Category Archives: Estate Planning

Do It Now: Name a Guardian for Your Minor Child(ren)

We know it’s hard. Thinking about someone else raising your children can stop you in your tracks. It feels crushing and too horrific to consider. But you must. If you don’t, a stranger will determine who raises your children if something happens to you – your children’s guardian could be a relative you despise or even a stranger you’ve never met.

No one will ever be you or parent exactly like you, but more than likely, there is someone you know that could do a decent job providing for your children’s general welfare, education, and medical needs if you are no longer available to do so. Parents with minor children need to name someone to raise them (a guardian) in the event both parents should die before the child becomes an adult. While the likelihood of that actually happening is slim, the consequences of not naming a guardian are more than intense.

If no guardian is named in your will, a judge – a stranger who does not know you, your child, or your relatives and friends – will decide who will raise your child. Anyone can ask to be considered, and the judge will select the person he or she deems most appropriate. Families tend to fight over children, especially if there’s money involved – and worse – no one may be willing to take your child; if that happens, the judge will place your child in foster care. On the other hand, if you name a guardian, the judge will likely support your choice.

How to Choose a Guardian

Your children’s guardian can be a relative or friend. Here are the factors our clients have considered when selecting guardians (and backup guardians).

• How well the children and potential guardian know and enjoy each other

• Parenting style, moral values, educational level, health practices, religious/spiritual beliefs

• Location – if the guardian does not live in Norman, Oklahoma, but lives far away, even out of state, your children would have to move from a familiar school, friends, and neighborhood

• The age and health of the guardian-candidates:
  • Grandparents may have the time, but they may or may not have the energy to keep up with a toddler or teenager.
  • An older guardian may become ill and/or even die before a child is grown, so there would be a double loss.
  • A younger guardian, especially a sibling, may be concentrating on finishing college or starting a career.

• Emotional preparedness:
  • Someone who is single or who doesn’t want children may resent having to care for your children.
  • Someone with a houseful of their own children may or may not want more around.

WARNING: Serving as guardian and raising your children is a big deal; don’t spring such a responsibility on anyone. Ask your top candidates if they would be willing to serve, and name at least one alternate in case the first choice becomes unable to serve.

Let’s Continue this Conversation

We know it’s not easy, but don’t let that stop you. We’re happy to talk this through with you and legally document your wishes. Know that you can change your mind and select a different guardian anytime you’d like. The chances of needing the guardian to actually step in are usually slim (we always hope this is the one nomination that’s never actually needed); but, you’re a parent and your job is to provide for and protect your children, so let’s do this.

Call our office now for an appointment and we’ll get your children protected.

Most people think of probate (the process of collecting, managing, and distributing a deceased person’s money and property) as a private process. However, because Wills are filed at the courthouse, probated estates become a matter of public record. That means your nosy neighbor Nellie can simply go down to the local courthouse, such as the Cleveland County Courthouse on 200 S. Peters Avenue, Norman, OK 73069, or hop online @ oscn.net/courts/cleveland, and find out about your probate. Really.

It’s Not Just Nellie That Has Access…

After a death, most states require that whoever has possession of the deceased person’s will must file it with the probate court –even if there won’t be any probate court proceedings. While Nellie may be an annoyance and have no reason to view the information other than curiosity, others can get access to your public records and make your beneficiaries’ lives miserable, such as:

● Financial predators. While today’s digital world is convenient, it’s also dangerous. Financial predators find ways to access sensitive personal information online. Since courts are part of a bureaucratic process that often moves slower than a glacier, months can elapse before you (or the court) realizes that your beneficiaries have been swindled.

● Charities. Even the most well-meaning charities can become an annoyance when money is considered “up for grabs.” This is especially true in an estate situation when those inheriting assets want to do the right thing and honor their loved one.

● Will challengers. Since a will that is filed with the probate court becomes a public record, those believing they have an interest (whether valid or invalid) can access the document and challenge the will. This can result in added costs and time defending the will from what could amount to a frivolous claim.

Avoid the “Nosy Nellie” Factor with a Trust.

Trusts are never filed with a court, either before or after your death. Probate courts are not involved in supervising your trust administration. So, you can avoid intrusions by busy bodies and predators by creating a trust. While some state laws require a total or partial disclosure of information regarding the trust to beneficiaries, it is still the best way to keep your legal affairs private. Did you hear that, Nellie?

Contact us today and let us help you create a trust to avoid probate and keep your family and financial affairs private. We are available to speak with you via telephone or through video conferencing if you prefer.

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 June1, 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.

Most people understand that having some sort of an estate plan is, as Martha Stewart would say, a “good thing.” However, many of us don’t take the steps to get that estate plan in place because we don’t understand the nuances between wills and trusts – and dying without either.

Here’s what will generally happen if you die, intestate (without a will or trust), with a will, and with a trust. For this example, we’re assuming you have children, but no spouse:

1. Intestate. If you should die intestate, your estate will go through probate and all the world will know what you owned, what you owed, and who got what. Your mortgage company, car loan company, and credit card companies will all seek payment on balances you owed at the time of your death. 

After that, state law will decide who gets what and when. 

• For example, if your only heirs are your children and you have not provided any instructions, state law will mandate divvying up proceeds equally. 
• Your older children will get their shares immediately if they’ve attained adulthood.
• But, the court will appoint a guardian to manage the money for your minor children until they become adults. 
• Shockingly, that guardian can charge a lot of money and be a total stranger – as can the guardian who raises your child. 
• Yes, if you die without a valid will, the court, not you, will decide who raises your minor children.

Keep in mind that since your death has been published to alert valid creditors, it’s not uncommon for predators (fake creditors) to come forth and make demands for payment – even if they’re not owed anything. 

The bottom line? Dying intestate allows state law and the court to make all the decisions on your behalf – regardless of what your intent might have been. Publicity is guaranteed.

2.     Will. If you should die with a valid will, your assets will still go through the probate process. However, after creditors have been satisfied, the remaining assets go to whom you’ve identified in your will. 

•       So, if you want to leave money to your children and name a guardian for the minor ones, the court will usually abide by your wishes. 
•       The same holds true if you specified that you wanted to give assets to a charity, your Aunt Betty, or your neighbor. 
•       Keep in mind that predatory creditors are still an issue as your death has been publicized. Even with a will, probate is a public process.

The bottom line? While a court oversees the process, having a will allows you to tell the court exactly how you want your estate to be handled. But, a public probate is still guaranteed.

3. Trust. If you’ve created a trust, you’ve taken control of your estate plan and your assets.  Trust assets are not subject to the probate process and one of the most important benefits of trusts is that they are private. Notices are not published, so you avoid predators coming after your estate. 

You’ll have named a trustee to manage your estate with specific instructions on how your assets should be dispersed and when. 

• One word of caution – trusts must be funded in order to bypass probate. 
• Funding means that your assets have been retitled in the name of your trust.
• Think of your trust as a bushel basket. You must put the apples into the basket as you must put your assets into the trust for either to have value.

You do still need a will to pour any assets inadvertently or intentionally left out of your trust and to name guardians for minor children.

The bottom line? Trusts allow you to maintain control of your assets through your chosen trustee, avoid probate, and leave specific instructions so that your children are taken care of – without receiving a lump sum of money at an age where they are more likely to squander it or have it seized from them.

Don’t let the will versus trust controversy slow you down. Call the office today; we’ll put together an estate plan that works for you and your family whether it be a will, trust, or both.