Oklahoma Estate Planning

Oklahoma Estate Planning is about taking care of your family. The tools we use for Oklahoma Estate Planning are Trusts, Wills, Durable Power of Attorney, Living Wills and many other things.

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

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

Two ways to change title to a car without Oklahoma probate

Image provided by Flickr user Keith Ellwood

Image provided by Flickr user Keith Ellwood

Would you like to know two ways you can change the title to a car owned by a person who died, without going through an Oklahoma probate?

If your answer is “yes”, you have found the right post. 🙂

I have written volumes on this blog about Oklahoma estate planning and a lesser amount about addressing the situation where someone died without doing estate planning.  I would like to provide a few cleanup tools that can be used to avoid probate even after someone didn’t do Oklahoma estate planning.

There are two options that may apply for changing the title to a car owned by someone who died with going through Oklahoma probate.

  1. Oklahoma No Administrator Affidavit.

My experience has been that most tag agents will transfer title to the vehicle following a person’s death when the No Administrator Affidavit is provided.  I wrote about this Affidavit on this blog post.  This document will generally allow the title to a car to be transferred if:

  • A properly completed No Administrator Affidavit is provided;
  • A certified copy of the death certificate is provided; and
  • The facts are such where the person asking for the change in title (ostensibly to themselves) has a clear right to receive the vehicle.
  1. Oklahoma Small Estate Affidavit.

The other option is the Oklahoma Tax Commission’s Small Estate Affidavit.  This document is used to transfer the ownership of a vehicle when:

  • The car is given to someone in a last will and testament,
  • The total value of the estate is not greater than $50,000.00, and
  • The person who is given the car in the last will and testament must sign the Oklahoma Small Estate Affidavit.

 

There are no guarantees of course; even when you think you have done everything correctly, the transfer of title still doesn’t happen.  If you run into this type of issue, give me a call or an email.

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

5 things you can do with an Oklahoma trust that you can’t do with a Will

From Jerry "Woody" on Flickr

From Jerry “Woody” on Flickr

One of the primary decisions a person has to make after they’ve decided they are going to do Oklahoma estate planning is whether they’re going to go the trust route or the last will and testament route.

Both routes allow a person to make decisions about how their estate will be distributed and how their family will be cared for. There are however some things that a person can do with a living trust that the same person cannot do with the last will and testament. I’m going to provide a list of some of these things that will hopefully be helpful is another tool for determining whether you want to go the trust route or the last will and testament route.


 Your family can avoid probate.

As I wrote about in this post,  a Will does not provide any means to avoid probate. If you pass away owning real property that is not jointly titled, your heirs will be going through the probate process at some point. With an Oklahoma trust, however, the trust exists and owns the real property the day it is transferred into the trust. Since the Trust is the owner of the real property, the death of an individual does not impact this.  No probate case is required to transfer title to the real property.  Your family saves time and money.

 Protect your privacy.

Privacy is one of the most significant underrated features of a living trust.  How is privacy part of the trust process? To understand this you must understand what happens if a person dies with no living trust. If a person passes away owning real property, investment accounts or mineral interest usually that person’s errors must file a probate proceeding to access the property. Oklahoma probate is a public process. You file a lawsuit in the County Court in which the deceased person lived and all of the documents filed in the lawsuit are publicly available. Not only are the documents publicly available, but with current technology, most of the documents can be accessed from any Internet-enabled computer. That means anyone can view the documents that are part of the probate case including the last will and testament which often contains personal details and other private family matters.

 Plan for a special needs child.

If you have children, grandchildren, or other dependents with special needs a Trust can be customized to meet these needs, by specifying and limiting access or control over the inherited property. A Will allows you to pass on your property to those heirs but a Will in itself does not allow you to exercise substantial control or provide protection for your heirs’ use of the property.

 Facilitate your care during disability.

Creating a revocable trust is an excellent way to ensure your property remains available to be used for your benefit if you become incapable of managing your own affairs. While continuity of management is also possible when a durable power of attorney is signed, third parties such as banks, brokers and transfer agents often have more difficulty in dealing with a power of attorney than with a trust. And, if the designated attorney-in-fact is unable to act, the power of attorney may not be usable.  If you become disabled and you have neither a revocable trust nor a power of attorney, an expensive, lengthy, and potentially embarrassing court proceeding is generally required to appoint a conservator or guardian before your property can be used to benefit either you or your family. And even after a guardian has been named, continued court supervision over the management of investments and disbursements is usually required. This can include annual bond fees, annual fees for providing a court-ordered accounting and additional legal and accounting fees.  A Will is not helpful in this area because it does not go into effect until you pass away.

 Allow your family to have immediate access to your assets at death.

Assets in a revocable trust at the grantor’s death are available to raise cash to pay income, estate and other taxes, administration expenses and debts immediately after death, without waiting for a probate decree or issuance of preliminary letters. If the trust is funded prior to death, the property in the trust remains in the trustee’s name before and after death and is immediately available for liquidation should the need arise.

Posted by Shawn Roberts in Blogposts, Oklahoma Probate

Why is Oklahoma estate planning important? It may help avoid a nuclear-class disaster within the family . . .

Why is Oklahoma estate planning important?

I have asked and answered that question hundreds of times both on this blog and in real life. My answer generally is because it protects your family when you are gone. One of the primary protections is disputes over how you would’ve wanted your property to be distributed in your family taking care of.

However, nothing makes the point better than seeing the result of the failure to plan. Let me give you a factual scenario that is rooted in real life events:

Husband and wife Mary in their late 30s. Both have children from previous relationships. They own their home, another rental property and some lake-front property in another part of the state. They live happily for 35 years until husband passes away. Neither husband nor wife has a will or a trust.

Wife, who is now a widow in her late 60s, is left to administer the estate. She is guided by what she believes her husband wanted. However, the husband’s children from his first relationship don’t see things the same way as the wife. With no Will or Trust to resolve the issues, the wife and the children are left to battle in probate court over the property. Although probate is usually a fairly routine, process, this probate is akin to a full-blown adversarial no holds barred lawsuit. Everyone involved believes they knew what husband wanted but nobody has clear enough proof to prevail quickly. Thousands of dollars in attorney fees and incalculable amounts of emotional damage occur throughout the process.

How could this have been avoided?

The Husband could have expressed his wishes on paper, in a last will and testament.

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

5 critical questions to answer when doing Oklahoma estate planning

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Have you ever wondered what the key questions are when thinking about estate planning for your family?

Generally, you decide what you want to with the things you have and how you want take care of your family after you pass on.  A few years ago I laid out some of the key questions to consider when doing estate planning in this post.

As you think about what you want to do with the things you own when you pass away and to best protect your family, here are several more important points to consider:

  • Who will you designate to act as your personal representative (the person or corporation who will see to the administration of your estate)?
  • If the creation of a trust appears possible, what person, persons, or corporation would you wish to act as trustee?
  • Are there any specific items of real or personal property you would wish to go to particular persons?
  • Who would you wish to take the responsibility for the care of your minor children, if any?
  • At what age or ages would you feel your children should receive substantial assets (not simply support for their health, education and welfare)?

After you think about these questions a bit, it might be worth checking out this post about Oklahoma Estate Planning Tools and this post about simple Oklahoma Estate Planning with a trust.

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning

What do you stand to gain from doing Oklahoma Estate Planning?

Oklahoma Estate Planning

Oklahoma Estate Planning

 

Have you ever wondered what tangible benefit do you get when you do Oklahoma estate planning?

Have you seen one to many pitches for estate planning that simply isn’t clear about what you get out of it?

If the answer is “yes” that is completely understandable.  We (us attorneys) tend to talk in broad, generalized legalese that provides little clue as to the benefits of of the services we are selling.  The goal of this post is to bring it down to a specific set of benefits you can expect if you take the time to do Oklahoma estate planning.  Read on to find out if I succeeded.

Guardian

You can nominate the person or people you desire to be guardian of your minor children.  Although a court is not required to the appoint the person you nominate as guardian, practically, unless the person is disqualified based on a criminal history, the court will nominate who you appoint in writing.  This means you choose who cares for and raises your children.

Protect Assets

You can structure your assets to benefit your children.  If you have minor children and you pass away, the children cannot own your assets directly.  However, through using a trust you can create a structure plan for the assets to be used for the benefit of your children both now and as they grow up.  If you choose to do so, you can eventually direct that your assets go outright and free of any type of trust when your children become adults.

Avoid Probate         

If you create a revocable trust and ensure that all of your large assets are owned by the trust, your family can avoid going through the probate process when you pass away.  The probate process is public and it may cause some delay in how soon your family has access to your assets.

Privacy 

With probate, you file a lawsuit in the County Court in which the deceased person lived and all of the documents filed in the lawsuit are publicly available. Not only are the documents publicly available, but with current technology most of the documents can be accessed from any Internet enabled computer. That means anyone can view the documents that are part of the probate case including the last will and testament which often contains personal details and other private family matters.  The revocable trust is a private document that is not required to be filed with any court or government.  Contrasted with the public probate process, using a revocable trust means that there will be no public access to your private family information and decisions.

Inventory of Assets

In the process of creating the revocable trust and related documents, we will create of an inventory of your assets, broken down by category.  This list reduces the burden on children and other family members to search and gather assets after death.  It also provides the opportunity to gather and index all your financial documents together; that way your family will know what accounts you have and where.

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning

When do I have to file a tax return for a gift I make?

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Gifting into a tax return

While it is not a subject that most people consider often, there are circumstances where a person can make a gift and be required to file a tax return covering the gift and potentially paying tax on the gift. Most people are aware that if you die owning a large enough estate you may have to pay the IRS tax. Many people are also aware that there is an exemption, this year in the amount of $5.3 million, under which you are not required to file a return or pay taxes to the IRS.  What a lot of people don’t think about is that the exemption can be whittled down based on gifts a person makes during their lifetime.

The Annual Exclusion

One way to avoid reducing the lifetime exemption is to take advantage of the annual exclusion.  Each person is entitled to make an unlimited number of gifts each year without any tax consequences provided that the gifts do not exceed the annual exclusion, which in 2014 is $14,000.00. Gifts above the $14,000 number require that the person making the gift file a gift tax return.

What the IRS say about gifts

As the IRS states:

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

 The key points

So, here is a summary of how it breaks down:

  • You can gift up to $14,000.00 to just about any person without  return required or tax being owed;
  • You can gift more than $14,000.00 each year to your spouse without a return required or tax being owed;
  • If you gift over $14,000.00 to a person this year, you will need to file a federal gift tax return, IRS Form 709.  The IRS Form 709 is due on or before April 15 of the year following the year that you have made taxable gifts.

 

Remember however that the rules on gift taxes like many other taxes are complicated. You should consult a tax professional before making any final decisions including the decision whether you need to file a return or not

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

Do you know the documents that are used to fund your Oklahoma Living Trust?

Have you funded your Oklahoma living trust?

 

You have probably heard that funding your living trust is really important.  I have written about the topic a couple of times on this blog including this post . . . Why do you need to fund your trust or lose it?

But what does “funding” really mean?? Simply put, funding means to legal transfer title to your property from yourself to your living trust.

If you do not fund your trust, you will probably lose most of value of it.  Below is diagram I created that identifies some of basic documents that are used in the trust funding process, with a little bit of explanation about each document.

Snip - docs

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning

What is the difference between the Personal Representative and Power of Attorney?

Can you explain the difference in duties required by the person who is the Personal Representative and the person who has the Power of Attorney?  

The primary difference between the Personal Representative (“PR”) and the person appointed under a power of attorney the attorney in fact (the “POA”) is that the PR is administering the estate after the person has passed away and the POA is caring for the person while they are incapacitated, but still living.  POA powers terminate upon death.

Personal Representative

  •  The PR is responsible for securing the Last Will and Testament of the decedent (if there is one) and distributing the decedent’s property according to the terms of the Will. There are usually bills to pay, a tax return to file, personal belongings to gather and other items that need to be addressed. In some cases, a probate proceeding may be necessary.  The PR would be responsible for getting this proceeding filed and completed (with the assistance of an attorney).

Attorney in Fact

  •  The POA receives power to act on behalf of the incapacitated person when the person is determined to be incapacitated under the terms of the power of attorney document.  Typically, this is when a determination is made by at least one medical professional that person can no longer care for themselves.
  • The POA is charged with taking care of the incapacitated person’s financial needs, health and welfare needs and other day-to-day to issues.  For example, a POA may pay bills, communicate with the doctors and make decisions about the incapacitated person is going to be cared for.
  •  Legally, it probably makes no difference whether it is the same person who is POA and PR.  However, practically, many times the other spouse is the person chosen to be both the POA and then the PR.  A person who has acted as the POA and then acts as the PR has a bit of an advantage because they already have experience with the decedent’s estate.

 Is it best that whoever is appointed to act following the death of both spouses be the same person?

Whether it is best to have the same person as POA and PR for both spouses if you are both either incapacitated or pass way simultaneously depends on several things.

  • Is the person you appoint to act as POA capable of caring for two incapacitated people at the same time?
  • Will or could that person also have duties to care for minor children as well as the new guardian? Again, if the same person is PR and there is a simultaneous death of both spouses, the person must be capable of administering both estates.  It can be done, it is simply a question of the competency of the person who is appointed.
  • Practically, where there is one person who both husband and wife are comfortable with, that person is often appointed successor PR of both estates.

 

Posted by Shawn Roberts in Oklahoma Estate Planning, Oklahoma Probate