The #1 Argument Against DIY Estate Planning

This post is Part One in a four-part series discussing a variety of ways an estate plan can be challenged. You can find links to the other posts in the series here.

Can I make a "Do It Yourself" estate plan?

The phrase "Do It Yourself" calls to mind weekend trips to Home Depot and saving money. And while some aspects of home improvement may be proper to do yourself (e.g., painting walls or building a patio), things get trickier when you try to act as a plumber, excavator, or electrician. Performing those tasks incorrectly — resulting in broken gas mains or electrical shocks — could have disastrous consequences.

(Forbes has published several famous do-it-yourself estate planning horror stories)

The same is true of "Do It Yourself" (or "DIY") estate planning. Although do-it-yourself estate planning services may seem like a bargain, just remember: you get what you pay for. In many cases, these services merely provide generic forms that do not take into account your financial situation, family relationships, tax consequences, and other important factors. More than all of those things, however, the number one argument against using a do-it-yourself estate planning service is this: the documents may not comply with the legal requirements in your state.

Formalities can make or break your estate plan.

Every type of estate planning document — a last will and testament, living trust, power of attorney, etc. — has certain statutory requirements or "formalities" that must be adhered to in order for the document to be valid. Consider Oklahoma: Title 84 of the Oklahoma Statutes prescribes requirements for wills; Title 60 covers trusts; Title 58 covers powers of attorney; and laws governing the disposition of certain property interests are covered in Titles 15, 16, 54, and elsewhere. And that's just starters: you will also need to comply with a host of complex federal laws for special needs trusts, healthcare planning, and other documents.

One way someone can challenge your estate plan is by claiming that it failed to comply with statutory formalities. Were the witnesses or notary related to you? Does the document omit certain required language or "magic words"? Is your signature not in the proper place on the document? Without these formalities, your estate plan may not be recognized by the court and your beneficiaries may not get what you want to leave them. Worse yet: the mistakes or problems associated with these documents are often not realized until it's too late (e.g., when you are admitting a will to probate, using a power of attorney, or filing estate taxes). At that point, your family could end up spending many times what you "saved" in legal fees by drafting your own estate planning documents.

(AARP lists DIY estate planning as the #1 "Costly Estate Planning Blunder")

Do-it-yourself estate planning services will not help you answer the questions mentioned above and will not ensure all the formalities have been satisfied. In fact, these services provide repeated disclaimers that they cannot and do not offer legal advice and that you are accepting the risk of failure by using their service. With something as important as your estate plan — and the financial well-being of your loved ones — is that really a risk you want to take?

Don't Be an Estate Planning Horror Story

An attorney is pivotal in the estate planning process, as he or she can develop effective, valid documents that accomplish your goals. Don't leave things to chance with a "Do It Yourself" estate plan. To ensure your estate plan is prepared and executed properly, contact the qualified Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

4 Ways to Challenge an Estate Plan

Estate planning is meant to provide certainty and security to your loved ones. So how would you feel if, after your death, your estate plan were ignored? How would you feel if a probate court tossed it out and decided to do things differently? (Trick question: You're dead, so you can't feel at all.) Unfortunately, these are very real possibilities if your estate plan is successfully contested.

How Can My Estate Plan Be Challenged?

Understanding how your estate plan can be contested is the first step to making sure it won't be contested. That is why we are dedicating our next few blog posts to discussing the different ways an estate plan can be challenged in Oklahoma. Links to each new article in this series will be posted below as they are published:

  1. Part One – The #1 Argument Against DIY Estate Planning (formal requirements)
  2. Part Two – coming soon
  3. Part Three – coming soon
  4. Part Four – coming soon

To help ensure your estate plan won't be challenged, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Legal Briefs: What is the difference between a Will and a Trust?

We are often asked about the differences between a Last Will and Testament and a Living Trust. Let's start by describing how Wills and Trusts are similar: Both allow you to designate who gets your "stuff" after your death. Both allow you to name representatives to manage your estate after your death. Both allow you to designate a guardian for any minor children. Both are revocable, meaning you can change or revoke them while you are alive. In these respects, the documents serve similar purposes.

Now for the main differences: A Will takes effect only after your death; a Trust takes effect right now. A Trust allows your successor trustees (i.e. representatives who manage your estate after your death) to manage assets for beneficiaries who are unable to responsibly manage their own assets; a Will gives you no such option. A Trust is a private document; because a Will is subject to probate, it will be filed in court (meaning it is freely accessible to the public) along with lists and descriptions of all your assets and beneficiaries. Perhaps most importantly, a Will must still go through probate to transfer title of your assets to your beneficiaries; but assets in a Trust are not subject to probate.

(Confused about probate? We explain the probate process in a nutshell.)

Mostly, people who ask us about the differences between Wills and Trusts want to know whether one document is better than another, to which we give the classic lawyer answer: It depends. Sometimes, a Will may be more advisable than a Trust; other times, a Trust more advisable than a Will. As a result, we highly recommend consulting with a qualified estate planning attorney before creating your estate plan.

To discuss which estate planning documents might be best for you, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

What is Estate Planning?

Most people have been told that they need an estate plan, but what exactly IS estate planning? What does it mean to have an estate plan, and why is it important to have one? Although estate planning is a very broad subject, it can be boiled down to this: An estate plan helps ensure that the proper people can take care of your SELF in the event of your incapacity and that the proper people get your STUFF in the event of your death. An estate plan includes several key aspects:

1. Formal documents

You have most likely heard of two very common estate-planning documents: a Last Will and Testament and a Living Trust. These documents say what happens to your STUFF after you die. Importantly, a Will is still subject to probate after your death; however, a properly funded Trust can avoid probate.

(Read our blog post explaining Probate In a Nutshell.)

Other estate-planning documents deal with taking care of your SELF. For instance, a Durable Power of Attorney allows you to appoint someone to make financial and/or medical decisions for you in the event you are unable to do so. An Advance Directive for Health Care (also known as a Living Will) allows you to state your wishes regarding end-of-life care, e.g., whether you want a feeding tube or other life-sustaining treatment.

There are myriad other estate-planning documents that may be appropriate in your particular situation. Estate planning is not a one-size-fits-all proposition, and you should consult with a qualified estate-planning attorney to determine what documents are best for you.

2. Beneficiary designations

Bank accounts, insurance policies, 401(k) plans, IRAs, pension plans, and many other financial assets allow you name someone to receive the asset after you die. This person is called a beneficiary because they benefit from the asset after your death. You may not think about it, but these designations are part of your estate plan.

(There are a number of advantages to using insurance in your estate plan.)

One of the great things about beneficiary designations is that, in most circumstances, they allow assets to transfer outside the probate process. As a result, we recommend reviewing your beneficiary designations regularly to make sure (1) you have a beneficiary named and (2) you still want the named individual to receive that particular asset after your death.

3. Informal planning

The most overlooked aspect of estate planning is possibly also the most important: informal planning. When you die, do your kids know where your assets are located? Do they know how to contact your financial or business advisors? Do they know your Internet passwords? Do they know where your safe deposit box key is located? Do they know which subscriptions and services need to be canceled? Do they even know what estate-planning documents you have?

(Has your family had an estate-planning "Fire Drill"?)

In addition to the formal documents prepared by an attorney, we recommend preparing a "Letter of Instruction" to your family and/or representatives detailing the more nuanced aspects of managing your estate. Approach the letter as though you could stand over your representative's shoulder and tell them everything that needs to be done in order to close your estate. Creating this document can greatly reduce the stress placed on your loved ones by having to manage your estate after your death.

How should I start my estate plan?

Although this post has merely covered the highlights, you can surely tell that there are many sides to estate planning. It is not all formal documents filled with legalese. Whatever your estate plan includes, remember: A properly designed estate plan should take care of your STUFF and your SELF.

Whether you want to create an estate plan for the first time, or you already have an estate plan and want to have it reviewed, contact the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation appointment. As a bonus, click below to download our FREE Estate Planning Guide.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Use RMDs to Fund a 529 Account

Earlier this month, we wrote about using required minimum distributions (RMDs) to make charitable gifts. But in what other ways can you use your RMDs? One option: fund a 529 account for a child or grandchild.

A 529 account (or 529 plan) is a tax-advantaged savings plan designed to encourage saving for future college costs. The different types and mechanics of 529 plans are best saved for another blog post. For now, the important thing to know is that there are three main benefits to using your RMDs to fund a 529 plan:

1. Earnings grow tax-free.

Usually, you have to pay income taxes on RMDs. If you then invest the RMD, you will likely pay a second round of taxes on those earnings down the road. On the other hand, if you contribute your RMD to a grandchild's 529 account, you will still pay income tax on the RMD, but the money you invest in the 529 account will grow tax-deferred. And if the money is later used for qualified education expenses, the entire amount is available tax-free.

(Three 529 Withdrawal Penalties to Avoid)

Additionally, the amount you contribute to a 529 account is not included in your estate for estate tax purposes — even though you retain control over the funds.

2. Helps financial aid qualification.

Federal financial aid (FAFSA) calculations consider the total resources of a prospective student when determining need. The Expected Family Contribution (EFC) to a child's college education takes into account 20% of a student's assets, but just 5.64% of a parent's assets and 0% of a grandparent's assets.

(How Assets Hurt College Aid Eligibility on FAFSA)

Giving your RMD to a grandchild as a check or other type of gift will likely increase the amount he or she is expected to pay for college. But by setting up a 529 account in your own name with a grandchild as a beneficiary, you keep your contributions classified as your assets and help your grandchild qualify for federal aid.

3. Offers flexibility.

529 accounts offer flexibility in the event circumstances change after you open the account. Say, for instance, one of your grandchildren gets a full scholarship to college. You can change the beneficiary of the account to another family member and still retain the tax-advantaged status of the plan. And if you decide to go back to school during retirement, you can even name yourself as the beneficiary of your 529 account.

Put RMDs to work for loved ones.

If you are fortunate enough to not need all of your RMDs, consider funding a 529 account to help your children or grandchildren on the way to a brighter future. For more information on 529 accounts and their role in your estate plan, talk to a qualified financial advisor and contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Asset Protection in a Nutshell

With increases in the federal estate tax exemption ($5,600,000 for single individuals or $11,200,000 for married couples in 2018) and repeal of the Oklahoma estate tax, estate-tax planning is becoming a non-issue for all but the largest estates in Oklahoma. Instead, a greater concern for most people is protecting their assets from lawsuit judgments.

Why is Asset Protection necessary?

One car wreck, for example, can have a devastating effect on your estate. What if someone is injured in the wreck and sues you? Will your insurance cover it? Your car insurance may include $300,000 in liability insurance; however, if the accident seriously injures or kills someone, a lawsuit judgment could be $1 million dollars or more. In that case, you could be personally responsible for damages above the $300,000 in liability insurance.

In Oklahoma, certain assets are typically protected from creditors: your personal residence, your retirement plans, life insurance, your car (up to a certain value), etc. But general savings, investments, real estate, and other assets are fair game for creditors. One lawsuit can eliminate your life savings. Asset protection is the process of minimizing your liability exposure to avoid losing everything you have worked so hard to gain.

What does Asset Protection look like?

Asset protection comes in many forms, but the most popular is the creation of a Limited Liability Company (LLC) or a Limited Partnership (LP). Once created, this entity would hold some of your assets and "manage" them for you. That way, if a judgment is rendered against you personally, the assets owned by the LLC or LP would not be subject to execution; similarly, if a judgment is rendered against the business entity, your personal assets outside the entity would not be subject to execution. In addition to liability protection, these business entities can offer income tax benefits -- benefits that may be even greater if the GOP tax bill goes into effect.

How can I protect my assets?

For more information about asset protection and the tax benefits of an LLC or LP, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

5 Items to Put on Your Year-End Estate Planning Checklist

As 2017 comes to a close, now is a good time to review your estate plan. Although there are many aspects of your plan to consider, we recommend performing at least the following tasks:

1. Review Beneficiaries

Are the beneficiaries listed in your Living Trust or your Will still the individuals you want to inherit your assets? Have you divorced? Have you remarried? Have any beneficiaries proven themselves financially irresponsible? If one of your children is newly married, do you want to ensure the spouse does not get your assets? Have you had additional children or grandchildren?

Additionally, take time to review beneficiary designations on insurance policies, your 401(k), your IRA, or your bank accounts and other financial assets. These simple actions can go a long way to ensure that your assets go to the right people and, potentially, keep your heirs from fighting over your estate.

2. Inventory Assets

If you have purchased or inherited new assets in 2017—a house, a car, mineral rights, artwork—or sold others, your estate plan should reflect those changes. If not accounted for in your estate planning documents, those assets may be subject to probate (or cause other unintended consequences) after your death.

3. Review Your Power of Attorney

Your power of attorney grants someone (your "attorney-in-fact") the ability to act for you in financial and/or medical situations. If you no longer trust the person you have named as your attorney-in-fact, or if the person you named has moved away, you should consider updating your documents.

Additionally, some financial institutions and medical providers are wary of powers of attorney that are more than a few years old—even though the documents are still legally valid. To avoid any problems with using your documents, we recommend updating your powers of attorney at least every few years.

4. Create a Digital Estate Plan

Most people focus on the tangible side of estate planning, but have you set up an estate plan for your digital assets? What happens to your email accounts, social media accounts, and online bank and investment accounts after you die? What happens to photos or other important documents you have stored online?

To make things easier on you, we put together a five-step guide for creating your digital estate plan. So take a few minutes over the holidays to set your digital assets in order.

5. Have a "Fire Drill"

We recommend scheduling a family meeting to hold a "fire drill": Explain your estate planning documents to your family; show them where your important information is located; and walk them through exactly what needs to be done after your death. It's not always easy or happy to discuss your estate plan, but having a "fire drill" like this gives your family members a chance to raise any questions they have about your estate. And if they know exactly what to do, it can also dramatically reduce their stress after your passing.

There are many factors that can influence your estate plan, but reviewing the five items listed above can help ensure that your estate plan does what it is supposed to do. To discuss your estate plan with qualified estate-planning attorneys, contact the Oklahoma City law firm of Postic & Bates for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Reduce Taxes by Making a Charitable Distribution

If you have not already taken your required minimum distribution (RMD) for 2017, you may want to consider making a qualified charitable distribution (QCD) through your IRA. Of course, before doing so, you want to know the answer to one important question: Would you benefit from making a QCD? If you fall into one of the following categories, the answer may be "yes":

1. You have a high adjusted gross income.

Some expenses are deductible only to the extent they exceed a certain percentage of adjusted gross income (AGI). For instance, miscellaneous itemized deductions must exceed 2% of AGI to be deductible; medical expenses and casualty losses must exceed 10%. QCDs can reduce AGI by taking the place of otherwise taxable RMDs, meaning it may be possible to lower your threshold for deducting certain expenses.

2. You pay income tax on Social Security.

As explained above, QCDs can reduce AGI. For retirees, a lower AGI can possibly result in lower taxes on any Social Security benefits you received in 2017.

3. You want to reduce your estate tax burden.

Your IRA is included in your estate after you die, meaning it could be subject to the estate tax. If you are looking to reduce the value of your estate to fall under the estate tax threshold, QCDs are one method to achieve that reduction. Because you can give up to $100,000 per year through QCDs, you can reduce the balance of an IRA (and thus the value of your estate) with charitable gifts over several years.

4. You can't deduct all your charitable contributions.

In any given year, the most you can claim for a charitable-gift deduction is 50% of AGI (although deductions in excess of that amount can be carried over for up to five years). However, gifts made directly from IRAs (e.g., a QCD) are not included as part of this 50% limitation. This means QCDs can reduce your 2017 tax burden over and above ordinary charitable contributions.

There are many factors that go into determining whether you should make a QCD from your IRA. With all tax issues, we recommend consulting with a qualified attorney and/or tax professional. To discuss your estate plan or charitable giving options, contact the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Will You Lose Your Long-Term Care Deduction?

We recently wrote about several ways the House GOP tax package could impact your estate plan. However, one area we did not cover is an important proposal that could impact millions of Americans: eliminating the medical expense deduction.

What Is the Deduction?

The House plan proposes eliminating the deduction (codified in Title 26, Section 213 of the U.S. Code), which generally allows taxpayers to deduct medical expenses (including long-term care insurance premiums) for income tax purposes if the expenses are greater than 10% of adjusted gross income (AGI). But there is a cap on the amount you can deduct for long-term care premiums. The IRS recently announced that, for 2018, taxpayers age 40 and under can deduct a maximum of $420; taxpayers 70 and over can deduct a maximum of $5,200.

(You can see full tax rate tables and other IRS inflation-related adjustments for 2018 here.)

Of course, this deduction only applies to qualified long-term care insurance policies, so be sure to discuss the matter with your accountant or tax professional before claiming the deduction.

Who Uses the Deduction?

According to the IRS, approximately 8.8 million households -- or about 6% of tax filers -- claimed a medical expense deduction in 2015. The AARP estimates that 74% of those filers are 50 or older, and roughly half have annual incomes of $50,000 or less.

(Click here for the full AARP report on Medicare beneficiaries who spend at least 10% of their income on out-of-pocket medical expenses.)

Spouses, adult children, and some other individuals serving as caregivers can also claim the deduction under certain circumstances. By and large, though, the deduction is used by middle-aged or elderly taxpayers with limited assets and high medical expenses.

How Does this Change Affect Me?

Eliminating the medical expense deduction means more people will likely have to spend down their assets more quickly, forcing them to apply for Medicaid. Additionally, if you pay for your parents' care and qualify to claim the deduction, your tax bill may be affected, as you may no longer be able to claim the deduction for certain expenses. Click here for more information on how eliminating the medical deduction might affect you.

The tax plan proposes many changes that may affect your financial future. To discuss your estate plan or long-term care planning, contact the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Legal Briefs: What is "stepped-up basis"?

"Stepped-up basis" refers to a tax rule that minimizes or eliminates capital gains tax liability. Say, for example, your Uncle Buck owns Apple stock. He purchased 100 shares of the stock when it was worth $1/share. In tax lingo, his cost to buy the stock is known as his "basis." Apple stock is now worth about $170/share. If Uncle Buck sold his shares today, he would have to pay a capital gains tax on the $169/share appreciation in the value of his stock. Similarly, if Uncle Buck gifted you the stocks today, you would "inherit" his basis, meaning you would have to pay capital gains tax on the $169/share appreciation if you sold the stock tomorrow.

But let's say Uncle Buck decided to hold onto his shares. He placed them in a trust that names you as the sole beneficiary. If Uncle Buck died today, leaving you the stocks, the Internal Revenue Code provides that the value of the stock today (Uncle Buck's date of death) is your new basis in the stock. In other words, your basis is "stepped-up" from $1/share to $170/share. So if you turned around and sold the Apple stock for $170/share, you would pay no capital gains tax. 

The principle of "stepped-up basis" applies to other capital assets, most commonly real estate. Even though the law is more nuanced than the above example illustrates, the idea of "stepped-up basis" is an important one to consider when discussing potential estate planning options. To learn more about "stepped-up basis" or other estate planning terms, contact the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]


3 Ways Tax Reform Could Impact Your Estate Plan

Yesterday, House Republicans unveiled their tax reform legislation, called the Tax Cuts and Jobs Act. (You can read the full text of the bill here.) Although the tax plan proposes numerous changes to our current system, we wanted to review a few that could impact your estate plan.

1. Repealing the Estate Tax

We have written previously about the history of the estate tax, but pretty soon the estate tax itself could be history. Under the GOP proposal, the individual estate tax exemption would nearly double (to about $11 million) immediately -- and the federal tax would be repealed entirely in 2024. What does this mean for you? Very likely, nothing. Only 0.2% of estates owe an estate tax. However, for those who do (or may) owe an estate tax, elimination of this 40% tax could mean a difference of thousands or even millions of dollars.

2. Maintaining "Stepped-Up" Basis

Republicans have long wanted to do away with the estate tax. However, some commentators believed that, as a compromise, the House bill would also propose eliminating (or limiting) a tax rule known as "stepped-up basis," which can allow you to avoid paying capital gains on certain inherited assets. Although the Republican tax plan maintains the stepped-up basis rule, it is an important item to watch in the coming months, as the rule can always be excluded in the Senate version of the bill. If the final tax package does eliminate the stepped-up basis, you should revisit your estate plan to determine how best to handle appreciated capital assets.

3. Extending "Pass-Through" Taxation

Some businesses -- sole proprietorships, partnerships, or limited liability companies -- pay taxes differently than others. For these "pass-through" entities, the owners pay taxes on all business profits on their individual tax returns (i.e., business income "passes-through" the business to the owner's tax returns). This is in contrast to a corporation (or a business that elects corporate-style taxation), which is taxed directly on all business profits.

Under the GOP tax plan, pass-through companies would pay a tax rate of only 25% on a large chunk of their business income (significantly lower than the 39.6% some pay now). The bill does include provisions to prevent service firms (e.g., law firms, accounting firms) from being able to pay the lower 25% rate; however, unless stronger (and likely more complicated) rules are proposed, many of those firms will likely still be able to qualify for the lower tax rate. Still, if you own a business, the tax plan's treatment of pass-through entities will be a major item of debate that you will want to watch.

The Bottom Line

With all the uncertainty surrounding tax reform, now is a good time to review your estate plan to see whether any of the potential changes to the tax system could affect you or your family. As always, we recommend discussing these matters with a qualified estate planning attorney or tax professional. To discuss creating or reviewing your estate plan, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

IRS Announces Estate and Gift Tax Limits

The IRS recently (officially) announced increases in the estate and gift tax exemption for 2018. The combined exemption will be $5.6 million per individual, up from $5.49 million in 2017. In other words, if you die in 2018, you can leave $5.6 million (or $11.2 million for married couples*) to heirs without paying a federal estate or gift tax.**

The annual gift exclusion amount also has increased to $15,000 in 2018—up from $14,000 in 2017. This means you can now give away $15,000 (and a husband and wife can each gift $15,000) to as many individuals as you want each year without paying any gift tax. For example, starting in 2018, a couple could make $15,000 gifts to each of their four grandchildren, for a total of $120,000. Gifts beyond the annual exclusion amount count towards (i.e., reduce) the $5.6 million combined estate/gift tax exemption.

Of course, tax reform being discussed at the Capitol could change all of this. President Trump’s tax reform framework, announced last month, calls for the elimination of the federal estate tax. However, the estate tax repeal may end up being sacrificed as the Republican-controlled Congress focuses on lowering corporate and individual income taxes.

To learn how to minimize or avoid estate taxes or to take other actions to protect your hard-earned assets, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]


*The $11.2 million exemption per couple is not automatic. An unlimited marital deduction allows you to leave all or part of your assets to your surviving spouse without paying federal estate tax. However, to use your spouse’s unused exemption — a.k.a. "portability" — you have to elect to do so on the estate tax return of the first spouse to die, even when no tax is due. Otherwise, you could be hit with a surprise federal estate tax bill.

**Although Oklahoma has eliminated its separate estate tax, 18 states and the District of Columbia still have a separate inheritance tax or inheritance tax. This number will drop to 17 in 2018, as Delaware and New Jersey each repealed their estate taxes effective January 1, 2018 (though New Jersey still has an inheritance tax).

How Do I Keep My Kids From Fighting Over My Estate?

As a parent, you undoubtedly want your children to have successful and happy lives. And while money is not the only measure of success or happiness, you may want to give your kids some assistance when it comes to finances. Many people utilize their estate plans to leave inheritances to their children to help them with financial and sentimental aspects of their lives.

If you have multiple children, you likely want to leave each child his or her fair share of your estate. But this task is not always as easy as it sounds. Each child may be attached to different assets, and their lives may present different hardships and successes that make certain assets more desirable for them. If you don't take these factors into account, your kids could end up fighting over your estate even if you have a well-designed estate plan - especially if probate becomes necessary. Luckily, there are certain steps you can take to help mitigate these disputes or avoid them entirely:

1. Address specific property

Though you may already address larger assets such as homes and vehicles in your will or living trust, have you taken time to specify where your smaller personal items should go? Rather than leaving those items up for grabs (for example, "half to my son and half to my daughter"), you can create a separate list to designate who should receive each item of personal property. Which child should have your grand piano? Who should get your paintings? Your set of china? Specifying who you want to receive these items can help you ensure that your estate is distributed fairly and, hopefully, avoid arguments.

2. Update your plan

Once you create your plan and feel that it distributes your property fairly, you may believe that is the end of it. However, life happens and things change. What you may have deemed fair and equitable at one point may not seem fair later. If you have additional children or grandchildren, if a beneficiary passes away, or if certain relatives are more or less financially successful, your current distribution plan could require significant adjustments. We recommend reviewing your estate planning regularly to determine if you should make any changes. At the very least, update your list designating who will receive your personal property.

3. Speak with your family

For some personal items, you may wish to get input from your family. Perhaps your daughter is very connected to your dining table but does not want your jewelry. Or maybe your son would love your book collection but not your vintage car. By having an open discussion on how you should distribute your estate, you can better understand who has an interest in your assets and decide what designations would be the most fair. It can also help avoid later disputes by making all your beneficiaries aware of what you have planned, so no one will be surprised in the future.

Creating your plan

When it comes to estate planning, there are many ways to ensure that your estate is distributed in a way that makes you and your family happy. And while you cannot always control how your children will react after you are gone, you can do your best to avoid arguments by executing a well-crafted estate plan.

To discuss your estate plan, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Legal Briefs: Will my IRA affect my estate plan?

Most of the time, the answer is simple: it won't. Even if you set up a trust, you will continue to individually own your IRA and list individual beneficiaries for it. You cannot make your trust the owner of your IRA, and naming your trust the beneficiary of your IRA accounts can be very complicated. However, your IRA can be an important part of your estate plan, so it is important to understand what options are available and what you can do to provide the maximum benefit to you and your loved ones and other heirs.

If you do want your trust to be the beneficiary of an IRA, it is important that the trust qualify for the “look-through” rule. This rule says that the IRS must be able to determine whether there is a designated beneficiary and who that beneficiary is. The four requirements that the trust must satisfy are as follows:

  1. Validity. The trust must be valid under state law — or it would be but for the fact that there is no corpus (principal);
  2. Irrevocability. The trust must be irrevocable or will, by its terms, become irrevocable upon the death of the account owner;
  3. Identification. The beneficiaries of the trust who are beneficiaries with respect to the trust’s interest in the account owner’s benefit must be “identifiable from the trust instrument”; and
  4. Documentation. The plan administrator must be provided with certain documentation: (i) a copy of the trust and amendments (if any), or (ii) a list of all trust beneficiaries, including other details about contingent and remaindermen beneficiaries, as well as giving the plan administrator a copy of the trust instrument upon demand.

If the trust satisfies these requirements, the trust qualifies, and Required Minimum Distributions (“RMDs”) will be determined based on the life expectancy of the trust beneficiary. If there are multiple beneficiaries, RMDs are determined by the life expectancy of the oldest beneficiary. If the trust doesn’t qualify, then the “no designated beneficiary” rule will apply, and RMDs will not be computed according to any beneficiary’s life expectancy — thus, RMDs will be accelerated over a short time period.

There are some good reasons to leave IRA money to a trust after your death. Typically, it is to benefit someone who can’t be trusted to manage their money: a minor child, a spendthrift, or the spouse of a second or later marriage. In the last instance, a trust can be set up for those who want to leave enough money to care for their spouse and then direct any remaining funds to go to their children after the spouse passes.

Rules for inherited IRAs are different for spouses and non-spouse beneficiaries. As a spouse who inherits an IRA, you can either "rollover" the funds to your own IRA or wait to take RMDs until your deceased spouse would have been 70½. If you have other income, you may want to wait to take RMDs so your tax bill is lower.

The IRS has stricter rules for non-spouse beneficiaries of an IRA. These beneficiaries have three options:

  1. Cash in the IRA. This means emptying the entire inherited IRA and paying taxes on that sum at one time. If you really need the money that may be your best bet. However, be prepared for a huge tax bill!
  2. Take only RMDs. The IRS requires non-spouse beneficiaries of IRAs owned by people over age 70½ to start taking RMDs within a year of inheriting the IRA. Those RMDs are based on the beneficiaries’ life expectancy, not the life expectancy of the now-deceased owner of the account. Therefore, the younger you are the lower your RMDs.
  3. Cash in and empty the account over five years. You don’t have to stick to the RMDs or take all the money from the IRA at once. You can wait and take any sum you want, but once you start taking distributions beyond your RMDs you have to finish emptying the account within five years.

Option 2, often called a “stretch IRA,” takes advantage of the fact that younger beneficiaries have smaller RMD requirements. Individuals who know that their spouses have enough money to live on can extend the benefits from their IRAs by naming children, grandchildren, and even great-grandchildren as IRA beneficiaries. Those younger relatives then take RMDs that are small enough to trigger minimal taxes. The rest of the inherited account (the part remaining in the IRA) can continue to grow tax-deferred and increase in value. However, not all IRAs can be stretched, so consult your IRA provider and/or financial advisor if you are considering this strategy.

If you are not comfortable bypassing your spouse as your IRA beneficiary, you can instruct him or her to stretch it for you. With this strategy, you name your spouse as your IRA beneficiary. He or she then rolls your IRA into an inherited IRA in his or her name and starts taking RMDs at age 70½. Your spouse then names a younger relative as the beneficiary of that IRA. When your spouse dies, the young beneficiary starts taking the small RMDs described above. However, due to pending legislation, this last option may soon no longer be available.

To determine how IRAs fit into your estate plan, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates today for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Probate in a Nutshell

Most people hear the word "probate" and start to clam up. Probate is often associated with all the worst parts of the legal system: a slow, lengthy process where nobody wins except the lawyers. The hate of probate is so widespread that Charles Dickens even dedicated most of the plot of Bleak House to describing an endless and fruitless probate.

But is it really that bad?

No, of course not, and probate serves some very important purposes. Probate is the court process by which your assets are transferred to your heirs after your death. If you own real estate, such as a home, the deed to that property may be in your name alone. Legally, then, only you can sign a deed to transfer title to that property. But who has the authority to convey that property after you die? Although you may assume your spouse or children do, they have no legal authority unless and until the court gives it to them. That is where probate comes in.

So what does probate actually look like? There are four main parts: (1) admitting a Will and appointing an executor, (2) addressing creditors, (3) marshaling assets, and (4) distributing the estate.

Part 1: Admitting Will/Appointing Executor

If you have a Last Will and Testament, that instrument will be filed with the court along with a legal document, known as a Petition, requesting that the instrument be accepted as your Last Will and Testament. After filing, notice must be given to your Heirs-at-Law — the individuals who would be entitled to receive your estate if you died without a Will. These individuals are determined by state statute but generally include your spouse and children or grandchildren.

Once the Will is accepted as your Last Will and Testament, the Court appoints an executor, also known as a Personal Representative. Most Wills name a person or entity to serve as Personal Representative; if no one is named or available, the Court can choose someone. If an individual dies without a Last Will and Testament, then the Petition simply asks the Court to appoint someone (usually the Petitioner) as the Personal Representative.

Part 2: Addressing Creditors

After the Personal Representative is appointed, they publish a Notice to Creditors. This notice serves one of the other purposes of probate — protection of creditors, that is, people you owe money at the time of your death. Creditors with proper claims against your estate must be paid before any distribution can be made to your heirs, and must be notified either by mail or, at the very least, by publication. The notice gives creditors a certain period of time (usually 60 days) in which to file claims against the estate; if they don't file, then their claims are forever barred. That is another beneficial reason to file probate: it can resolve certain debts you owed at death. 

Not all assets, however, are subject to creditors' claims. Many states have homestead laws that exempt certain assets from creditors if there is a surviving spouse or minor child. In Oklahoma, the homestead generally includes the marital home and can also include an allowance to the surviving spouse or minor children to support them during the estate administration period.

Part 3: Marshaling Assets

During the creditors' period, the Personal Representative must also figure out what "stuff" is in the estate. Bank accounts, real property, minerals, vehicles, jewelry, stocks — all of it must be reported to the Court in a document called a General Inventory and Appraisement. Once filed, heirs can see what they may be entitled to as beneficiaries of the Estate; it provides a level of transparency to hold the Personal Representative accountable.

After the creditors' period ends and all debts, claims, and other issues are addressed, the Personal Representative has to file a document called a Final Account. The Final Account shows the Court and the heirs at law what the Personal Representative has done during the probate: income received, expenditures made, creditors paid, assets sold, etc. Where the Inventory shows the assets and value in the estate at the beginning of probate, the Final Account shows the assets and value remaining in the estate at the end of probate.

Part 4: Distributing the Estate

Once all creditors' claims have been addressed, taxes paid (always important!), and other necessary legal documents filed, the estate is ready for distribution. If no objections are filed, the Court will authorize the Personal Representative to distribute the estate, and the case is closed. Simple, right?

As you might guess, this process is both time-consuming and expensive. The shortest probate takes approximately six weeks, but it can take as long as a year or more. Contested cases can take even longer. Court costs and publication expenses cost $350 or more, and attorney's fees can be anywhere from $4,000 to much, much more. Additionally, the Personal Representative is entitled to a fee based on the value of the entire estate. What's more, probate is a public process. Probate records at the courthouse are available to anyone who wishes to see them, including what you owned, how much it was worth, and who it went to.

Taken together, the probate process is pretty straightforward, but it can be very complicated to those who have not navigated its murky waters. Dealing with family conflicts, aggressive creditors, and complex assets can make probate even more difficult. But with an experienced probate attorney by your side, the process can be almost painless.

To discuss whether probate is necessary for a recently deceased loved one, or how you can potentially avoid probate through estate planning, contact the experienced Oklahoma City probate attorneys at Postic & Bates today for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

De-mystifying Advance Directives

An advance directive for health care is a legal document that allows you to express your wishes for end-of-life care in the event you are unable to communicate those wishes to your doctor. In Oklahoma, an advance directive covers three topics: (1) the living will, (2) the health care proxy, and (3) anatomical gifts.

The Living Will

The main portion of an advance directive is the “living will,” by which you state your preference for the use of certain treatments under certain conditions. This is the most technical part of the document, so it is important to understand what these terms mean.

Conditions Covered

Many people are concerned about signing a document that allows someone else to “pull the plug” on them. But an advance directive only addresses very specific circumstances, namely if you have a terminal condition, an “end-stage condition,” or are “persistently unconscious.”

A terminal condition is an incurable, irreversible condition that, even with the administration of life-sustaining treatment (e.g., respirator or dialysis, pacemaker, surgery, blood transfusion) will, in the opinion of two attending physicians, result in death within six months.

An “end-stage condition” means a condition caused by injury, disease, or illness that results in severe and permanent deterioration indicated by incompetency and complete physical dependency, and that treatment of which would be medically ineffective.

“Persistently unconscious” can mean one of several things. Generally, it means an irreversible condition “in which thought and awareness of self and environment are absent.” A persistent vegetative state (PVS) is due to a partial death of the brain from which a person cannot recover. This is different from a coma because sometimes people wake up from comas. People with PVS might also reflexively move limbs, follow objects with their eyes, and make sounds. A diagnosis of PVS takes time to make, and a person in a PVS state can survive for years on feeding tubes and other life support.

On the other hand, a persistently unconscious condition can mean “irreversible cessation of all functions of the entire brain, including the brain stem.” This diagnosis is determined by a flat electroencephalogram (EEG) and certain medical signs.

Treatments Covered

1. Life-sustaining Treatment

“Life-sustaining” treatments (commonly known generally as “life support”) are medical procedures that support your body to keep you alive when your body is not able to function on its own. The most common treatments are cardiopulmonary resuscitation (CPR) and intubation.

CPR is a group of procedures used when your heart stops (cardiac arrest) or your breathing stops (respiratory arrest). For cardiac arrest, treatment may involve chest compressions, electrical stimulation, or use of medication to support or restore the heart’s ability to function. For respiratory arrest, treatment may be insertion of a tube through the nose or mouth into the trachea to artificially support or restore your breathing function.

Intubation is the placement of a tube through your nose or mouth and into your windpipe (trachea) to help you breathe. This type of treatment may prevent cardiac or respiratory arrest.

2. Artificially Administered Nutrition and Hydration

When a person is no longer able to take nutrition (food) and hydration (fluid) by mouth, he can receive them artificially through intravenous methods. When someone with a life-limiting or other serious illness is no longer able to eat or drink, it usually means that the body is beginning to stop functioning as a result of the illness.

3. Other Treatments

In Oklahoma and many other states, advance directives also give you the option to give more specific instructions regarding end-of-life care. For instance, you can describe other conditions in which you would want life-sustaining treatment or artificially administered nutrition and hydration provided, withheld, or withdrawn. Oklahoma also allows you to state that during a course of pregnancy, you specifically authorize that life-sustaining treatment, including CPR, and artificially administered hydration and nutrition be withheld.

Critically, the withdrawal of these treatments only becomes an issue if their continuation or withdrawal would merely delay the time of your death or maintain you in a state of permanent unconsciousness. Oklahoma law also provides that even if life-sustaining treatment or artificially administered nutrition and hydration are withheld or withdrawn, you will be provided with medication or other treatment to alleviate pain.

Appointment of Health Care Proxy

In addition to a living will, the advance directive also gives you the option to appoint a “health care proxy” to make decisions for you in the event you are unable to do so. This portion of the document essentially operates as a medical power of attorney; however, it limits that power to the extent you have provided instructions for your care in your living will. This begs the question: if you have appointed a health care proxy in an advance directive, should you still get a medical power of attorney? The answer: yes. Some health care providers prefer to see a power of attorney that grants specific powers to your attorney-in-fact and that includes certain HIPAA and other important language. Most people appoint the same person as their health care proxy and their medical power of attorney, so this rarely becomes an issue. But when it comes to your medical care, do you really want to leave it all to chance?

Anatomical Gifts

An advance directive in Oklahoma also allows you to state your wishes about organ donation. One of the options that gives many people pause is where you can donate your “entire body.” This is not the equivalent of saying, “I donate my entire body to science.” If you want to donate your body to science, you need to complete a lot more paperwork. The “entire body” language simply means that you are willing to donate whatever will be useful, be it a lung, a kidney, or anything else. After the donation is made, your body can be disposed of however you wish. To that end, you should be sure to let your loved ones know whether you wish to be buried or cremated.

Alternatives to an Advance Directive

An advance directive is a good document to have because it covers a variety difficult decisions that your family would otherwise be forced to make. However, some people also prefer to have a Do Not Resuscitate (DNR) order or a Do Not Intubate (DNI) order.

A Do Not Resuscitate (DNR) order is a written order from a doctor that keeps a healthcare team from initiating CPR. (Importantly, however, some facilities do not honor DNR orders during surgery, so you should discuss the issue with your surgeon and anesthesiologist before surgery.) A doctor can write and sign a DNR at your request or at the request of your family or health care proxy. If the DNR order is not signed by a doctor, it will not be honored. DNR orders can be canceled at any time by letting the doctor who signed the DNR know that you have changed your decision.

Like a DNR order, a Do Not Intubate (DNI) order is a written order from a doctor that prohibits intubation. Importantly, refusing intubation does not mean that you necessary refuse other techniques of resuscitation, such as mechanical ventilation. If you wish to execute a DNR or DNI order, speak with your doctor about what specific procedures you do or do not want.

Potential Problems

Some healthcare professionals may choose to ignore what is written in your living will if they believe that what is written is against your best interest. In that case, your attending physician is required, as soon as practicable, to take all reasonable steps to arrange for your care by another physician. In some cases, your physician may simply misunderstand the law, medical ethics, or his professional responsibilities. Therefore, it is important that you speak with your doctors about your living will so you can know whether they will honor your request.

End-of-life matters require a great deal of consideration and planning, and it is best to begin planning early. Contact Postic & Bates today for a free, no-obligation consultation regarding an advance directive for health care or other estate planning or legal matters.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Where Should We Take You?

Several years ago, partner Martin Postic, Jr. faced an issue common in elder care: when your family requires assisted-living or skilled-nursing care, where should you take them? Read about his experience below.

My father was a fiercely independent person. At age 84, he was fully mentally competent and able to care for himself and his home. But one day while he outside trimming his hedges, he fell and broke a hip. Hip surgery went smoothly, and we thought he was set to come home in a few more days. Then, his care manager told us that he would need to spend thirty days in a skilled nursing center to rehabilitate. So I had to ask my dad a difficult question: "Where should we take you?"

The choice wasn't made any easier by the fact that I had only three days to find an acceptable skilled nursing center. At minimum, I needed to find a place (a) that had the expertise to take care of my father; (b) that my father would feel comfortable living in; and (c) that I would feel comfortable entrusting with my father's care. In spite of the short notice, I found a facilitate that—on its face—looked great, so we moved my father in and thought everything would be fine. After all, what could go wrong?

Apparently, a lot. During his stay, he discovered that one of his nurses was "skimming" pills. One day, she gave him his evening medicine—but when he counted the pills, one was missing. When he asked about it, the nurse said, "Oh, you already took that one." My father was a sharp guy; he knew that the nurse had not given him the correct number of pills. We reported the nurse, and it turned out that for months she had been using a similar scheme on other patients. She was eventually fired.

Another day, my father returned to his room from a meal to find a naked, elderly woman in his bed. She thought it was her room. There were many problems like this throughout my father's stay, and it was clear that the management of the center lacked competence. More than any single event, however, what upset my father the most was having to deal with the smell of the place, the noises, and the vacant stares from other residents there. Although that's often just the way things are in a long-term care facility, it doesn't make it any easier on the patient. My father couldn't get out of that place fast enough.

Based on this experience, I always recommend that my clients keep a "short list" of places they wouldn’t mind living, if the need ever arises. Often, "Plan B" is to live with a child. ("Plan A," of course, is to stay in your own home.) But what if those options are not available? What if, after a period of living with a child, that arrangement is no longer convenient or bearable? What do you do? If you have researched retirement centers, nursing homes, assisted living centers, and memory-care facilities in your area (or in the area where you intend to live), you will be better prepared should the need arise to make such a move.

Talk to friends, neighbors, and other acquaintances; ask any nurses, physical therapists, or other health care professionals that deal with elderly patients; get as much advice, input, and experience as you can. Often, people can share stories like mine to let you know potential problems you may encounter at a facility that may make it undesirable to you. Even after you have prepared your "short list," I suggest that you re-evaluate it regularly. Management of these facilities changes, the physical facility often deteriorates over time, and new options become available. Think of it like buying a house: where do you want to live?

By making this list, you can avoid the anxiety of you and/or your family needing to make last-minute decisions regarding your care, whether short-term or long-term. Don’t leave such an important part of your estate planning up in the air. Discuss the issue with your family and add it to your letter of instruction. You’ll be very glad you did.

To discuss legal options regarding estate planning and elder care, contact Postic & Bates today and schedule a free, no-obligation consultation appointment.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Legal Briefs: Do handwritten notes make a will?

The handwritten Will is a commonly misunderstood area of estate planning. Under Oklahoma Statutes title 84, section 54, a holographic Will (as it is known in Oklahoma) can be a valid testamentary instrument if it is: (1) entirely written by the Testator, (2) dated, and (3) signed by the Testator. Sounds simple enough, right?

But Oklahoma courts are very strict in interpreting holographic Wills. For instance, what if part of the document is typed, while the rest is handwritten? What if some of it was written on one date, then some more was written on another? Where does the signature have to be located on the document? Where does the date have to be located? How should you describe your assets and beneficiaries? Do the pages need to be stapled or clipped together?

Importantly, there must also be evidence that the Testator intended this particular document as a Will. Is the language of the document sufficient? Could anybody argue that the document is simply a set of notes rather than a testamentary instrument? 

As you can see, drafting a valid Will is not quite as simple as it seems. Even more difficult can be drafting an effective Will that disposes of your assets exactly how you want. Keep in mind that once you are gone, you cannot tell the court exactly what you want to happen to your “stuff.” If you phrase something ambiguously, the court may not interpret it the way you intended. What if you want to amend the Will? What if one of the pages gets lost or out of order? What if your handwriting is difficult to read?

So you want to know whether handwritten notes make a Will? The answer: it depends. And when it comes to the disposal of your assets — your life’s work — do you really want to take the chance?

There are many things to consider when making a Last Will and Testament, which is why we always recommend consulting an estate planning attorney to discuss and prepare your estate plan. You can contact Postic & Bates today for a free, no-obligation consultation regarding your estate planning needs.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

Has Your Family Had a Fire Drill?

Remember fire drills when you were in school? An alarm goes off. There’s a certain sense of panic, but you walk — in an orderly fashion — to the exit and meet your classmates outside. The teacher takes attendance, the coordinator makes sure everyone is accounted for, and then you go back inside. Most students probably think fire drills are a waste time, and surely teachers would prefer to not have their lessons interrupted while their students go outside. So why do we have fire drills? Obviously, to make sure we know what to do if a real fire occurs. Because if there is a real fire, there can be dire consequences if you don’t have a plan.

For similar reasons, we encourage our clients to conduct a “fire drill” regarding their estate plan. In other words, pretend you have died and walk your family through the process of what they must do to set your affairs in order. Surviving spouses or children are often consumed by grief and/or shock after the passing of a loved one. It can be hard enough getting up every morning, much less handling the administration of an estate. By organizing your estate plan and going through regular “fire drills,” you can make things that much easier on your family after you are gone.

So what kind of topics should you cover during your “fire drill”? We suggest you consider discussing at least the following:

  1. Location of a written calling tree (a list of family to be called at death).
  2. Location of a list of advisors (e.g., lawyer, accountant) and why they should be called.
  3. Location of your written funeral/burial plans.
  4. Location of your trust, will, durable power of attorney, advance directive, and other legal documents.
  5. Location of your safe deposit box key or safe combination.
  6. Location of your password vault or other information on passwords and passcodes (including information for any online accounts or other digital assets).
  7. Directions on how you wish to see personal items disposed of at death.
  8. Who you are placing in charge at your death or incapacity and why.
  9. Your thoughts/concerns on the use of artificial life support, including artificially administered nutrition and hydration.
  10. A “short list” of places you would suggest for your living or care if you are unable to continue living at home.
  11. A list of accounts, subscriptions, or other services that should be paid or discontinued.

In addition to doing a “live” fire drill in-person, we also recommend creating a letter of instruction that outlines, step-by-step, what must be done upon your death. Once prepared, review it regularly with your nominated personal representative or successor trustee. This will then allow them to ask questions and allow you to refine your instructions to make them as clear as possible. You will find that a good letter of instruction is not something you can write in a few minutes.

For years when I was young, my father would carry a large, gray, metal strongbox and place it on the kitchen table. It was his “fire drill” box containing important documents and other information. My mother and I would sit at the table with him while he explained each of the files in the box. As I got older, my mother avoided these drills, but I attended them dutifully. When my father died, I placed that same strongbox on my office table and laughed: I knew exactly what to do because we had gone over it so many times. There was no stress, no strain, no anxiety.

Most people want their family to be at peace after their death. A “fire drill,” as well as a well-written letter of instruction, can assist with that process and make things easier on your family during what will undoubtedly be a trying time in their lives. Addressing these matters is never easy or fun, but it is wise to set your affairs in order today. Tomorrow could be too late.

To learn how you can begin the estate planning process, contact the Oklahoma City law firm of Postic & Bates today for a free, no-obligation consultation.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]

5 Tips to Create Your Digital Estate Plan

You have spent years cultivating memories with your Facebook profile, curating an audience with your Twitter account, and building an incredibly efficient agricultural operation on FarmVille. But what happens to those accounts after your death? We recently wrote about the importance of protecting your digital assets, but what exactly does is involved in creating a digital estate plan?

Tip #1: Make an inventory of digital assets and how to access them. 

This is a bit of a catch-22. We usually recommend that our clients keep a list of any accounts, usernames, and passwords on a piece of paper so their representatives will know how to access those accounts after your death. However, if all of that information is in one place, anyone who steals the list could hack into your accounts. So if you prefer to play it safe, consider writing the accounts and usernames on one piece of paper, and passwords and other security information on another — keeping one in a safe at home, and the other in your safety deposit box.

However you decide to store this information, creating an inventory of digital assets will make it much easier for your loved ones to access your Internet accounts after your death. Your digital inventory could include the following:

  • Facebook, Twitter, Instagram, LinkedIn, and other social media accounts
  • Wordpress, Tumblr, Blogger, and other blogs and websites you own
  • Bank, credit card, brokerage, retirement plan, credit, loan, insurance, and other accounts you access and/or pay online
  • E-mail accounts
  • Online retail accounts
  • Apps from stores or marketplaces like eBay, Amazon, and iTunes
  • Photo- or video-sharing sites like Flickr or YouTube
  • Video subscription sites like Netflix, Huhu, or Amazon Prime
  • Music sites like Spotify or Pandora
  • PayPal or other online payment accounts
  • Utility bills you pay online
  • Frequent flier accounts 

Additionally, if you use a “digital wallet” or Passport product on your cell phone — like the Starbucks app that lets you pay for orders from your phone — this might also be worth adding to the list. Update this inventory regularly or, ideally, whenever you add a new account or change account information.

Tip #2: Store the information in a safe place.

As illustrated above, security should always be a concern when it comes to storing this sensitive information. Outside of physical options like a safety deposit box, some websites like Legacy Locker or SecureSafe securely encrypt and store your account information and passwords in one place. I personally use LastPass, which has a free (but still secure) option as well as a paid subscription that costs only $1/month. Most of these sites allow you to designate a beneficiary who can get access to the account after your death, making it easy to pass on your account information to your heirs or representatives.

Tip #3: Name a “digital executor.” 

This can be the same person you name as executor of your estate in your Will, or you can name someone else to carry out your digital wishes. If you do choose to designate a separate person to manage your digital assets, you may also consider naming him or her as your digital executor in your Will, detailing what assets they can control and where they can find information to access those accounts.

Some websites allow you to automate the transfer of your digital assets after your death. One example is Google's Inactive Account Manager. Here's how it works: You give Google instructions for what to do with your accounts after your death (i.e., either share them with someone(s) or delete them). If you are inactive for a certain period of time (you can decide how long), Google will send you a text or email alert. If you do not respond, Google will notify the friends or family members whose contact information you provided. Once they have confirmed that you are deceased, Google will follow your instructions and either share those accounts with the designated individual(s) or delete the accounts as you have provided.

Similarly, Facebook has given users the option of identifying a "legacy contact" that can access your account after your death. But that access is limited to the ability to pin a post on your Timeline, such as a funeral announcement. Your legacy contact will not be able to log in as you or read your private messages, but they will have the ability to accept or deny new friend requests, update your profile and cover photos, and archive your posts and photos.

Even though these "legacy" processes are automated, it is important to let your executor know that have set up those options, so he or she does not have to figure out what to do with those accounts.

Tip #4: Write instructions for what should happen to your digital assets. 

Your Will probably lays out the distribution of your online financial accounts, but what do you want to happen to your Facebook, Twitter, or Instagram profiles? Consider writing out a "to-do" list to let you digital executor know, among other things, whether they should delete your accounts. It should answer questions such as:

  • Should your digital executor deactivate your Facebook account when you die, or do you want him or her to set it up as a memorial page?
  • Do you want your executor to send prints of your Flickr photos to your family members?
  • Do you want to give someone control of any unused iTunes credits you have?
  • Do you want any personal videos uploaded to YouTube for friends and family to see (or taken off of YouTube so they don't see them)?

As you create this to-do list, be sure to review the terms of service on your social media accounts. Often times, those agreements take precedent over state laws. For example, Facebook allows your "legacy contact" to either “memorialize” your profile so family and friends can still see it and post on your wall, or Facebook can deactivate the profile at the request of your family.

Twitter, on the other hand, only gives the option of deactivating your account. To do this, your digital executor would need to fax Twitter copies of your death certificate and government-issued ID (e.g., driver’s license), along with a signed and notarized statement of your death, and either a link to an online obituary or a copy of the obituary from a local paper.

Tip #5: Talk to a Qualified Estate Planning Attorney.

As with all things legal, we recommend you work with a qualified estate planning attorney to ensure that your wishes are carried out properly. In today's world, it is common for people to have most of their lives online: personal information, pictures, articles, memories. To avoid the uncertainty of what happens to your online accounts after your death, you should consider what you want to happen to all that information. Contact Postic & Bates today for a free, no-obligation consultation to discuss how you can incorporate digital assets into your estate plan.

[As with all our posts, the contents of this article do not constitute legal advice and are subject to our site-wide disclaimer.]