1. “Estate planning” is the process of taking steps, during your life, to plan for management and distribution of your assets both during your life and after your death.
2. Your “estate” is comprised of everything you own – your home, your car, rental properties, investments, checking and savings accounts, insurance policies, business interests, and personal possessions.
3. A “will” or “Last Will and Testament” provides instructions as to whom you want to receive what properties in your estate after your death. A will typically must go through the process of “probate” in your local court.
4. If you do no estate planning and die with an “estate”, or property solely in your name, state law will determine who inherits your estate through a process called intestate succession. Typically, your heirs are your spouse, children, and sometimes extended relatives such as siblings, nieces and nephews, and grandchildren.
5. If you wish to have part of your estate go to a friend, stepchild, domestic partner, or charitable organization such as your church or university after your death, you must do that through some type of estate planning. Oklahoma intestate succession law will not presume you intended to leave property to anyone other than your spouse or close blood relatives.
6. A handwritten (or “holographic”) will is valid in Oklahoma, so long as it is entirely handwritten, dated, and signed.
7. One way to avoid the need for probate is to ensure your property, especially real estate, is held in “joint tenancy” with another person, such as your spouse. Language providing that property is held by you and another as “joint tenants, with rights of survivorship” means that at your death, the other joint tenant becomes the sole owner of the property. If a deed provides only that you and the other person own the property, without specific joint tenancy language, however, a probate may be required.
8. Another way to avoid probate is to ensure your bank accounts have a “POD” (payable on death) provision, meaning that the person you designate can present identification and proof of your death to obtain full access to the accounts.
9. One important purpose for a will is to nominate a guardian to care for minor children in the event you and the other parent are unable to care for them.
10. If you own shares in a closely held corporation or are a member in an LLC, estate planning is critical to ensure your ownership of the business is transferred as you and the other co-owners intend.
11. The probate/estate administration process can take several months. It involves appointing a Personal Representative of the Estate, notifying creditors and satisfying claims against the Estate, creating an inventory of Estate assets, and distribution. Notices of hearings must be published in the newspaper and sent to known heirs.
12. It is important to give serious consideration to the person you name as the executor of your estate in your will. An executor should be someone you trust who gets along with your other beneficiaries. The executor should also be comfortable working with experts such as attorneys, financial advisors, and accountants, as multiple individuals may need to be consulted in order to settle your estate.
13. Another way to avoid the need for probate is to execute a “transfer on death” (“TOD”) deed. By signing a TOD deed, you can ensure real estate will be transferred to your selected beneficiaries at your death. A TOD deed remains revocable during your lifetime, meaning you can change your mind.
14. It is a good idea to title vehicles jointly with another person. However, probate can sometimes be avoided by presentation of various documents to a tag agent, including a signed affidavit, will, and death certificate.
15. Once you have signed a Last Will and Testament, it is critical that you keep the original document in a secure location, such as a safety deposit box or fire safe. If probate is ultimately required, the original Last Will and Testament will need to be filed with the court.
16. One of the most flexible tools for planning your estate is to use a trust. A trust can be created by you to own your property, and the trust agreement determines who manages the property (called a “trustee”), the terms by which the trust is managed, and how property is to be distributed. Generally, a trust avoids the need for a probate.
17. Many types of trusts exist. A “testamentary trust” is created in your will. A “living trust” is in place during your lifetime. A trust can be revocable or irrevocable.
18. Many factors should be considered when doing estate planning. These factors include your net worth, income and debts, and the types of assets you own; your age; the needs and sophistication of your spouse, children and other beneficiaries; and whether you expect to inherit property from someone else.
19. Trustees are the individuals who manage the trust and trust property. In most circumstances, you are the initial trustee of your trust. In the trust agreement, you name successor trustees to act after you, or in the event your initial trustee is unable or unwilling to act. In simple trusts, the successor trustees may be your spouse or an adult child.
20. In some cases, a corporate trustee is selected to manage the trust. A corporate trustee is typically a bank or financial institution that is well-equipped to manage and invest trust property. Corporate trustees are excellent choices for more complex trusts, or when it is not suitable to name a spouse, child, or other friend or family member to act.
21. A “revocable trust” can be changed by the creator of the trust (called a “settlor”, “trustor”, or “grantor”) as permitted by the trust agreement itself. An “irrevocable trust” typically cannot be revoked or amended once created by the Settlor, except by court order or other special circumstances.
22. Special considerations are due when a minor may be beneficiary of your estate plan. For example, you may want to leave property in trust for that minor’s benefit until they reach a certain age, while allowing a trustee latitude to use the funds to pay for education or living expenses. Additionally, you may wish to nominate a guardian in your Will to care for your minor child in the event you are not able to.
23. Another consideration in estate planning for high net worth clients is the potential impact of estate taxes. Currently, there is no estate tax in Oklahoma. The current exemption for federal estate taxes is $11.18 million per taxpayer.
24. One type of trust is a special needs trust, sometimes known as a supplemental needs trust. In this type of trust, a disabled beneficiary may enjoy the use of property held in trust for her benefit while continuing to receive government assistance such as Medicaid.
25. Another type of specialized trust is a wealth preservation trust. In Oklahoma, a Settlor may create this type of trust to protect assets from creditors. A majority of the assets in an Oklahoma wealth preservation trust must be Oklahoma-based, and the trustee must be an Oklahoma-based bank or trust company.
26. One of the most commonly forgotten assets in estate planning in mineral interests. Make sure you account for any mineral interests you own (or inherit in the future) when developing plans with your legal and financial professionals. In many cases, oil and gas companies may pay royalties to your heirs based on an affidavit without the requirement of a probate, however, in certain situations, a probate or estate administration may be required.
27. When estate planning, don’t forget to think about your funeral or memorial service. You can pre-plan and pre-pay for your services and burial/cremation costs, which can save your loved ones a great deal of stress.
28. Consider signing an Advance Directive for Health Care. This document allows you to indicate your wishes for end-of-life medical care, including artificial life-saving measures and artificial hydration and nutrition. In an Advance Directive, you also nominate a health care proxy to help enforce your decisions, and you can indicate your desire to donate your organs.
29. It is often a good idea to leave “letters of last instruction” to a loved one. Things you might include in your letter: important contact information (family members, financial advisor, accountant, lawyer, etc.); usernames and passwords for online accounts; location of safe, safe deposit box key, etc.; funeral wishes/plans; insurance policy information; and explanations for other estate planning decisions.
30. The bottom line – if you don’t plan your estate, it may be planned for you, and probably different than you would have wanted. Take steps today to make plans and ensure they are formalized and enforceable. And make sure you review your plan every few years.