No Kids? Why You Still Need an Estate Plan

This post is Part One in a five-part series discussing estate planning for Millennials. You can find links to the other posts in the series here.

Many young couples think that, if they don't have kids, they don't need an estate plan. After all, if you die, everything is going to your spouse anyway, right? Not always.

What happens if we don't have an estate plan?

If you are married with no kids, and you do not have an estate plan or prenuptial agreement providing otherwise, the law in Oklahoma says that everything you have goes to your spouse. However, as we have discussed before, your spouse must still go through probate before he or she can actually get your assets. This is the case even if you have a Last Will and Testament providing that your spouse gets everything.

Of course, your spouse only needs to go through probate to receive assets that are subject to probate. This topic can be confusing, so we recommend you read our explanation of probate assets vs. non-probate assets here. (More on this below.) At best, probate means that your spouse will have to spend (in many cases) at least a year in court, paying attorney's fees, while unable to enjoy the assets tied up in probate. Most people prefer to avoid that result, if possible.

So what kind of estate plan should we have?

Remember that there are two sides of estate planning: What happens to your STUFF when you die and who takes care of your SELF when you become incapacitated. With a spouse, your primary goal with your STUFF should be to avoid probate. There are a number of ways to do this, some better than others. At the very least, we recommend ensuring that your spouse is listed as a joint owner or pay-on-death beneficiary of your assets. 

Your primary goal with your SELF should be to ensure your spouse has full authority to make decisions for you in the event you cannot make decisions for yourself and that you have an alternate to make those decisions for you if you spouse is unable. These designations usually come in the form of a Durable Power of Attorney (giving someone the ability to act for you in financial and/or medical situations), a Nomination of Guardian, and an Advance Directive for Health Care, which spell our your wishes in the event you are unable to take care of yourself.

In light of these considerations, an estate plan for married couples commonly consists of a Living Trust, Last Will and Testament, Durable Powers of Attorney (for financial and health care purposes), a Nomination of Guardian, and an Advance Directive, or some combination of those documents. Many couples prefer the benefits of a Living Trust, since it avoids probate for assets titled in the name of the trust, appoints someone to control your assets in the event you can no longer do so, and can be easily amended if you ever have children or wish to change the distribution of your estate.

(See our explanation about the main differences between a Will and a Trust here.)

Properly crafted by a qualified estate planning attorney, these documents can ensure that your spouse can receive your STUFF without having to go through probate after your death and that your spouse (or an alternate representative) can take care of your SELF when you are no longer able to do so.

What else should we do?

Regardless of your estate plan, we recommend you write a letter of instruction to your family or representatives, telling them everything they need to know to manage your estate. What subscriptions or services need to be canceled? What bills need to be paid? Where do you keep the key to your safe deposit box? Where do you keep your assets? What family or friends should they notify of your death? Giving these instructions can make it much easier for your representatives to properly manage your estate after your death, particularly if your spouse does not know much about your family finances, business dealings, etc.

In addition to writing a letter, you should have a family meeting or "fire drill" to let your loved ones know the basic contents of your estate plan and other wishes regarding your estate and your medical care. Consider if your spouse were faced with the decision of whether to take you off of life support. Your Advance Directive might say you want them to pull the plug, but how would your spouse feel? By talking about your decisions and desires with your spouse, you can help them better follow your wishes in the event of your death or incapacity.

If you own a business, you should also create a succession plan to provide for the management of your business affairs after your death. Is the business your family's primary source of income? If so, do you want to provide for your spouse to continue operating the business? Or do you have a business partner who will continue running it? Whatever the case, it is important to plan for an orderly transition or disposition of your business so your spouse does not lose the value that you created during your lifetime.

Lastly — and this is especially important for Millennials — we highly recommend you create a digital estate plan detailing how you want your online assets disposed of and the information your representatives will need to access those accounts. Depending on the laws in your state, you may need to appoint a separate "digital executor" in your estate plan for this purpose.

Discuss Your Estate Plan With an Attorney

Every person’s situation is unique, and your estate plan should be crafted to address your goals, family circumstances, and assets. To discuss what estate plan may work best for you, call the experienced Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation appointment.

Additionally, download our FREE Estate Planning Guide, packed with 70 pages of information about estate planning, probate, and much, much more, by clicking the button below.

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

Single and Ready to Mingle With Estate Planning

This post is Part One in a five-part series discussing estate planning for Millennials. You can find links to the other posts in the series here.

I'm single with no kids. Do I need an estate plan?

This scenario describes a lot of Millennials, and the short answer to the question is yes. Having an estate plan is a good idea no matter your family situation. Remember that there are two sides of estate planning: What happens to your STUFF when you die and who takes care of your SELF when you become incapacitated. Both aspects of estate planning matter, whether you are married with a large family or single with no kids.

What will happen to my STUFF?

Every state has a framework (called "intestacy laws") essentially providing an estate plan "by default." In Oklahoma, for instance, if you are unmarried and have no kids, the law says that, unless you have an estate plan directing otherwise, your estate will go to your parents or, if they are deceased, to your siblings in equal shares. End of story.

That might sound great, but intestacy laws are rigid and do not take into account other desires you may have for your property. Are there any specific personal items you want to leave to friends or loved ones? Do you want to leave any of your estate to charity? Do you want to ensure a particular relative does not manage your estate after your death? Do you want to provide for a niece or nephew's education? What do you want to happen to your online accounts? Without an estate plan, you cannot guarantee that your wishes will be followed.

So what kind of estate plan should you have to control who gets your stuff? At the very least, we recommend having a Will designating who will receive your assets after your death and who will be appointed personal representative to manage your estate. But remember that a Will may still need to go through probate before your beneficiaries can receive that you left them. Or you can save your family the time and expense of probate and create a Living Trust that gives you a much greater degree of flexibility and privacy.

(See our explanation about the main differences between a Will and a Trust here.)

There are other ways to leave your estate to friends or loved ones, but wills and trusts are generally the most common. The important thing is that you have a legally enforceabledocument stating who will receive your assets.

What will happen to my SELF?

Aside from you STUFF, you should also have a plan for who can take care of your SELF. Who do you want making your medical decisions if you can't? Who do you want to be able to manage your assets? What are your desires regarding end-of-life care such as life support? 

Maybe you want your parents to be in charge if you become incapacitated. That's great. But without a document giving your parents the legal authority to make those decisions, medical providers and financial institutions may not allow them to access information about your medical care or financial accounts.

That is why we recommend you have a Durable Power of Attorney. Generally speaking, a power of attorney gives someone (your "attorney-in-fact") the ability to act for you in financial and/or medical situations. 

What else should I do?

Regardless of the type of estate plan you have, we recommend you write a letter of instruction to your representatives or family, telling them everything they need to know to manage your estate. What subscriptions or services need to be canceled? What bills need to be paid? Where do you keep the key to your safe deposit box? Where do you keep your assets? What family or friends should they notify of your death? Giving these instructions can make it much easier for your representatives to properly manage your estate after your death.

In addition to writing a letter, you should have a family meeting or "fire drill" to let your loved ones know the basic contents of your estate plan and your other wishes regarding your estate and your medical care. How is anyone supposed to know about your estate plan unless you tell them about it? And even if they know about your estate plan, how is anyone supposed to find your documents unless you tell them where they are?

Lastly — and this is especially important for Millennials — we highly recommend you create a digital estate plan detailing how you want your online accounts disposed of and the information your representatives will need to access those accounts. Depending on the laws in your state, you may need to appoint a separate "digital executor" in your estate plan for this purpose.

Discuss Your Estate Plan With an Attorney

Every person’s situation is unique, and your estate plan should be crafted to address your goals, family circumstances, and assets. To discuss what estate plan may work best for you, call the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation appointment.

Additionally, download our FREE Estate Planning Guide, packed with 70 pages of information about estate planning, probate, and much, much more, by clicking the button below.

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

Estate Planning for Millennials

With hitting the work force and starting families (not to mention destroying entire industries), Millennials have a lot on their minds. Estate planning may not even be on your radar. Besides, isn't estate planning just for older, richer folks? Do you even need an estate plan when you're young and poor?

Do Millennials Need an Estate Plan?

The short answer: estate planning is for everyone, including Millennials. But what should a Millennial's estate plan look like? What documents should you have? What things do you need to consider before deciding on an estate plan?

Family is one of the most important factors to consider when developing an estate plan. So we are using our next few blog posts to discuss estate planning considerations for Millennials in a variety of family situations. Links to each new article in this series will be posted below as they are published:

  1. Part One – Single and Ready to Mingle With Estate Planning [Single and No Kids]
  2. Part Two – No Kids? Why You Still Need an Estate Plan [Married and No Kids]
  3. Part Three – [Single and Minor Children]
  4. Part Four – [Married and Minor Children]
  5. Part Five – [Unmarried but Together]

Get a Free Consultation

Estate planning is not a one-size-fits-all proposition. That is why we recommend consulting with a qualified estate planning attorney to determine type of plan best suits your needs. To discuss what estate planning options may be best for you, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation.

Additionally, download our FREE Estate Planning Guide, packed with 70 pages of information about estate planning, probate, and much, much more.

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

Cryptocurrency: The New Frontier of Estate Planning

What if millions, or even billions, of dollars in wealth suddenly disappeared? What if some of your assets are lost after your death and your heirs are unable to recover them? With the rising popularity and value of cryptocurrency, these scenarios are now a very real possibility.

What Is Cryptocurrency?

A cryptocurrency is a digital asset designed to work as a virtual medium of exchange. The "crypto" part of the name comes from the fact that the currency uses cryptography to secure transactions. Think of it like wiring money or trading stocks (all ones and zeros), except that cryptocurrency is not regulated by a central bank or securities commission.

This lack of regulation poses a big problem for investors. Cryptocurrency appeals to many investors because it is intensely private. In other words, no one knows if you own Bitcoins, for example, unless you tell them. So if you die unexpectedly and leave no records of your cryptocurrency wealth, how will your heirs be able to access those assets?

Cryptocurrency and Estate Planning

As with all digital assets, any cryptocurrency you own should be incorporated into your estate plan. We have created a guide to digital estate planning, and the principles in that guide generally hold true for cryptocurrency. However, unlike many other digital assets, the secrecy of cryptocurrency means that creating a digital estate plan is the ONLY way you can ensure the safe transfer of your cryptocurrency after death.

Unlike banks accounts or stock portfolios, cryptocurrencies do not send statements to the IRS. They do not have a customer service number. They do not have a "search" function whereby you can find whether someone has an account. All account information is private.

Even if you tell your heirs that you own cryptocurrency, you need to tell them how to access those assets. What do they need to know in order to find and control your cryptocurrency? Consider including the type of cryptocurrency, your passcode, answers to your security questions, and other important information. Without passing along this information to your executor or your heirs, your digital assets could be lost forever.

Create Your Digital Estate Plan Today

If no one knows about your cryptocurrency investments, all that wealth could essentially float away into the Internet abyss after you die. To discuss estate planning and how you can incorporate digital assets like cryptocurrency into your estate plan, contact the experienced Oklahoma City estate planning attorneys at Postic & Bates 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.]

Estate Tax Portability in a Nutshell

In a world of computers that fit in your pocket and phones on your wrist, "portability" is all the rage. And for the last six years, it has been all the rage in estate planning circles as well — except "portability" in this context has nothing to do with how small something is.

What is estate tax portability?

As of January 1, 2018, the estate tax exemption for individuals is $11.2 million, adjusted for inflation. In other words, if your assets are worth $11.2 million or less at the time of your death (and you have not used any of your combined estate and gift tax exemption), your estate owes no estate tax. But upon the death of the first spouse, the surviving spouse can elect to use the deceased spouse's unused exemption amount (also known as "DSUE"), effectively doubling the estate tax exemption for married couples to $22.4 million. This election is known as estate tax portability.

If you read the last paragraph closely, you probably noticed that there is a big if when it comes to portability: the surviving spouse can use the DSUE if the decedent's estate elects to do so. To make a portability election, the decedent's estate must file IRS Form 706, which is the "United States Estate (and Generation-Skipping Transfer) Tax Return." On that form, the estate can elect to transfer the DSUE to the surviving spouse. While somewhat confusing, the form offers helpful instructions for completing and filing the return. For further guidance, we recommend you consult a tax professional.

When should an estate elect portability?

A decedent’s estate is required to file Form 706 when the gross estate plus adjusted taxable lifetime gifts (over the annual exclusion amount) exceed the applicable exemption amount. However, where the surviving spouse's estate is not large enough to benefit from portability right now, the decedent's estate may still want to file a portability election just to be safe. The surviving spouse could receive an inheritance, increase the value of their assets, or remarry a wealthy individual — any of which could bring the surviving spouse's estate above the estate tax exemption amount. There is also the possibility that the federal estate tax exemption will drop in the future. (The current $11.2 million individual exemption will sunset at the end of 2025, unless Congress extends it.)

Discuss portability with an estate planning attorney.

The bottom line is that portability can dramatically impact estate tax liability and should be considered after a spouse's death. To discuss your estate plan and learn how to minimize or avoid estate taxes, 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.]

Advance Directives in a Nutshell

Estate planning is meant to give you peace of mind. Knowing your assets will go to the proper people is important. But equally (if not more) important is knowing that the proper people will be able to take care of you when you cannot do so yourself. Therefore, one of the most indispensable parts of your estate plan is the Advance Directive for Health Care.

We have previously written about advance directives in greater detail, but, to summarize, the document is made up of three parts: (1) a living will, (2) health care proxy appointment, and (3) anatomical gifts.

Part One: The Living Will

The main portion of an advance directive is the “living will,” where you state your preference for the use of certain life-sustaining treatments under certain conditions. Namely, you state whether you want life-sustaining treatment (medical procedures to keep you alive when your body is not able to function on its own, e.g., CPR, intubation) or artificially administered nutrition and hydration (food/nutrients and/or fluids administered by intravenous methods).

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: if you have a "terminal condition," an “end-stage condition,” or are “persistently unconscious.” We have explained these terms and other aspects of the living will in greater detail here.

Part Two: Appointment of Health Care Proxy

The advance directive also gives you the option to appoint a “health care proxy” who can make decisions for you if 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.

Part Three: Anatomical Gifts

In Oklahoma, an advance directive also allows you to state your wishes regarding organ donation. One of the options that gives many people pause is where you can donate your “entire body.” This does not mean you are donating your body to science. It simply means that you are willing to donate whatever will be useful, be it a lung, a kidney, or anything else.

Make an advance directive part of your estate plan.

End-of-life matters require a great deal of consideration and planning, and it is best to begin planning early. For more information on advance directives and other healthcare documents, contact the 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 One Big Thing Your Estate Plan Is Missing

You may have great estate planning documents. You may have discussed them with your family. You may have even inventoried your digital assets and feel that your job is done. But your estate plan may still be missing one BIG thing: a "letter of instruction."

Do your representatives know what to do?

Managing an estate is a tough job. If you died today, would your Successor Trustee or other representatives even know where to start? Where is the key to your safe-deposit box? Where are your car titles? What is the combination to the floor safe? Where is the abstract of title to your home? What are the passwords to your computer and other online accounts

A letter of instruction is meant to help guide your representatives through administering your estate after your death. Imagine that you could stand over the shoulders of your spouse or children or other loved ones and tell them exactly what needs to be done. Very likely, these individuals are going through a tremendous amount of stress and grieving. But you can ease their burden by leaving step-by-step instructions to help them through the process. That is the purpose of a letter of instruction.

What should my letter contain?

There is no right or wrong way to prepare a letter of instruction. A few ideas were mentioned above. Include a list of where your assets are located, how to access your accounts, where you keep important title documents, etc. These pieces of information are essential to managing any estate.

However, your letter can provide even greater detail. What subscriptions (cable, newspaper, lawn service) need to be canceled? What are the names and phone numbers of your advisers (financial, medical, spiritual, insurance) that should be contacted after your death? How can your representatives contact your family to let them know of your death? Where would you like your funeral held? Do you have a preferred program for your funeral? Do you already have an obituary prepared?

Your letter can also include instructions for distributing small items of personal property that have low market value — but high sentimental value — to your family. You may wish to distribute these items to certain beneficiaries rather than having them sold with your other property as part of an estate sale. Letting your representatives know about your wishes could keep these items from being lost forever. Remember, however, that your letter of instruction can only voice a preference for how you want untitled personal property distributed. All gifts of titled property must be made through proper legal documents.

Talk to an attorney about a letter of instruction.

Estate planning involves more than just legal papers. It is also about more than just your own well-being; it is about providing for your loved ones after you are gone. To discuss how you can take care of your loved ones after your death, 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 for access to over 70 pages of information about estate planning and probate:

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

Do I Need Probate to Get My Inheritance?

Hardly a day goes by that someone doesn't ask us whether they need to probate a deceased loved one's estate. So when is probate necessary?

When you hold title to (i.e., own) an asset, you can generally only lose title in two ways: by inter vivos (literally, "between the living) gift or by court order. By definition, you can only make an inter vivos gift while you are alive. Therefore, once you die, the only way to transfer title is by court order. That (among other things) is the basic role of the probate process. 

In other words, if a loved one dies owning property in his or her individual name, that property generally must pass through probate before you can legally obtain title (ownership) — even if the loved one's Last Will and Testament says that you get everything! That said, there are certain circumstances in which an asset "owned" by the decedent is not subject to probate:

1. The asset is owned by a Living Trust.

Many people believe that having a Last Will and Testament means probate will not be necessary. Those people are generally incorrect. Why? Because a Will makes a testamentary (after-death) gift. Remember: You can generally only lose title by inter vivos gift or by court order. A testamentary gift does not fit into either of those categories, which means a probate court order will be necessary.

During your lifetime, however, you can establish a Living Trust. The benefit of a trust comes by transferring assets from you, as an individual, to you as the trustee of your trust. Although you still "own" and control these assets during your life, the trust operates like a separate entity for probate purposes. After your death, the trust lives on and can transfer assets just as you could while you were living.

Think of a trust as a box: during your lifetime, you put your "stuff" inside the box (i.e., retitle assets in the name of the trust); after your death, everything in the box (i.e., everything owned by the trust) avoids probate. 

(Read more on the differences between a Will and a Trust.)

2. There is a pay-on-death beneficiary.

Certain assets allow you to name an individual or entity to receive that asset after your death. Making a beneficiary designation is akin to entering into a contract between you and the institution that holds the asset. Because that contract designates who will receive the asset after your death, the property does not need to pass through probate in order to transfer title.

Pay-on-death beneficiary designations are commonly seen on insurance policies, bank accounts, IRAs, and other financial assets, as well as transfer-on-death-deeds. These assets are considered "non-probate" property and can be transferred outside the probate process.

3. There is a surviving joint tenant.

Joint tenancy is a type of ownership by two or more people in which each joint tenant owns an undivided interest in the whole of the property. If there are three joint tenants (each owning an undivided one-third interest) and one dies, then each of the surviving joint tenants would own an undivided one-half interest in the property. If there are two joint tenants and one dies, the survivor would own the whole of the property.

For this reason, joint tenancy has been called "the poor man’s will" because it can effectively avoid probate on the death of the first joint tenant. Although property with a surviving joint tenant may not need to pass through probate, the surviving tenant may have to file an affidavit (along with a death certificate for the deceased tenant) before he can transfer or encumber the property.

Talk to an attorney to see if probate is necessary.

Probate can be a complicated process. There are numerous exceptions to these general rules, and a variety of circumstances can affect whether an asset must pass through probate. To visit with a qualified attorney about whether probate is necessary or advisable, contact the Oklahoma City probate 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.]

Durable Powers of Attorney in a Nutshell

Kanye West once said that no one man should have all that power. Fortunately for 'Ye, one man doesn't have to have all that power if he has an essential estate planning document called a Durable Power* of Attorney. (*This was most likely the "power" Kanye was referring to in his hit song, "Power".)

What is a Power of Attorney?

Generally speaking, a power of attorney gives someone (your "attorney-in-fact") the ability to act for you in financial and/or medical situations. In other words, one man doesn't have to have all that power — he can share it with someone else. This authority can be limited in scope, e.g., a single real estate transaction; or it can be broad, e.g., any and all healthcare and financial decisions.

A power of attorney can also be limited in time. For example, you could provide that your attorney-in-fact can act for you only if a doctor certifies that you are incapacitated. However, this type of "springing" power of attorney can be problematic: if the attorney-in-fact has not otherwise been given the authority to access your medical records, privacy laws may prevent him from getting that documentation. And if he cannot get the documentation to say that you are incapacitated, your power of attorney would be rendered ineffective.

Why should my Power of Attorney be "durable"?

There is an important difference between a power of attorney and a durable power of attorney. Traditionally, a power of attorney was effective only as long as the person who made it was competent. If you became incapacitated or incompetent, your attorney-in-fact no longer had authority to act for you.

However, Oklahoma now provides that a power of attorney can include language that allows an attorney-in-fact to remain effective, even if the person who made the appointment is no longer competent. The power of attorney endures through any incapacity of the person making the appointment. This is particularly important for elderly individuals who may show early signs of dementia or other mental or physical ailments.

Since the primary benefit of a power of attorney is that it allows someone to act for you in the event you cannot act for yourself, failing to make a power of attorney durable can defeat the whole point of the document.

Execute or update your Power of Attorney.

It's not easy to think about becoming incompetent or needing to rely on someone else in the future. But as Kanye wisely noted, "the clock's ticking" — so don't wait until it's too late. If you cannot make medical decisions for yourself, you should have the peace of mind of knowing someone you trust can make those decisions for you.

For more information about durable powers of attorney — or to discuss whether your power of attorney should be updated — contact the Oklahoma City estate planning attorneys at Postic & Bates 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.]

Ghostbusters: Preventing Identity Theft After Death

Each year, approximately 2.5 million Americans have their identity stolen... after their deaths. These stolen identities are used to borrow money, purchase cell phones, fraudulently open credit cards, etc., all of which can dramatically impact the liability exposure of the decedent's estate. Criminals may even file tax returns under the name of the decedent and collect refunds (totaling $5.2 billion in 2011) that rightly belong to someone you.

Welcome to the world of "ghosting": the theft of a deceased individual's identity.

How does "ghosting" happen?

Your identity as a deceased individual is perhaps more vulnerable to theft than your identity as a living individual. Suppose you pass away today. It can take six months or more for credit-reporting agencies, financial institutions, and the Social Security Administration to register your death records and share information that lets other governmental agencies and financial institutions know you are deceased. During that time, you aren't regularly checking your credit score or other financial information because, you know, you're dead.

Your identity may be stolen deliberately. A thief could get your personal information from an obituary, a funeral home, or hospital records. With your name, address, and birthday, they can illicitly purchase your Social Security Number for as little as $10. Alternatively, your identity may be stolen by sheer luck: A thief makes up a Social Security Number that just happens to match yours (think of it like picking lottery numbers).

You may not care whether your identity is stolen after your death (after all, you're no longer using it). However, identity theft is a very real problem that could affect the estate of a loved one and, in turn, affect you.

Is there any way to prevent "ghosting"?

So what can be done to protect your loved one's estate after their death? The short answer is this: "be vigilant." If you notice any suspicious activity on a deceased loved one's accounts, contact the institution and/or law enforcement to investigate. There are some other ways you can help prevent identity theft in the first place:

  1. Don't disclose too much personal information. This is key to preventing identity theft in general. For example, in obituaries, list the age of your loved one but don't include their birthday or their mother's maiden name or their home address.
  2. Send death certificates to credit bureaus. Send copies of the death certificate to credit-reporting bureaus — Equifax, Experian, and TransUnion — and ask them to place a "deceased alert" on your love one's credit report. Be sure to use certified mail with a "return receipt requested" when mailing this information (so you will know the bureau received the certificate).
  3. Send death certificates to financial institutions. Similarly, mail death certificates to banks, investment companies, credit card companies, brokerages, insurers, mortgage companies, and other institutions where the decedent owned accounts. For any joint accounts, simply remove the deceased individual's name.
  4. Report to Social Security. Report the death to the Social Security Administration by calling 1-800-772-1213.
  5. Cancel driver's license. Contact the DMV to cancel the decedent's driver's license. This helps prevent duplicate licenses from being issued to criminals.
  6. Check credit reports. Check the credit report of the decedent a few weeks after their death to see if there is any suspicious activity. A few months later, get another report from a different bureau.

It is often difficult to think straight after the death of a loved one, and focusing on financial matters and identity theft may be the last thing you want to do. But we highly recommend that you take the time to perform these preventative measures and lessen the possibility of an even bigger headache later on.

Protect yourself with a solid estate plan.

Identity theft is a problem whether you are living or dead. But during your lifetime, you can take steps that make it less likely your information and assets will be vulnerable to identity theft: namely, you can ensure that your personal information will be handled by people you trust — something you control through estate planning. 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.]

5 Ways to Avoid Probate

Probate is a dirty word to most people. It's time-consuming, expensive, public, and brings with it the possibility of infighting and costly litigation. So how can you avoid it? The short answer: estate planning. But as we have written before, estate planning is a very broad topic. So here are five ways you can use estate planning to avoid probate:

1. Give away your entire estate.

This might seem like the most logical solution and, sadly, many people do it without thinking of the consequences. If you give away your assets, you also give away control over them. If, for example, you give your home to your child, you cannot control who lives there or if it is sold or mortgaged or seized by your child's creditors — even if you're living there. Giving away your estate may also trigger a federal gift tax. What's more, if you give your child your home as a gift during your lifetime, they cannot take advantage of a concept known as stepped-up basis and could instead be forced to pay large capital gains taxes in the future.

(Read more about stepped-up basis and avoiding capital gains taxes.)

2. Create a joint tenancy.

Joint tenancy has been called "the poor man’s will" because it can effectively avoid probate on the death of the first joint tenant. However, if you and your spouse own property as joint tenants and both of you die together, the property is still subject to probate. Joint tenancy property is also subject to estate taxes and may actually cause an increase in overall estate taxes, since the property may be fully taxable in the estates of both joint tenants. Some people decide to make their children joint tenants on a house or a bank account. But beware: property held in joint tenancy can be reached by the creditors of all joint tenants. To sell or encumber joint tenancy property, ALL joint tenants (and their spouses, in some cases) must agree and sign the necessary documents.

There are also potential tax consequences of naming a joint tenant. For some assets, such as bank accounts or most brokerage accounts, merely adding someone as a joint tenant does not trigger a gift tax; they could incur gift tax liability if the joint tenant starts drawing funds or income from the joint tenancy asset for personal use. For other assets, however, such as a personal residence, creating a joint tenancy could result in gift tax liability immediately. And like giving away your property during your lifetime, naming a joint tenant means that person cannot take advantage of stepped-up basis after your death.

3. Designate Pay-on-Death beneficiaries.

This is possibly the easiest method of probate avoidance, although not the most thorough. Banks and other financial institutions allow you to designate a particular account or investment to pay out to a named beneficiary after your death. Regardless of what you have provided in your last will and testament or your living trust or other estate planning document, this pay-on-death designation will control the disposition of that property after your death. Similarly, if your state allows it, you can sign a transfer-on-death deed to pass real estate after your death.

(Learn about transfer-on-death deeds in our recent blog post.)

Unfortunately, you cannot put restrictions on the use of your account or real estate after your death; it simply becomes the property of your named beneficiary. If the beneficiary dies before you, and you have not named any other living beneficiaries, the pay-on-death designation may not be effective to convey that asset after your death, which means the asset may be subject to probate in your estate.

4. Designate contractual beneficiaries.

This concept is most commonly used with life insurance. Your life insurance policy names a beneficiary to whom the policy proceeds are paid at your death. As with the pay-on-death designation, you usually cannot put restrictions on the distribution. Also, as with the pay-on-death designation, the death of the beneficiary still leaves the insurance proceeds subject to probate. Life insurance policies are a good part of many estate plans, but it is important to understand their limitations.

5. Create a Living Trust.

Finally, you can avoid probate by creating a living trust. A living trust involves transferring all your titled assets (real estate, bank accounts, motor vehicles, etc.) into the name of the trust. You can be the trustee of your trust and, in order to allow the trust to function after your death or incapacity, you can also list successor trustees to manage the trust for you and distribute your estate at your death. When you die, the trust lives on and can transfer those titled assets without the necessity of probate. You can also put restrictions on the use and/or distribution of the trust assets, which can be particularly important if you have any young, irresponsible, or special-needs beneficiaries.

(What is the difference between a will and a trust?)

Most of these methods of avoiding probate are more complex and nuanced that they appear. Therefore, we highly recommend consulting an attorney before taking any of these actions. To visit with an qualified attorney about whether your estate will be subject to probate at your death, contact the Oklahoma City estate planning attorneys at Postic & Bates for a free, no-obligation consultation. And for more information about probate avoidance and estate planning, download our FREE Estate Planning Guide by clicking below.

[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 a transfer-on-death deed?

Most people are familiar with deeds. Though they come in many different varieties, deeds convey (transfer) interests in real estate. Generally speaking, a conveyance is effective as soon as a deed is signed. With a transfer-on-death deed, however, the conveyance is effective only after the grantor (the person conveying the real estate) dies.

What are the benefits of a transfer-on-death deed?

The main benefit of a transfer-on-death deed is that the conveyance can avoid probate. Let's say Joe wants to leave his house to his son, Dan. If Joe provides in his Will that the house should go to Dan, the Will must still go through probate before Dan can get the house. But if Joe signs a transfer-on-death deed, all Dan will need to do is file an affidavit (and a death certificate) with the county clerk to obtain title to the house.

(A living trust can also avoid probate. Read about the differences between a will and a trust.)

You are not limited to just one beneficiary, either. If Joe had two children, Dan and Mary, he could list both of them as grantees (the people receiving the property) on the transfer-on-death deed. He could also leave them the house as joint tenants or as tenants in common. So there is some degree of flexibility with a transfer-on-death deed.

What are the problems with a transfer-on-death deed?

Transfer-on-death deeds can lead to several potential problems. First, if the beneficiary (grantee) named on the transfer-on-death deed dies before you, then the real estate could be subject to probate. Second, a transfer-on-death deed doesn't provide a plan in the event of your incapacity. Without someone to manage your property, a guardianship may ultimately be necessary in the event you lacked capacity to transfer or encumber the real estate during your lifetime. Third, it does not allow you to limit the flow of property to beneficiaries who may be too immature or irresponsible to manage their assets.

(Read more about how a transfer-on-death deed can avoid probate.)

In short, a transfer-on-death deed does not offer the same scope and flexibility as other estate planning documents such as a Last Will and Testament or a Living Trust. That said, it is still a great tool to effect a deathtime transfer outside the probate process. To discuss whether a transfer-on-death deed may be right for you, contact the estate planning attorneys at Postic & Bates 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.]

One Weird Estate Planning Concept You Need to Know

This post is Part Four 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.

So your parents have a Last will and Testament or a Living Trust. Great. It was signed by all the proper parties, contains the proper language, and appoints the proper people. Wonderful. And to top it all off, the attorney's gave you an unbelievable deal. Excellent (unlikely, but excellent). The problem? Those documents can still be thrown out by the court if your parents lacked one key thing: testamentary capacity.

What is Testamentary Capacity?

We lawyers sure do like our big words. Fortunately for everyone, testamentary capacity boils down to a pretty simple idea: Does the person signing a Will or Trust understand what they're signing? To have testamentary capacity in Oklahoma, the testator (the person signing the Will or Trust) must understand, in a general way, (1) the quality and quantity of his or her property (sometimes called their "bounty"), (2) the natural objects of his or her bounty (i.e., who should logically inherit their property), and (3) the legal effect of signing the document.

Seems simple enough, right?

It is important to understand that testamentary capacity is different than what people usually think of as legal capacity or capacity as it relates to a guardianship or other legal proceeding. The fact that a person was found incompetent to handle his affairs two years ago does not mean he lacks testamentary capacity today. Likewise, a person's ability to manage his affairs two years ago does not mean he has testamentary capacity today. What matters is the individual's capacity at the moment he or she signs an estate planning document.

How is testamentary capacity determined?

Lawyers also like "tests." Not actual tests, of course, but rules that guide our interpretation of the law. To determine testamentary capacity, we use a category of test called a "totality of the circumstances test" (so named because it asks us to look at the totality of the circumstances). Oklahoma courts have held that the following factors or circumstances may be considered (but do not have to be considered and need not be the only factors considered) when determining the existence of testamentary capacity: (1) evidence of the testator's mental state both before and after execution of the Will; (2) the testator's appearance; (3) the testator's conduct and actions; (4) the testator's habits; and (5) the testator's conversation.

So, practically speaking, how can we know whether an individual has testamentary capacity at the time they sign their documents? That is the operative question, as it is definitely better (and, likely, less expensive) to find out the answer now rather than years later in probate.

There are a number of ways a qualified estate planning attorney can make his or her own determination regarding the testator's capacity, although there is no strict "test" a client must pass before he or she can sign a document. Some common questions come from an evaluation called the Mini-Mental State Evaluation (MMSE). Often used to decide whether an individual has capacity to testify at trial (which is different than testamentary capacity), this evaluation asks the individual to identify the date and their location, to repeat a certain phrase, to count backwards, etc. Attorneys often work these and other similar questions into their conversation with a client if there is a possibility he or she may lack testamentary capacity.

Can you change your estate plan if you lack capacity?

The short answer is "no." Testamentary capacity is necessary for any testamentary document to be valid. However, there are other ways to make changes to the testator's estate. For instance, if the testator has a Durable Power of Attorney appointing someone as their attorney-in-fact (and if that document gives the attorney-in-fact the ability to do so), that individual can transfer property, enter into contracts, and even establish a trust for the testator's benefit. Still, these transactions are scrutinized very closely by courts, and if the testator does not have a Durable Power of Attorney, they may be out of luck.

Could a loved one's estate plan be challenged?

Testamentary capacity is a crucial estate planning concept to understand. If you are concerned that a loved one may lack (or may have lacked) testamentary capacity to execute an estate planning document -- or to determine whether you should challenge an estate planning document in probate -- contact the experienced Oklahoma City estate planning and probate 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.]

How to Recognize Fraud in Estate Planning

This post is Part Three 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.

Suppose your mother has dementia. Her nurse convinces her that he is her only child and has her sign estate planning documents leaving all of her assets to him and expressly disinheriting you and any of her other children. Are those documents valid? Likely not, as your mother has been the victim of fraud.

What is fraud?

There are several ways fraud can be committed in the estate planning process, but the type of fraud we will discuss in this article is referred to as fraudulent inducement. Let's say your mother executed a Last Will and Testament. You could challenge that Will if your mother was fraudulently induced into leaving her property to a person she would not normally have left it (in the example above, the nurse).

You could also challenge the Will if your mother was fraudulently led to believe she was signing a different document, when in reality it was a Will. For instance, the nurse may have tried to convince your mother that the estate planning documents were really medical forms or birthday cards. If she did not realize she was signing a Will, then her estate plan can be challenged on the basis of fraud.

How do you challenge a Will on the basis of fraud?

Even if a loved one has been the victim of fraud in the estate planning process, how do you prove it? How can you get the Will overturned on the basis of fraud? There are three main elements of any claim of fraud:

1. Misrepresentation

To prove fraud, you must show that there was a false representation with the intent that the testator rely on that statement to make or change his or her Will or other estate planning document. The element of "fraud" is often referred to as a "misrepresentation." In the example above, the misrepresentation was the nurse's statement that he was your mother's only child or that the papers she was signing were really something other than a Will.

A false representation does not have to come from someone outside the family. Fraud may occur if one child of the testator lies about a sibling to get more money under their estate plan or to disinherit the sibling entirely. Claims of fraud (and, for that matter, undue influence) are fairly common among family members.

(It is important to note here that fraud is different than undue influence.) 

However, showing a misrepresentation is not as cut and dried as it sounds. Generally speaking, you must be able to prove that the speaker knew the statement was false when he made it. Of course, anyone can pretend they "didn't know" the statement was false, but sometimes it can be enough to show that they should have known it was false. What evidence do you have that a statement was made? What evidence do you have that the statement is false? And what evidence do you have that the speaker knew or should have known the statement was false at the time it was made? These are all questions you should think about when discussing the matter with an attorney.

2. Intent

In most areas of the law, intent is a crucial element. Simply showing that the nurse lied to your mother is not enough to have her Will set aside for fraud. You must also show that the nurse intended for your mother to change her estate plan based on his misrepresentation.

For example, suppose the nurse had told your mother something like, "Don't worry about your cats after your passing. I will take care of them for you." If the nurse had no intention of taking care of your mother's cats, his statement was a misrepresentation. But it does not rise to the level of fraudulent inducement because there is no indication that the nurse intended for your mother to rely on his statement to change her estate plan.

On the other hand, if the nurse made that statement because he hoped your mother would leave him thousands of dollars to take care of her cats, then that may be enough to show fraudulent inducement. Yet providing intent is difficult. How can you show what someone was thinking at a certain point in time? That is why it is important to work with an experienced probate attorney who knows how to gather admissible evidence and convince the court of the speaker's fraudulent intentions.

3. Injury

To have success with any claim, you must be able to show that some injury occurred because of the complained-of conduct. For fraudulent inducement, the injury is not necessarily that the testator was tricked into making or changing his or her estate plan. A claim of a fraudulent inducement in this context usually arises only after the testator has died. Instead, the injured party/parties are the representative of the love one's estate or the heirs of that estate. While even attempts at fraudulent inducement are a cause for concern within your family, from a legal perspective, the injury must actually occur. That means the person who attempted to trick your loved one did, in fact, trick your loved one into making the estate plan change.

To explore this concept further, let's change the scenario a bit: Suppose that your father has passed away and you are your mother's only child. In other words, you are her sole heir at law, meaning that even if she had no Last Will and Testament, you would receive her entire estate after her death. If you fraudulently induce your mother into signing a Will, could that Will later be set aside on the basis of fraud? Maybe not. Because you would receive your mother's entire estate anyway, a court may not find that anyone else was injured as a result of your fraud. A friend or other relative could come forward and claim that your mother intended to leave them a part of her estate, but they would likely face an uphill battle. 

This is not to suggest that only children would face no consequences from defrauding their parents. But it is important to understand the concept of injury when determining whether you may have a valid claim for fraudulent inducement.

Do you have a case for fraud?

Few things are more upsetting than realizing a loved one was tricked or taken advantage of. Falling for a lie is not the fault of your loved one; someone manipulated him or her for their own personal gain. If you believe a loved one has been the victim of fraud in his or her estate planning, contact the experienced Oklahoma City estate planning and probate 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 Tips to Identify Undue Influence

This post is Part Two 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.

Imagine your father is elderly, handicapped, and requires in-home care. He develops a close relationship with his caretaker, who is much younger than he is. When your father passes away, you assume that all his assets will be left to you and your siblings. However, the caretaker comes forward with a Will signed by your dad a week before his death — and it leaves everything to her! Seems fishy, right? This is a classic case of undue influence.

What is Undue Influence?

In Oklahoma, undue influence consists of taking an unfair advantage of another's weakness of mind or body or the use of authority to procure an unfair advantage over someone. Put another way, undue influence occurs when someone exerts pressure on an individual, causing him or her to act contrary to his or her wishes and to the benefit of the influencer.

In the example above, the "influencer" is a person outside the family; however, undue influence can occur from inside the family as well. Sometimes, a child may convince his or her parent to leave another child out of the Will or to leave that other child less of the estate. The child assisting his or her parents with their estate plan may not have any malicious motives: perhaps he or she simply thinks that their sibling would not manage the assets well. Nevertheless, such a scenario could give rise to a claim of undue influence from the child left out of the Will.

How Can I Identify Undue Influence?

In assessing a claim of undue influence, courts consider a number of factors. But for our purposes, we have narrowed them down to four main indicators you can use to determine whether undue influence might exist: 

1. Look for unexpected gifts.

Courts often look at whether the testator disposed of his or her property in an unexpected way. The question is sometimes phrased like this: Did the testator leave his estate to anyone who was not the natural object of his or her bounty? For instance, if a woman was close with her three children, the fact that her Will leaves her entire estate to a caretaker looks suspicious. After all, one would expect the woman to leave most (if not all) of her estate to her children.

2. Examine the testator's mental/physical state.

Courts often consider the age and health of the testator in analyzing undue influence claims. Frailty, deteriorating mental state, and other mental or physical factors could make a loved one susceptible to undue influence. Although undue influence is different than a claim of "lack of capacity," the same evidence is often relevant for both claims.

3. Consider whether the testator was isolated.

Third, determine whether the testator was isolated from other family or friends. An influencer often tries to separate the testator from his or her loved ones so he or she will become dependent on the influencer. The testator may see the influencer as the only person that cares about him or her and thus believes it would be proper to leave the influencer their estate. Elderly people, disabled individuals, and individuals with mental ailments may be especially susceptible to undue influence on account of their isolation or separation from other relations.

4. Scrutinize special relationships.

Lastly, look at whether there is a "special relationship" in the testator's life. A caretaker is simply one example. Perhaps a neighbor spends a lot of time with your father and helps him with chores and other tasks. Or perhaps one child spends much more time with parents than another. A "special relationship," by itself, does not indicate undue influence. There must be some action on the part of the influencer to show that he or she unduly influenced the testator. Did she drive your father to his appointment with the estate planning attorney? Was she present when your father signed his Will? All these facts could indicate that the influencer utilized the "special relationship" to his or her unfair advantage.

How Can I Avoid a Claim of Undue Influence?

As mentioned above, perfectly reasonably intentions can still lead someone to challenge an estate plan on the grounds of undue influence. At various times, you may be the one bringing a claim or the one defending a claim. Therefore, we recommend a few best practices to avoid having a loved one's (or your) estate plan challenged because of undue influence"

1. Always keep undue influence in mind.

If you are helping a loved one prepare an estate plan, keep in mind the factors explained above. Examine your actions from the perspective of a disgruntled heir and consider whether you have done anything that could be considered undue influence. Remember: successfully defending a claim of undue influence is great, but the goal is to avoid the claim in the first place. Any legal battle will result in thousands of dollars of attorney's fees and court costs.

2. Resist involvement in a love one's estate planning.

If a parent plans to leave everything to you, and you are your parent's primary caretaker, resist involving yourself in their estate planning process. You might simply wish to help your parent through the legal process, but look at it from the perspective of a plaintiff's attorney (who would argue there was undue influence): you suggested that your parents review their estate plan; you called the attorney's office to schedule an appointment for them; you drove them to that appointment; you sat in the appointment with them; and you were present for the signing of their estate planning documents. The attorney wants to show the judge and jury that that you exerted complete control over your parent in amending his or her estate plan, and that such control amounted to undue influence. If you involve yourself in the estate planning process, the case becomes even more difficult to defend.

3. Make your wishes clear.

For your own estate plan, be sure that your attorney has a clear record of your wishes. Your estate plan may say exactly what you want -- right now. But if you become incapacitated, frail, or mentally infirm, you could be the victim of undue influence. By making your attorney aware of your wishes (and the reason for them), you can better ensure that your estate is distributed the way you want.

The Best Place to Start: Have a Rock-Solid Estate Plan

The issue of undue influence is much more complicated than explained above. Nevertheless, we hope that this article has given you an idea of what undue influence is and how you can identify it. Estate plans are meant to provide peace of mind and the knowledge that your assets will go to the people you want to receive them. But if your documents are challenged on the basis of undue influence, all your planning could be for naught. That's why it is critical that you consult with an experienced attorney to create a rock-solid estate plan.

If you believe a loved one has been the victim of undue influence, want to challenge an estate plan on the basis of undue influence, or want to avoid the appearance of undue influence in your or a love one's 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.]

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 – 4 Tips to Identify Undue Influence (undue influence)
  3. Part Three – How to Identify Fraud in Estate Planning (fraud)
  4. Part Four – One Weird Estate Planning Concept You Need to Know (testamentary capacity)

Get a Free Consultation

To help ensure your estate plan won't be challenged, or to determine whether you should contest an estate plan in probate, contact the experienced Oklahoma City estate planning and probate 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.

Will vs. Trust

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.

Get a Free Consultation

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.]