Have a Much Needed Conversation with Your Family About Estate Planning

Estate planning is often a difficult topic to broach, as it brings the unpleasant topics of aging and death to the forefront of our minds. However, creating a proper estate plan can also provide significant peace of mind for your family members by ensuring their life savings are protected, plans are in place in the event they become ill, and their property is passed down according to their wishes. Here are a few tips to help you start the conversation and important discussion points.

Be sensitive to your family members’ feelings. Put yourself in their shoes, and keep in mind that few people are eager to dwell on the subject of their own mortality. One way to begin the conversation is to talk first about the need to plan for illness and to provide instructions in the event they become too sick to communicate with doctors or manage their own finances. The conversation can then naturally progress to the importance of having an estate plan that will enable their life savings to be transferred in the way that they wish, provide for the care of any children or pets, and minimize any taxes, court costs, and legal fees. Communicate that you are not trying to control their decisions, but only want to ensure that their own wishes regarding their medical care and their property are known—and that all their instructions are in writing to guarantee they are honored.

Involve other family members in the conversation. If you are planning to speak to your parents about the need for an estate plan, it is important to try to include any siblings in the discussion to avoid giving the impression that you are trying to influence or control your parents’ choices. You and your siblings should emphasize to your parents that none of you are asking about what you will inherit, but just want to make sure that their wishes are known and honored if they become ill or pass away.

Address several key topics.

  • Ask if your family members have a last will and testament and/or a trust, and explain that if they do not have these important legal documents, state law will determine who will receive their property—and thus it may not occur in the way they would have chosen. In addition, someone appointed by the court, instead of a trusted person of their own choosing, might be in charge of caring for any children or pets. Spelling out their wishes in a will or trust will also prevent confusion and anxiety when they are gone.
  • A financial power of attorney will allow them to designate an individual to manage their finances and property if they are unable to manage them. Inquire about your family members’ powers of attorney, and encourage them to decide who would be the best individuals for the job.
  • Make sure that your family members have proper medical powers of attorney and advance directives in place. These documents contain their wishes about how they would like their medical care to be handled if they are not able to make decisions for themselves. A medical power of attorney also enables them to designate a trusted person to make medical decisions for them when they are unable to speak themselves.
  • Find out whether they have insurance and the location of the insurance policies. If your family member becomes incapacitated or dies, it is important to have information about their insurance so that claims can be filed for benefits in the case of health, disability, long-term care, and life insurance, and that other types of policies, such as homeowner’s or auto insurance, can eventually be modified or terminated.
  • Ask them to compile a list of all of their accounts and property and other important personal information, including bank and investment accounts, titles to vehicles. deeds to homes, credit card accounts or loans, digital accounts (such as Facebook, Twitter, Netflix) and passwords, Social Security cards, passports and birth certificates, which will be needed to wind down their affairs once they are gone. This information should be kept in a safe place and shared only with trusted family members or loved ones.
  • A list of legal, financial, and medical professionals who have worked with your family members is also important. Be sure they include medical doctors and care providers, financial advisors, insurance agents, CPAs or tax professionals, business partners, care providers, and more.  The list should include the professionals’ contact information so they can be easily reached in the event their help is needed.

Consult an estate planning attorney. We can help you and your family ensure there is a plan in place that will prevent unnecessary stress, legal expenses, taxes, arguments between family members, and delays in passing property to loved ones upon death. An estate plan will also provide the peace of mind that comes with knowing there is a plan in place for incapacity.

Please call us today to set up a consultation.

What is Asset Protection and Do I Need It?

A common misconception is that only wealthy families and people in high-risk professions need asset protection planning. In reality, everyone is at risk of being sued and possibly losing everything they have worked hard to obtain. A car accident, foreclosure, medical crisis, or business failure could result in a huge monetary judgment, decimating your finances. 

You may also view the idea of asset protection planning with a skeptical eye, believing there is a moral obligation to pay your debts. In reality, the U.S. justice system is unpredictable. Defendants are faced with ever-expanding theories of liability, being sued because they appear to have “deep pockets,” and the possibility of a judgment against them based on a desired outcome instead of the law.

What Exactly Is Asset Protection Planning?

Asset protection planning is a widely accepted and frequently used form of wealth and estate planning. It is the process of positioning property that could be vulnerable to seizure by future creditors, predators, and lawsuits in a way that discourages lawsuits, provides a valuable bargaining chip if a lawsuit arises, and minimizes loss. Asset protection planning is NOT about avoiding taxes, keeping secrets, hiding assets, or defrauding creditors.

Basic, Everyday Asset Protection Planning Strategies

It may surprise you to know that you may already be taking advantage of basic asset protection strategies without knowing it.

The first line of defense is insurance, including homeowner’s, renter’s, automobile, business, malpractice, long-term care, and umbrella policies. You should regularly check your insurance policies to determine if the policy limits are in line with your current assets and net worth, and to confirm that the coverage is still adequate and that the benefits have not been reduced to maintain the current premiums.

Another type of basic planning is achieved through investments in 401(k)s or IRAs. Under federal law, 401(k)s and IRAs (excluding inherited IRAs) are protected from creditors in bankruptcy (with certain limitations). Maximizing contributions to your 401(k) if you are still working will not only increase your retirement savings, but will also keep investments outside of the reach of future creditors, predators, and lawsuits.

Asset Protection Strategies for Your Family

Asset protection is not aimed solely at protecting assets for your enjoyment.  Depending on your family situation, you may desire to protect assets that will be passed to your beneficiaries at your death.

Irrevocable Life Insurance Trust (ILIT)

An irrevocable life insurance trust holds life insurance proceeds for your intended beneficiaries. An ILIT can remove insurance proceeds from your estate for estate tax purposes and, with proper planning, it can provide much-needed liquidity for owners of illiquid assets such as farms, closely held businesses, or real estate.

Standalone Retirement Trust (SRT)

Because a IRA inherited by a non-spouse beneficiary is not protected from the beneficiary’s bankruptcy creditors, the SRT can be an important tool for protecting inherited retirement accounts from the creditors of your beneficiaries. 

Discretionary Trust

In an irrevocable discretionary trust, funds are held and invested by the trustee and are only distributed on a discretionary basis according to your stated wishes. The purpose is to safeguard the trust funds for the benefit of beneficiaries who are (or may become) spendthrifts, married to overreaching spouses, or bad at managing money, or who are in high-risk professions or worried about being sued, rather than allowing those assets to be available to a beneficiary’s creditors. While it can be a standalone trust, this type of trust can also be built into other types of trusts.

Credit Shelter Trust

A credit shelter trust is an alternative to leaving assets outright to a surviving spouse. As the beneficiary of the trust, the surviving spouse can benefit from the assets, but they are not part of his or her estate. They are unavailable to creditors and cannot be commingled with a new spouse’s assets.

Inheritor’s Trust

An inheritor’s trust is a trust created for the benefit of a child or grandchild that is structured to allow the beneficiary some control over the assets while also protecting assets from the beneficiary’s creditors or spouse in the event of divorce. Typically, the beneficiary has the power to appoint or remove a trustee and to replace the trustee with a different one. The trustee has the authority to make distributions to the beneficiary.

Plan Ahead

To protect your assets, you must plan ahead. Asset protection planning is not a quick fix for existing legal problems. In fact, if you transfer assets to shield them from existing creditors, it could be considered a fraudulent transfer, resulting in legal penalties.  Your plan must be in place before a lawsuit arises.  And, in some situations, a significant period of time must pass before the plan effectively protects your assets. 

Everyone needs some form of asset protection. Availing yourself of legal tools to protect your assets from future claims is a responsible way to plan for your family’s future. Please call our office to schedule a consultation.

Legal Requirements to Consider When Selecting an Executor/Personal Representative

Legal Requirements to Consider When Selecting an Executor / Personal Representative

The person you choose to be your executor (sometimes called a personal representative) will play an extremely important role, as that person will be responsible for gathering, securing, managing, and ultimately distributing your money and property when you pass away. As a result, you should make your selection only after careful consideration regarding who is the best person to fulfill this role. Don’t just choose your oldest child because that’s what you think is expected: If a friend or advisor is more trustworthy or better qualified, that person may be a better choice. The probate court will typically honor your choice, but there are certain grounds that could legally disqualify the person you have nominated as executor. If the executor you have nominated is legally disqualified, the court will not appoint that person as executor.

Characteristics Not Legally Required

There are several factors to consider before choosing your executor that are not addressed in state law. For example, if the person you have chosen is extremely busy, he or she may not have time to serve even if that person would otherwise be a good choice. Similarly, someone who does not live close by may find it difficult to make the necessary trips to take care of your money and property. It is also prudent to name someone who is reliable and trustworthy, although these characteristics are not legally mandated.

Legal Qualifications to consider in selecting an Executor / Personal Representative

There are certain categories of people who are disqualified from serving as an executor under the law of most states. For example, your executor typically may not be someone who:

  • has not reached the age of majority (usually 18 or 21)
  • has a felony conviction
  • is not a U.S. resident
  • has been found to be incapacitated (physically or mentally unable to manage their own affairs) by a court

Special Rules for Out-of-State Executors

Out-of-state executors normally are not disqualified, but they may have extra requirements that must be met. For example, many states require an out-of-state executor to find an in-state resident, living in Norman, Oklahoma, or whatever city/town/county the property is located, to serve as his or her agent or to deal with certain probate matters.

Let Us Help

If you need help selecting an Executor / Personal Representative, we can help you identify the important factors to consider in making this important decision. The law in our state has its own particular requirements, so we can also help you rest assured that the executor you choose will not be legally disqualified. Please call us today to discuss this or any other estate planning needs or concerns. We are happy to meet with you over the phone or by video conference if you prefer.

Funding Your Trust

How to Help Your Loved Ones (and Assets) Avoid Probate

Today, many people are using a revocable living trust instead of a will or joint ownership as the foundation of their estate plan. When properly prepared, a living trust avoids the public, costly and time-consuming court processes of guardianship (due to incapacity) or probate (after death). Still, many people make a big mistake that sends their accounts and property and loved ones right into the court system: They fail to fund their trust.

What Does It Mean to Fund Your Trust?

Funding a trust is simply the process of transferring accounts and property from your name into your trust. In some cases, you may also want to change beneficiary designations to name your trust as a beneficiary. If you have any accounts or property with a beneficiary designation, we can walk through the best way to transfer these outside of the probate process.

Funding is accomplished in several different ways:

●Changing the title of the asset from your individual name (or joint names if you’re married) to the name of your trust –for example, from John Smith to John Smith, Trustee of the John Smith Living Trust dated June 1, 2020.

●Assigning your interest in an asset without a title (such as artwork, jewelry, collectibles or antiques) to your trust.

●Changing the primary or contingent beneficiary of the asset (i.e., account or property) to your trust.

What Happens to Assets Left Out of Your Trust?

For many people, avoiding a conservatorship or guardianship during their lifetime and probate at their death are the main reasons they set up a revocable living trust. Unfortunately, you may believe that once you sign your trust agreement, you’re done. But if you fail to take the next step to change titles and beneficiary designations before becoming mentally incompetent or dying, your accounts and property—and your loved ones—will end up in probate court.

Which Assets Should, and Which Should Not, Be Funded Into Your Trust?

In general, you should consider funding the following assets into your trust:

●Real estate –homes, rental properties, vacant land, and timeshares

●Bank and credit union accounts –checking, savings, CDs

●Safe deposit boxes

●Investment accounts –brokerage, agency, custody

●Notes payable to you

●Life insurance –if you don’t have an irrevocable life insurance trust

●Business interests

●Intellectual property

●Oil and gas interests

●Water rights or shares (especially in some states where they can be quite valuable)

●Personal effects –artwork, jewelry, collectibles, antiques.

On the other hand, you should probably not fund the following assets into your trust:

●IRAs and other tax-deferred retirement accounts –only the beneficiary should be changed

●Interests in professional corporations

●Foreign assets –in some countries, funding an asset into a U.S.-based trust causes adverse tax consequences, while in other countries, trusts aren’t recognized or are ignored due to forced heirship laws

●Cars, trucks boats, motorcycles and scooters –most states allow a small amount of assets, including vehicles, to pass outside of probate; in others, a beneficiary can be designated for vehicles;and in still others, vehicles don’t have to go through probate at all.

It’s important to work closely with us to determine what should go into your trust and what should stay outside of it. Also, before purchasing new assets, give us a call to find out how to title the account or deed or who to designate as the beneficiary.

What Are the Benefits of Funding Your Trust?

Funding your trust makes it possible to obtain the best results from your trust-based estate plan:

●Your trustee, instead of a conservatorship or guardianship judge, will take control of your trust assets, on your behalf, if you become mentally incompetent, ensuring that you are cared for in the manner you expect.

●Your trustee, instead of a probate court, will take control of your trust assets after your death, managing and distributing the accounts and property to your chosen beneficiaries without court involvement.

●Your trust will be easier to update as your wishes and circumstances change instead of doing things piecemeal through joint ownership, payable-on-death or transfer-on-death accounts, or individual beneficiary designations.

●Your final wishes will remain a private family matter instead of being publicized in the local probate court records.

The Bottom Line on Trust Funding

Many people like the cost and time savings, as well as the added control over their money and property a living trust offers. Yet in the end, an unfunded trust isn’t worth the paper it’s written on.

We are available, by phone or video conference if you prefer, to answer your questions about funding your trust, and we look forward to working with you and your advisors on all of your estate planning needs.

Is a Handwritten Will Really Easier and Less Expensive?

At first glance, it may appear that a handwritten will is the easiest and cheapest way to dispose of your money and possessions when you pass away. However, this may not be the case for several reasons:

Lengthy and expensive probate process. Like other wills, a handwritten will must be admitted to and accepted by the probate court after death before it takes effect. Although you may save the initial legal fees of having an estate planning attorney draft a will and/or trust, handwritten wills are notorious for resulting in complicated, expensive, and public probate proceedings and legal challenges. There may be questions about whether the handwritten document was intended to be a will or if it was just your thoughts about what you ultimately would like to include in a will. Also, although what you write in your will may seem very clear to you, others may not understand what you intended. In addition, some heirs may question whether the handwriting is actually yours—meaning that witnesses or even a handwriting expert must be called to verify it. This will cost extra money and time.

Having an experienced estate planning attorney draft a will that is properly executed (i.e., signed by you and witnessed by others) will facilitate a smoother probate process, avoiding the unnecessary expenses that so often arise when a will is handwritten. Further, the probate process can be avoided altogether if you create a trust. When you create a revocable living trust, you transfer your money and property to the trust for the benefit of beneficiaries you choose. Because the trust owns your property at your death, probate is not required to transfer ownership to your beneficiaries when you die. A trustee that you select will manage the property and funds you place in the trust and will transfer them to your beneficiaries in the way you have directed without court involvement or delays.

Inadequate expression of intentions. Many people know who they would like to receive certain items, but they may not know the best way to clearly express it so that it will hold up in the probate proceeding. They also may not think of everything that the will should address: For example, who will care for your children if something happens to you, or what will happen if the person your will names to receive your property dies at the same time or before you? What will happen to the money or property you have set aside for your children if you die when your children are still minors? These are only a few of the issues that an experienced attorney can help you address in a professionally drafted will or trust.

Moving to a state that does not recognize handwritten wills. If there is a chance you may move, it is important to remember that about half of the states do not allow handwritten wills. A few will recognize a handwritten will that is legally valid in the state in which it was made, but most will not. If you relocate to one of these states and do not have a will that is valid in that state, it will be the same as if you had died without a will. Your money and property will go to the heirs specified by the state’s “intestacy” laws—which may not be the people you would have chosen.

We Can Help Ensure Your Wishes Are Carried Out

A handwritten will may appear to be the easiest and least costly way to make sure the people you want to have your money and property when you pass away receive it. It may indeed be easier and cheaper for you—but not necessarily for your family members and loved ones. Instead, it may result in months or even years of court proceedings, will contests, and damage to family relationships. We can help you draft a will or trust that will ensure that your wishes are fulfilled and prevent unnecessary stress for your grieving family and loved ones.

Please call us today to set up a meeting so we can create an estate plan that will address all of your goals.

Common Mistakes with DIY Estate Plans

The internet offers all the information and tools we need at our fingertips to create our own estate plan, right? For most people, this is simply not true. Several years ago, Consumer Reports®, an independent nonprofit consumer watchdog group, created wills using the forms provided by DIY websites and asked three law professors to review them. Although the professors found that the wills drafted using the DIY services were better than wills drafted by non-lawyers on their own, they were inadequate to fully meet the needs of most consumers. Although your DIY “estate plan” may initially cost only $49.95, it may end up being much, much more expensive than an estate plan designed by an experienced estate planning attorney. 

Wills are only one part of a comprehensive estate plan that fully protects you and your family. Even if your DIY will meets all your state’s requirements and is legally valid, the will alone is unlikely to be sufficient to address all of your estate planning needs. Furthermore, DIY packages you can buy online that purport to be comprehensive may not include important documents you may be unaware that you need. As a non-lawyer, you have not received legal training and are unlikely to know which documents you need to fully plan for the future. This is not a criticism—an estate planning attorney doesn’t know how to fly a plane or create a delicious crème brûlée without the necessary training and experience. Without expertise in a particular area, we simply don’t know what we don’t know—and this could lead to unnecessary heartache for you or the family and loved ones you will one day leave behind.

DIY estate plans may not conform to the applicable law. The law that applies to estate planning is determined by each state—and there can be wide variations in the law from state to state. Although the forms you can find on the internet may claim to conform to your state’s law, this may not always be the case. In addition, if you own property in another state or country, the laws in those jurisdictions may differ significantly, and your DIY estate plan may not adequately account for them.

A DIY estate plan could contain inaccurate, incomplete, or contradictory information. For example, if you create a will using an online questionnaire, there is the possibility that you may select the wrong option or leave out important information that could prevent your will from accomplishing your goals. In addition, some online services allow users to insert additional information not addressed by their questionnaire that could contradict other parts of the will.

Your DIY estate plan may not account for changing life circumstances and different scenarios that could arise. For example, if you create a will in which you leave everything to your two children, what happens if one of those children dies before you? Will that child’s share go entirely to his or her sibling—or will it go to the child’s offspring? What if one of your children accumulates a lot of debt? Is it okay with you if the money or property the indebted child inherits is vulnerable to claims of the child’s creditors? What if your will states your daughter will receive the family home as her only inheritance, but it is sold shortly before you die? Will she inherit nothing? As opposed to a computer program, an experienced estate planning attorney will help you think through the potential changes and contingencies that could have an impact on your estate plan and design a plan that prevents unintended results that could frustrate your estate planning goals.

DIYers frequently make mistakes in executing the plan. Under the law, there are certain requirements that must be met for wills and other estate planning documents to be legally valid. For example, a will typically requires the signatures of two witnesses, but state law differs regarding what is necessary for a will to be validly witnessed. Some states require not only that the will be signed by the will maker and the witnesses, but also that they all must sign the will in each other’s presence. In other states, witnesses are not required to be in the same room when the will maker signs the will, and they can even sign it later if the will maker tells them his or her signature is valid.  Similarly, for a valid power of attorney, some states require only the signature of the principal (the person who is granting the power of attorney) to be notarized, but some states require the signatures of both the principal and the agent (the person who will act on behalf of the principal) to be notarized. In other states, one or more witnesses are required—and these requirements may also differ depending upon the type of power of attorney (financial vs. medical) you are trying to execute. If you seek the help of an estate planning attorney, you can rest assured that all of the “i’s” are dotted and the “t’s” are crossed, and that your intentions will not be defeated because of mistakes made during the execution of your documents.

Assets may be left out of your estate plan. Many people do not realize that a trust is frequently a better estate planning tool than a will because it avoids expensive, time-consuming, and public court proceedings (i.e., the probate process) that would otherwise be necessary to transfer your money and property to your heirs after you pass away. Even if you have created a DIY trust, if you do not fund it, that is, transfer title of your money and property into the name of the trust, it will be ineffective, and your loved ones will still have to endure the probate process to finish what you started. Further, if you do initially transfer title of all your assets to the trust, it is likely you will acquire additional property or financial accounts over the years that must go through probate if title is not transferred to the trust. Regular meetings with an estate planning attorney can help ensure that your plan accomplishes your goals and that your grieving family members are not left with major headaches after you die.

We Can Help

A DIY estate plan can lead to a false sense of security because it may not achieve what you think it does. If your DIY will is not valid, your property and money will go to heirs specified by state law—who may not be the people you would have chosen. An unfunded trust will be ineffective. Banks may not accept a generic power of attorney you found on the internet. Laws affecting your estate plan may change. These are just some of the mistakes or unforeseen issues that could cost your family dearly. An experienced estate planning attorney is aware of any trends in the law that could dramatically affect your estate plan and has the expertise needed to help you design and create a comprehensive plan.

Call us today so we can help provide you and your family with the peace of mind that comes from knowing that you have an estate plan that accomplishes your goals and will avoid unnecessary attorneys’ fees, headaches, or conflict for your grieving family when you pass away.

Small Business Owner? Know What Can Happen to Your Business If You Become Incapacitated or Pass Away

Preparing your company for your incapacity or death is vital to the survival of the enterprise. Otherwise, your business will be disrupted, harming your customers, employees, vendors, and ultimately, your family. For this reason, proactive financial planning — including your business and your estate plan — is key. Below are some tips on how to protect your company and keep the business on track and operating day-to-day in your absence.

Preparing for the Unexpected

If you are a small business owner, your focus is likely on keeping the company running on a daily basis. While this is important, looking beyond today to what will happen if you can’t run your business should be on the top of your to-do list. If you die or become incapacitated without a plan in place, you will leave your heirs without clear instructions on how to run your company. This can jeopardize the business you worked so hard to build. The right plan along with adequate insurance can help keep your business running regardless of what happens.

Execute the Proper Business Documents

If your company has several owners, a buy-sell agreement is a must. This contract will outline the agreed upon plan for the business should an owner become incapacitated or die. Provisions in the buy-sell agreement will include:

  • how the sale price for the business and an owner’s interest are determined,
  • whether the remaining owners will have the option to buy the incapacitated or deceased member’s interest, and
  • whether certain individuals can be blocked from participating in the business.

Execute the Proper Estate Planning Documents

A properly executed will or trust will allow you to state how you would like your assets to be transferred — and who will receive these assets — at your death. A will or a trust also lets you identify who will take charge of the assets and manage their disbursement (including your business accounts) according to your wishes.

Although a will can be used to pass assets at death, creating and properly funding a trust allows any assets owned by the trust to bypass the probate process making distribution of assets to heirs much faster, private, and may reduce the legal fees and estate taxes your heirs will owe.

Additionally, a trust can help your loved ones manage your trust assets if you become incapacitated. While you are alive and well, you typically act as the trustee of the trust, so you can manage your business and assets with little change from the way you do now. But unlike a will, a trust allows your successor trustee to step in manage things if you become incapacitated. This process avoids court involvement, allows for a smooth transition of trust management (which can be very important if your business is an asset of your trust), and proper continuing care for you in your time of need. Although having a will can be a great way to start, most business owners are much better off with a trust-based estate plan.

Purchase Additional Insurance

Whether you own the business by yourself or are a co-owner, it is important to have separate term life insurance and a disability policy that names your spouse and children as beneficiaries. The money from these policies will help avoid financial hardship while the buyout procedures of buy-sell agreement are being carried out.

Contact an Estate Planning Attorney

Having a plan for your business in the event you are unable to continue managing the company is essential to keep the company going.

We can explain the many options you have to protect your enterprise so that you can focus on what you do best — running your company. Give us a call today – (405) 857-8231!

Myths We Tell Ourselves About Estate Planning

Estate planning can be a very difficult process. While it’s not brain surgery, making the decision to move forward with the planning requires us to face the fact that we will not live forever. This thought can stop many people right in their tracks. Others talk themselves out of seeing a qualified attorney to put together an estate plan based on some of the following common myths:

Myth #1: Only the Rich Need Estate Planning

When we hear about estate planning on the news or read about it on the internet, it is usually in regards to a wealthy businessman or celebrity who made some error, did no planning, or has family members who are angry about the planning that was actually done. The topic catches people’s attention: Rich people have so much that surely they need planning and can afford to have the planning done correctly. By comparison, when the average person thinks about their own property and planning needs, they assume that it is not necessary because they do not  have anything close to Bill Gates’ billions.

However, this could not be further from the truth. Estate planning is about more than just the money. While proper planning allows you to determine who gets your money and property upon your death, the planning process also addresses what happens if you become incapacitated and someone has to make decisions on your behalf–a far more likely scenario. If you have not done any planning, the court will have to appoint someone to make your medical and financial decisions for you. This can be very time consuming, expensive, and public. It can also wreak havoc on a family if they disagree about who should be appointed and how decisions should be made.

Even for those of modest means, who gets your hard-earned savings when you die is an important consideration. Without any planning, state law will decide who gets what—and many times, what the government’s best guess as to what you would want is contrary to what you actually want. But, because you did not take the opportunity to formalize your wishes in an estate plan, the state has to step in and do it for you.

Myth #2: I Don’t Have to Plan Because My Spouse Will Get Everything

For many married couples, it is common to own property or bank accounts jointly. If these assets are owned jointly or as tenants by the entirety, when one spouse dies, then the surviving spouse automatically becomes the sole owner. In most cases, this is the desired outcome for married individuals.

However, this approach can be dangerous. While it is convenient for assets to pass automatically to the surviving spouse, this outright distribution offers no protection. What happens if, after your spouse dies, you get into a car accident and are sued? If the assets you owned jointly automatically became yours alone, this money and property are available to satisfy any judgment that could be entered against you resulting from a lawsuit.

Additionally, what if, after you die, your spouse gets remarried? If the brokerage account you owned jointly becomes your spouse’s only, your spouse is now able to spend it all in any way he or she wants without any consideration for your wishes or the next generation. Your spouse’s new spouse could go out and buy a sports car with the money you intended to pass to your children. With blended families being common today, this is a real concern for many people.

Estate planning does not mean that you have to disinherit your spouse. Rather, it means the two of you can sit down and plan out what happens to your joint property and accounts upon either of your deaths, ensuring that the survivor is provided for and that any remaining money and property are gifted in a way that is agreeable to both of you.

Myth #3: A Will Avoids Probate

Many people believe that once they have created a will—whether drafted by an experienced attorney, or using a DIY solution or online form— they have avoided probate. Unfortunately, they are wrong.

While a will is a great way to designate a person to wind up your affairs once you have passed, determine who will get your hard earned savings and property, and, if necessary, appoint a guardian to care for your minor children, this document has to be submitted to the probate court to begin the process of distributing your money and property. The level of involvement by the probate court can vary depending on the circumstances, but this process is not private, as the will becomes a matter of public record.

We are here to help answer any questions you may have about estate planning, the estate planning process, or probate. Together, we can craft a one-of-a-kind plan to ensure that you and your family are properly protected.

Give us a call today.

Our Beloved Pets – Love Them Today and Love Them Tomorrow with a Pet Trust

Whether you already have a pet or you are planning to adopt one (or several), it is important not to forget to make arrangements for their care if something should happen to you.

Consider a Pet Trust

Although many pet owners consider their pets as members of their family, they often neglect to include their pets in their estate planning. Pet owners may assume that family will care for their pets if they become ill or pass away. But this can create a dilemma for family members who are unable to afford the costs of caring for another pet or who may not be animal lovers themselves. In the worst-case scenario, your beloved pet could end up in a shelter, where it could be euthanized if it is not adopted.

Making arrangements for your pet in your will may not be the best option, because it leaves the fate of your pet in limbo while your estate is probated—a process that could take several months. In addition, even if you name a caretaker in your will and give that person a gift intended to be used for your pet’s care, with a will, there is no way to guarantee that your wishes are ultimately carried out: The person you named could just take the money and give your pet away. Because your pet becomes the property of that person, the caretaker is free to make decisions about it that might be contrary to your wishes. Also, if the caretaker has any creditors or liabilities, the money you have provided for your pet’s care will be vulnerable to claims made by the caretaker’s creditors.

A pet trust will ensure that a caretaker of your choice is in place as soon as you are no longer able to care for your pet. In addition, the terms of the trust are binding, and the money you provide for your pet’s care must be disbursed and spent in the way you have designated in the trust—and can’t be reached by the caretaker’s creditors. The caretaker has a fiduciary obligation to take care of your pet in the way you spell out in the trust, and the trustee has a fiduciary obligation to make sure that the funds provided to the caretaker are used only for the purposes described in the trust. The trust could specify that the trustee will distribute money to the caretaker only for the benefit of the pet. Alternatively, the trust could require the trustee to make payments directly to veterinarians and other service providers for the pet.

Steps to Set Up a Pet Trust

  • Choose a caretaker. It is important to give thought to who will be the best caretaker for your pet. Be sure to obtain the consent of the person you would like to care for your pet: Don’t just assume someone is able or willing to take on the role. You can also name back-up caretakers if the initial caretaker is unwilling or becomes unable to care for your pet in the future.
  • Choose a trustee. One way to ensure that the money you provide in the trust is used only for the benefit of your beloved pet is to appoint a separate person to be the trustee. In this case, the person caring for your pet is not the same person managing the money, providing a check on the caretaker and oversight on how the money is spent. The trustee can be a trustworthy person who is good at managing money but not at providing day-to-day care for a pet.
  • Include instructions for pet care. These instructions can be included in the terms of the trust, but a better option may be to set forth the instructions in a separate document that is referenced in the trust agreement. The use of a separate document will enable you to easily update or modify the care instructions in the event that your pet’s needs change over time. You can provide specific instructions for exercise and grooming, general care, medical care, and even a memorial for your pet.
  • Determine the amount of funds that will be needed. This will vary widely depending upon the type and number of pets you own. Less money will be needed to care for an older cat than for a younger macaw (lifespan of 50 to 100 years in captivity) or a red-eared slider turtle (lifespan of 40 years in captivity). In addition, an exotic animal such as a reptile or bird is generally more expensive to care for than the average cat or dog.
  • Designate a remainder beneficiary. In case the funds you provide for your pet’s care are not exhausted, you should name another beneficiary to receive any remaining money upon the trust’s termination. This could be a person or a charity: It is completely up to you.

Some states have limitations on the length of a pet trust, for example, 21 years. This may not be long enough for pets with longer lifespans, so check with us to be sure that the trust you establish will last for your pet’s entire lifespan. The trust can be set up in another state if necessary.

Contact Us for Help

If you are concerned about what will happen to your pets if you are unable to care for them, we can help you make arrangements for their care. You can gain peace of mind by not leaving your pet’s future up to chance. A pet trust will ensure that your beloved companions are well cared for and that your wishes are respected.

Contact us to set up a consultation – (405) 857-8231