based on your specific set of circumstances.

Posted by Shawn Roberts in Blogposts, Oklahoma limited liability company