Writing Your Tulsa Estate Planning Blog

One of the most common questions that people have about estate planning, is how to avoid probate. You probably cannot do so entirely, but you can make it quick and painless.

For most people, the word “probate” conjures up nightmare scenarios of protracted estate battles that cost lots of money and tear families apart. It is an ugly word for most people.

As a result, most people generally want to avoid having their estates go through probate.

In fact, one of the most frequently asked questions of estate planning attorneys is how to avoid probate, as Forbes points out in “Probate, Wills, Executors: Your Estate Planning Questions Answered.”

It is important to understand that probate is merely the type of court that a will or an estate without a will has to go through.

Most of the time, it is a relatively simple process, especially with the assistance of an estate attorney. However, there are times when it can be long and expensive, so the desire to want to avoid it are not unjustified.

The key is to have an estate plan that utilizes instruments that do not have to go through probate. The most typical of these are trusts, but there are other more complex legal instruments that can also be used.

However, even the most airtight probate avoidance estate plan might have to go through the probate process briefly.

All estate plans should have at least a simple pour-over will that directs any unaccounted for assets into a previously created trust.

If there are enough unaccounted for assets, they will need to go through probate. However, the process should be quick and easy.

Reference: Forbes (April 7, 2017) “Probate, Wills, Executors: Your Estate Planning Questions Answered.”

Even great amounts of family wealth, can easily be lost by future generations who do not preserve and add to it as the original wealth generator did.

James Jewett Stillman’s greatest lasting achievement was running the bank that eventually grew into Citigroup. However, he had another legacy.

Stillman also had a large and valuable collection of art and an estate he wanted to be preserved for use by the public. If everything had gone according to plan, the art and the estate would have been preserved for generations.

However, everything did not go according to plan.

His heirs are now trying to auction off the art, because they need the money to save the estate, as Bloomberg reports in “New York Banking Royalty’s Heirs Are Unloading Art to Save the Family Estate.”

The source of the problem, in this case, appears to be that trustees who were charged with running the estate have squandered millions of dollars over the years. The estate’s funds have run so low, that the heirs have no choice but to sell something. Therefore, they have chosen to sell the art.

The immediate lesson to be learned? It is very important to choose trustees carefully and to make sure that trust documents are carefully crafted to make squandering money difficult.

However, there is also a more important lesson that wealth does not last forever, unless it is properly maintained. Had it not been the trustees who squandered the wealth in this case, it might have been the future heirs.

Reference: Bloomberg (April 4, 2017) “New York Banking Royalty’s Heirs Are Unloading Art to Save the Family Estate.”

If you feel overwhelmed about planning your estate, it might be helpful to remember what is at the core of estate planning. It is a way to transfer assets.

Estate planning can be and do many different things. It can provide for the care of minor children. It can be a way to let people know that you love them. It can create a charitable legacy.

In fact, there are so many things estate planning can be and do that may people get overwhelmed thinking about all of them. As a result, they do not create estate plans.

At its core, however, estate planning is not that complicated. Estate planning can be as simple as transferring your assets after death.

As the Times Herald-Record explains in “Transferring assets upon death,” there are four main ways to do that, including:

•Wills – In a will you state who should get your assets and appoint someone to be in charge of making sure that your wishes are carried out. Wills have to be approved by a probate court.

•Joint Ownership – If you have assets in joint ownership with another person, then by law when you pass away the joint owner becomes the sole owner of the asset.

•Beneficiary Designations – For life insurance policies, retirement accounts and savings accounts, you name a specific beneficiary to receive the assets after you pass away. A court does not need to approve the designation.

•Trusts – With a trust, you state how your assets should be handled, appoint someone to handle them and name the people for whose benefit the assets will be handled.

How do you know which approach or approaches are best for your circumstances? Contact an experienced estate planning attorney.

Reference: Times Herald-Record (March 15, 2017) “Transferring assets upon death.”

Many people have fond memories of their vacation homes and would like to keep them in their families, after they pass away. That requires some considerations.

For many people, the best memories they have of spending time with their families is at a family vacation home when their children were still young. On vacation when people have few worries about work, they have more time to develop strong bonds with their children.

People remember these times fondly.

Many people would like to make sure those vacation homes remain in their families, so future generations can have similar experiences.

The Globe and Mail recently discussed some things to consider about how to do so in “How to keep the cottage in the family.”

While the paper is Canadian, the considerations are applicable to the U.S. and include:

•Consider any tax implications for your estate and children. Both federal and state estate taxes might need to be paid, as well as property taxes. It is important to ensure that money is available to pay those taxes.

•You might want to use a trust to pass your vacation home down to your family, especially if you have more than one child. A trust can preserve the property for generations and can also take care of any maintenance and property taxes.

•Make sure that your children want the vacation home. One or more of your children might have good reasons for not wanting it and you may need to equalize your estate to give them something else.

Reference: Globe and Mail (April 11, 2017) “How to keep the cottage in the family.”

For decades, Delaware trusts were considered the gold standard for asset protection. A recent case has called that into doubt and many people now prefer Nevada trusts.

When people set up dynasty trusts, one of their goals is to keep assets in the family. That is the primary reason for the trusts. People would rather have their assets go to their children and grandchildren, instead of an ex-spouse of one of the children getting the assets, for example.

For a long time, the preferred way of accomplishing this was to create a Delaware dynasty trust. It was believed that Delaware offered the best asset protection.

A 2014 court decision, however, has led many people to question whether Delaware is still the best option, according to Kiplinger in “Delaware Trust? You May Want to Consider Nevada Instead.”

The case is truly only remarkable because the decision came as a surprise.

The facts themselves are simple.

A man created a Delaware dynasty trust for the benefit of his son, his son’s spouse and his grandchildren. Over the years, the trust assets grew to hundreds of millions of dollars. The son and his wife got divorced.

The court ruled that the now ex-spouse was entitled to a portion of the dynasty trust, so the assets were not kept in the family as desired.

This decision has caused many to look for other states in which to create trusts that better preserve assets in the family. Nevada is the most popular choice, since it allows trusts to be created that shield assets from ex-spouses, even for child support purposes.

Reference: Kiplinger (March 2017) “Delaware Trust? You May Want to Consider Nevada Instead.”

Much of the world’s wealth is in the hands of a relatively small number of super wealthy individuals. Many of them are now elderly and making plans about what will happen to their wealth, after they pass away.

Over the past few years, you may have heard reports about income and wealth inequality in the U.S. Economic data shows that the country’s wealth is rapidly being concentrated into fewer and fewer hands, at the top of the socioeconomic scale.

As a result, many politicians like to talk about the top 1%. However, the data shows that wealth is even far more concentrated than that. Actually, it is in the top 0.1%.

This same phenomenon is not just occurring in the U.S. It is happening all over the world.

What will happen to all of that concentrated wealth when the current holders pass away, is a burning question as they continue to get older and older and eventually die?

This was the subject of a recent Private Wealth article “The World’s Aging Rich Are Plotting What’s Next.”

The article provides many examples of what various wealthy people are planning. They naturally wish to keep their wealth away from waiting governments and do not want their families to fight over it.

This has led to various legal methods to avoid estate taxation and other problems.

Some are choosing to transfer the bulk of their assets to family members now. Others are planning to give a large portion of their wealth away to charities, so their families have nothing to fight over.

Since much of the world’s wealth is in complicated trusts and other entities, it will be interesting to see how it all gets sorted out when the current holders continue to age and do pass away.

Reference: Private Wealth (March 3, 2017) “The World’s Aging Rich Are Plotting What’s Next.”

Trusts might be more of a topic of political conversation today, thanks to the Trump family, than at any other time since President Theodore Roosevelt waged war against the trusts of the Gilded Age. That could be a good thing.

Trusts are not often a subject of much public discussion. They are important to estate planners, but as a matter of pressing national concern they rarely register.

The last time they were considered to be a matter of nightly discussion on the national news was during the first Roosevelt administration, when President Theodore Roosevelt resolved to bring the trusts to heel.

Today, trusts are back in the news because of the Trump administration and how members of President Trump’s family are using trusts to hold their assets.

A lot of digital ink has been spilled over whether the President’s family is using trusts in ethically appropriate ways.

One of the more recent examples of that comes from a New York Times article on Ivanka Trump’s trust titled “Despite a Trust, Ivanka Trump Still Wields Power Over Her Brand.”

While the press reporting has been mostly over the concerns about the ethical considerations of the Trump family trusts, there is another possible story.

What the Trumps are teaching us is that trusts can come in all sorts of shapes and sizes. They can be created for different purposes and give different people various levels of control over the assets in the trusts.

Whether or not you care about the ethical considerations of the Trump trusts, pay attention to the different things they do with their trusts. It might give you some ideas about what you can do with trusts that you can make part of your estate plan.

Reference: New York Times (March 20, 2017) “Despite a Trust, Ivanka Trump Still Wields Power Over Her Brand.”

Most Americans do not have wills. They should get one, but they should not stop their estate planning with just a will.
The estate planning news has recently been full of stories about a new survey that showed that 58% of American adults do not have wills. The survey found that it was even worse for parents of minor children. Some 64% of them do not have wills. They have more reasons than anyone else have a will.

This has resulted in many articles about how Americans need to get wills and why their excuses for not getting them are misguided. That is all true.

Americans do need to get wills and they do need to stop making the same excuses, as the AARP points out in “Haven’t Done A Will Yet?”
However, estate planning should not stop with just a will.
A will is only one of the documents you can get by going to an experienced estate planning attorney. For example, you might learn that a trust is a better primary estate planning tool for you to use in your particular situation. Through an attorney, you can also get other important legal documents, including a health care power of attorney, a general durable power of attorney and a living will.
These and other legal documents will make sure that your financial affairs are managed properly, if you ever become unable to handle your own affairs.
Do get a will if you do not already have one. However, do not stop there. Make sure that you have a more thorough estate plan by consulting with a qualified estate planning attorney.
Reference: AARP (Feb. 24, 2017) “Haven’t Done A Will Yet?”

When creating an estate plan, you will want to consider how to leave assets for the benefit of your spouse. There are several ways to do so.

Unless you and your spouse have a valid legal agreement otherwise, you will not be able to disinherit him or her in all but the most unusual circumstances. In every state, a spouse is entitled to a spousal elective share of a deceased partner’s estate, although the exact amount of the share varies between states.

Consequently, if you make no provisions in your estate plan for your spouse, your spouse can elect to take his or her share and the court will alter your plans. Therefore, when you are creating your estate plan, you need to consider how to leave an inheritance for your spouse, even if you would rather not.

There are several different ways to do so, as The Times Herald discusses in “Options for leaving an inheritance to a spouse.”

The biggest decision is whether to use a will or a trust.

With a will, you can leave assets for your spouse to receive outright as free of any restrictions or control. However, there are disadvantages, especially if you want to avoid probate and ensure that the spouse will leave any remaining assets to heirs of your choice, when the spouse passes away.

With a funded living trust, probate may not be required. There are also ways to make sure that any remaining assets are given to people of your choosing. There are several different types of trusts that can be used to include testamentary trusts under a will, once the estate clears probate.

An estate planning attorney can go over your options and help you to determine the best option for you.

Reference: The Times Herald (Feb. 20, 2017) “Options for leaving an inheritance to a spouse.”

When most people think of trusts, they think of living trusts. That is something that a person creates while they are alive and that has a written trust agreement. There is another type of trust.

Revocable living trusts are now so common that many people assume all trusts are just that – revocable living trusts. However, there are many different types of trusts.

Trusts can also be irrevocable. In addition, not all trusts are living trusts.

A living trust merely refers to any trust agreement that a person makes during his or her lifetime. Another type of trust exists that people can make after death. It is called a testamentary trust. Many people have documents that create one, even if they are not aware of it, as NWI Times discusses in “Wills can create trusts.”

It is very common for a will to create a testamentary trust, when the person making the will has minor children. The language of the will leaves assets to the child as held in trust by a third party. That third party becomes the trustee and assumes all of the normal responsibilities of a trustee.

You might even have these provisions in your will and not know about it, if you have not reviewed your will closely enough.

Whether your estate plan creates a trust for minor children under a revocable living trust or a will, make sure that you understand what it will do (and not do) to protect and manage the inheritance. A qualified estate planning attorney can help you, and even make adjustments as may be needed.

Reference: NWI Times (Feb. 19, 2017) “Wills can create trusts.”