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Category: Estate Planning (Page 1 of 2)

6 Tips to Reduce Debt and Get Closer to Financial Freedom

By Sarah Stewart Legal Group

Everyone dreams of being wealthy.  Who wouldn’t love to have enough money to do whatever they want whenever they want?  Unfortunately, for the first time in American history, many Millennials, those born in the early 1980s to the mid 1990s, are making less and working harder than their parents did and are buried in far more debt.

Pay for young people in America today is far less than their parents received at their age.  Average income for young people is the lowest it has been since the 1980s.

The Baby Boomer generation graduated with very little, if any, college debt because tuition was much lower in the 1960s and 1970s.  Millennials have graduated with an average of $34,000 in student loan debt. Also, Millennials carry over their credit card debt each month, adding ridiculous amounts of interest and fees each month to their bills.

Because of these conditions, the Millennial generation is delaying buying a home, getting married, and buying cars. So, for most Millennials, paying off their debt is their dream, and a difficult one to attain at that.

If you are a Millennial ridden with debt, you need a good financial plan to get rid of your debt and start your real life.  Here are 6 tips to help you plan:

(1) Decide How Much You Owe

We can’t make a plan if we don’t know what we’re planning for.  Pull out those statements and add up your total amount of debt.

(2) Negotiate Interest Rates

Try to negotiate with your debt-holders on interest.  Just a few points in interest can make a huge difference in your overall payout.  Shop around for consolidation and refinancing options.  Just don’t fall for the “___ months, no interest” trap, unless you can reasonably pay off the debt you’re transferring in that amount of time. Otherwise, you’ll wind up paying interest on your balance, and usually, interest on all the months you supposedly didn’t have interest accruing.

(3) Budget, Budget, Budget

Budget isn’t a dirty word.  Most wealthy individuals live by budgets- and praise them.  Figure out what you can live with and what you can’t live without.  Cut out the extras and bring your monthly budget down to the bare-bones. Pay whatever extra money you can to your lowest debt until it’s paid off, then focus on your next lowest. Re-evaluate your budget each month, and be sure to stick to it! When you budget, you can also make sure you are not adding to those credit card balances each month!

(4) Build an Emergency Fund

Having an emergency fund is essential to getting your finances in check.  If an emergency happens and you don’t have the money set aside to pay for it, you derail all your hard work. Start putting a little aside each month to help with emergencies. In fact, make your emergency fund your first priority, until you have saved at least $1,000.  Then, start working on paying down that debt.

(5) Call a Professional

Accountants and other professionals can help you plan for debt reduction.  Don’t be afraid to ask for help. Or, pick up books by financial gurus- and follow their advice.

(6) Make an Estate Plan

The number one excuse I hear for not planning is “I don’t have an estate.”  This is a myth.

The reality is, everyone has an estate, no matter the size. If you don’t make a plan, the Court will decide who gets your valued things.  Estate planning also determines who you want to help you when you can’t help yourself.  Estate plans are, quite simply, for everyone.

Once you have a plan in place, the rest of the pieces will fall into place.  You may have months where you do better than others, and that’s ok.  Just continue to work on yourself and your finances and you will progress.

3 Essential Estate Planning Documents for Newly Weds and New Parents

By Sarah Stewart Legal Group

Marriage and babies are huge life-changing situations.  These happy times take up so much of our minds each and every day that the importance of planning for our families after these events can be a distant afterthought.

Estate plans are important, even though most new families do not have large estates.  There are many considerations that still need planning, such as guardianship of a child if the parents pass away, and/or ensuring spouses keep the full estate if one of them dies.

It is always important to plan these aspects of your estate and not let the Court determine them for you.  There is no better time to start planning than soon after the honeymoon or new addition arrives!

Every new family should consider the following 3 Essential Estate Planning Documents.

(1) Will or Trust

At the very least, spouses should have Wills in place outlining their wishes for their assets after their death.  Maybe surprisingly, Oklahoma law rarely allows spouses to keep all of a deceased spouse’s assets, unless a Will or Trust says they can. You also have the opportunity to name someone to care for your children if both you and your spouse die.

You will also want to decide if you want your family to go to Court if something happens to you.  If the answer is no, you will want a Trust, or other probate avoidance planning, in place to protect your family from the increased financial and emotional burden of court proceedings.

(2) Powers of Attorney

In Oklahoma, no one is automatically allowed to act for another individual.  If you have joint accounts and property, both spouses can access that information.  However, if any property is separate, the spouse cannot access it without a Power of Attorney, or other legal permission.

Also, spouses are not allowed to make Medical decisions for their incapacitated spouses under Oklahoma law, without a Medical Power of Attorney. If you or your spouse get into a car accident that leaves you unable to walk for any amount of time, you will be glad you have a Medical Power of Attorney in place.

(3) Advance Directive for Health Care

Under Oklahoma law, no one has the authority to withhold life sustaining treatment for someone who cannot make his or her own medical decisions.  The only document that authorizes withholding life-sustaining treatment is the Advance Directive for Health Care.

The Advance Directive consists of 3 parts. (1) The document takes you through several scenarios and asks you to initial for each one if you would want artificial hydration and nutrition only, no life-sustaining treatment, or everything. (2) The document then asks you to choose a health care proxy. The proxy can make medical decisions for you when you can’t, including whether or not to apply life-sustaining treatment. (3) In the third part, you state your wishes for organ and tissue donation.  You can donate for transplantation to other people, or for dental or medical research and advancement.

These documents are the bare necessities that everyone, but especially newly weds and new parents, should have for their estate plan.

An estate plan is a living organism that evolves and changes as you and your life change.  Please be sure to put a plan in place, and revise it as your life circumstances change.

3 Most Often Missed Assets in Estate Planning

By Sarah Stewart Legal Group

If you have a Trust or a Will set up, you may think your job is done.  It’s all smooth sailing from here.  You’re set!

But, the truth is, your job is just beginning. A trust is only as good as what you put in it, and a Will does not avoid probate.  So, you need to have a back up plan for a Will, and make sure your trust is funded, if that’s your chosen plan.

It’s easy to have real estate placed into a trust.  Often, the attorney can do that for you.  Funding your trust, or avoiding probate on other assets can be harder. Attorneys cannot easily access these accounts on your behalf and with so many options to open accounts, some can easily be missed.

Make sure you have included the following most often missed assets in your trust or beneficiary plans.

(1) Bank Accounts

There are so many options available for opening banking accounts today.  You can click a few buttons online, put in a few bucks, and you’re all set.

Whether it be checking or savings, you want to make sure your accounts are titled in the trust you created, or have payable on death beneficiaries and powers of attorney if you do not have a trust.  That way, when something happens, your bank accounts can automatically go exactly where you want them to or be managed in a way you like.

(2) Retirement Accounts

You can leave your trust, or anyone you would like, as a beneficiary on your retirement accounts.

People who have worked for decades for an organization can forget to update beneficiaries, or may even forget what company holds their accounts.  On the other hand, those who have changed jobs frequently nay not have rolled their accounts over and have several different accounts.  Keep track of this information and update beneficiaries after major life changes.

(3) Stocks, Bonds, Etc.

Much like retirement accounts, these are assets people tend to hold for a long time and can sometimes forget about. Also, like retirement accounts, these items usually allow you to choose one or more beneficiaries.

Be sure to keep track of all of these types of assets you own and keep beneficiaries updated.

Making a plan for your family when you die is just the beginning.  You will need to fund your trust with all of your most important assets, or make a plan for distribution in addition to a Will, if you have chosen a Will for your estate planning.

You will also want to update and change your plans as life changes. Adding and removing beneficiaries, and updating assets are vital to keeping your plan effective throughout your lifetime.

Or course, if you have not begun you estate plan at all, you will want to reach out to professionals who can evaluate your goals and walk you through your options and the process of planning.

4 Ways to Avoid Probate Without a Trust

By: Sarah Stewart Legal Group

Many people we talk to are interested in making life as easy as possible for the loved ones they leave behind once they die.

One important way to help your family as much as possible is to provide an estate plan that avoids probate.  A great tool to avoid probate is a trust.  Sometimes, though, people are not comfortable with a trust.

There are still some ways to avoid probate if you do not want to use a trust.

(1) Transfer on Death Deed

In Oklahoma, real property can be transferred with a Transfer on Death Deed filed in the County where the property is held.  A benefit of the Transfer on Death Deed is that the property does not change ownership until the owner’s death. So, it is not subject to the creditor claims of beneficiaries and the owner can sell, lease, etc. at any time without agreement by the beneficiaries.

One con of the TOD Deed is if your heirs want to claim their interests in the property, they have to file an Affidavit and a death certificate within 9 months of the death of the owner. Otherwise, the property will become property of the deceased owner’s estate and have to go through probate.

(2) Payable on Death Accounts

Many banking institutions will allow you to name a payable on death beneficiary for your accounts.  Once you die, your beneficiary simply has to take your death certificate to the bank to access your accounts.  Of course, if the beneficiary dies before you do, you must be sure to update your information, or the money will go to your estate and have to go through probate.

(3) Beneficiaries

Life insurance, retirement accounts, stocks and bonds, and other assets will allow you to name a beneficiary, or several beneficiaries, to the account.  The beneficiary can access the accounts on your death without having to go through probate.  You will need to remember to keep your beneficiaries updated if you decide to go this route without any other estate plan.  If a beneficiary has died before you, your family will usually have to go through probate to clear up title for the company holding the assets.

(4) Joint Tenant with Rights of Survivorship

Real and personal property can be held as joint tenants with right of survivorship.  Think of when you own a bank account jointly with your spouse, or when you and your spouse purchase property together.  These are properties held as joint tenants with right of surviorship.  That means when one of you dies, the other gets full ownership of the property.

If you have a joint tenant on your property, that property is subject to the debts and liens of the other owner.  And, you must remember to make some sort of plan for after the survivor dies.  Otherwise, the property will have to go through probate.

If probate avoidance is your greatest estate planning goal, there are several ways you can accomplish your goal.  Be sure to reach out to professionals in order to help you find the most effective plan for you. And please remember, these options may not be the best for you if you are also concerned about planning for your incapacity.

Making a Plan for Leaving Your Business

By Sarah Stewart Legal Group

Entrepreneurs spend all day every day working in and thinking about their businesses.  More often than not, entrepreneurs, and especially small business owners are the human resources, customer service, IT, and every other department of their businesses.  So, understandably, it can be difficult to plan for the time you may need to leave your business.

Leaving a business is inevitable, whether it be through a buy-out, incapacity, or death, all business owners will eventually give up their businesses.  So, there’s no better time than now to plan for your exit.  Today, we address the items you need to consider to plan your exit.

(1) Succession Planning

Every business needs a succession plan. When making a succession plan, you need to consider the following:

  • Who is your Successor?

You want to review every employee and decide who has the skills necessary to take your place. You may want to speak to your Board of Directors or other professionals to help you. Experts suggest choosing your Successor at least 15 years before you plan to retire so you can properly train and groom them.

  • How will you train your Successor?

First, you need to know what makes your company work.  What departments are the most important?  What functions are crucial?  Once you know, you will want to train your Successor in these areas.

  • How long will the transition take?

You need to make a timetable.  Decide how and when to shift control of your company.  The timetable helps keep your Successor on track in training and helps managers and employees know what roles you and your Successor will handle every day.

  • Are you prepared to retire?

Make a retirement plan.  What do you want to do when you retire?  Then, initiate those plans by saving the right way and the right amount.

(2) Disability and Incapacity Planning

You may not always be able to choose when you leave your business.  Life happens to all of us. Be sure you have enough insurance to cover you and your business if something happens to you. Disability and life insurance can protect you, your family, and your business from your worst case scenarios.

Though it can be difficult to think about, planning properly for leaving your business is important. Your plans affect your family, your employees, business structure, and taxes. Always reach out to professionals to reach your planning goals for your family and business.

Caregiver Checklist for the Elderly

By Sarah Stewart Legal Group

Caring for an elderly loved one can be a time-consuming, thankless task.  There are so many situations to think about and so little time.  The checklist below will help simplify your legal and other resource concerns if you are a caregiver of an elderly loved one.

(1) Estate Planning Documents

Depending on the level of capacity of your loved one, you will want to ensure a Durable Power of Attorney is in place, if possible.  You will also want to consider encouraging your loved one to make an estate plan- a Will or trust.  I do not recommend encouraging their opinions on who inherits what, but simply urging them to start thinking about their options and finalizing their wishes in writing.  Without a Durable Power of Attorney and estate planning documents, you and your family will face an expensive, stressful battle going to Court to get guardianship and divide the estate when the time comes.

(2) Set up Access to Medical Information

Though a DPOA can help with this, you will also need to consider HIPAA laws and authorizations.  HIPAA laws make access to medical records difficult without the patient’s authorization.  Encourage your loved one to allow you access now, before it’s too late.

(3) Government Benefits

If your loved one or his or her spouse served in the military, your loved one may be eligible for Veteran’s Benefits.  Check with your local Veteran’s Associations to confirm requirements.

Also, depending on you loved one’s income level, he or she may be eligible for Medicaid and other income-based benefits.  Reach out to your local agencies for more information on eligibility requirements.

(4) Find a Doctor Who Specializes in Geriatric Care

Many doctors are unfamiliar with the unique needs of the elderly.  Be sure to reach out to a doctor with appropriate experience and a stellar reputation to help you and your loved one through these transitional years.

(5) Reach out to Community Resources

There are many resources available in the community to help caregivers of the elderly.  There are Adult Day Centers where caregivers can drop their loved ones off for a day of play and socializing while the caregiver works or rests.  There are community respite services, and even home care services available.  Reach out to your DHS Aging Services department, Areawide Aging services organizations, Alzheimer’s Association, and local senior centers for more information on what is available in your community.  Availability of services varies in different communities.

Though it can be difficult to care for your elderly loved ones, there are organizations and people who want to help.  Be sure to reach out and get help for your situation.

8 Most Famous Wills Requests and Probate Battles of the Rich and Famous

By Sarah Stewart Legal Group

Though rich and famous people should be more aware of their need for estate planning, they are not immune to forgetting to plan for their estates after their deaths.  Today, we will discuss some of their most interesting requests and probate battles.  Let these be a lesson for us all.

(1) Prince

One of the most recent and public battles over an estate comes from the unexpected April 2016 death of pop music icon Prince.  Prince was not married, had no children, and no direct next-of-kin.  He also had no estate plan, not even a Will.  According to the law of the state where Prince lived, his closest family members are set to inherit his $300 million fortune.  Many unknown “family members” have made an appearance in the legal proceedings. The Judge has been forced to require DNA tests to prove the claimants relationships to the late legend.

(2) Joan Crawford

In 1977, Joan Crawford left a Will that disinherited her 2 oldest children from her $2 million estate.  The two oldest children sued the estate for their portions, claiming Crawford was unduly influenced by her youngest child and husband to disinherit the children.  After a lengthy legal battle, the children were able to recover a meager inheritance.

(3) Harry Houdini

Houdini died in 1926 and left a strange request in his Will.  Houdini was interested in the paranormal and believed he could communicate with his wife outside the grave.  He asked, in his Will, that she hold an annual seance.  His wife followed his instructions, but Houdini never showed.

(4) Marilyn Monroe

Monroe left a Will giving all of her belongings to her mentor.  She stated in her Will that her belongings should be shared among her friends and loved ones.  Her mentor did not follow her wishes.  Instead, he held on to her items until their value increased. When he died in 1982, his wife inherited the items and sold them.  She profited nearly $14 million off Monroe’s estate.

(5) J. Howard Marshall II

Most of us know the infamous court battle between Anna Nicole Smith and her husband’s children over his estate.  The oil tycoon died just over a year after his marriage.  He left a Will, disinheriting Anna Nicole and his oldest son. Anna Nicole and the eldest son launched years of legal battles against the estate.  In the end, both lost their battles.

(6) Leona Helmsley

At her death in 2007, Helmsley left $8 billion to her family charitable trust.  The trust donates to education, conservation, and health projects. She also left her beloved dog $12 million in a trust (a Court later reduced this to $2 million).

(7) Janis Joplin

In her Will, Joplin left $2,500 ($15,500 today) for her friends to have a large party and celebrate her life. The party took place 3 weeks after her death at her favorite club.  About 200 of her friends reportedly attended the festivities and, by all accounts, had a wonderful time.

(8) William Shakespeare

The famous writer was wealthy when he died in 1616.  His Will gave generously to all of his children and many other family members, but he left little to his wife.  Nevertheless, his wife was entitled to 1/3 of her husband’s estate under English law at the time of his death.

 

3 Blended Family Issues in Oklahoma Estate Planning and Probate

By: Sarah Stewart Legal Group

According to the Oklahoma Marriage Initiative, more than 32% of Oklahomans have been divorced.  Oklahoma has one of the highest divorce rates in the U.S.  Due to this, many families in Oklahoma are blended families. Families with children from one or more previous relationships and step-parent relationships.

Blended families have complex relationships, complex estate planning needs, and even complex Oklahoma law regarding probate, if there is no estate plan in place.

Estate Planning Issues

(1) Previous Relationships

If you have children from a previous relationship, and minor children, and don’t have an estate plan, the surviving ex will receive the assets intended for the children to manage as he or she sees fit.  There is no obligation to account to the Court or to have any oversight from, or even contact with, the prior step-parent.

If it is important to you that the assets your children inherit go to them and not your ex, you will want to consider establishing a trust that restricts how the children’s assets will be spent and/or when they will be distributed.

Also, if you are concerned about continuing a relationship between the minor step-children and surviving step-parent, a trust with the step-parent as trustee may help keep some contact as the ex will have to work with the surviving step-parent to receive assets on the children’s behalf. There’s no assurance the ex will keep contact,  but money can be a good incentive.

(2) Obligations to Step-children under Oklahoma law

Oklahoma law does not require that a step-parent leave an inheritance for his or her step-children.  Oklahoma law does not even require that a parent leave an inheritance for his or her own children. If you want to insure that some specific assets are left to your children, you will need a Will and/or trust.

Probate Issues

If one partner dies without an estate plan, things can get sticky for the kids and the surviving spouse pretty quickly, regardless of whether the children are under the age of 18.

Under Oklahoma law, if the surviving spouse is not the parent of at least one of the surviving children, the spouse will receive 1/2 of the assets acquired during the marriage and an equally divided share with the children of any other assets.

Such a division can lead to struggles and fights in even the happiest of families.  Trust me, I’ve seen it.

If you are in the position of having a blended family, you want to be extra aware and conscious of your estate plan.  Sit down with your spouse and discuss what assets you would like to be left to your children from a previous relationship.  Work out a plan.  Then, I can’t emphasize this enough, put the plan into action!

Put your plans into a Will and/or Trust so that you can ensure you are fulfilling your own wishes and protecting those you love from the determinations of the Court.

 

Don’t Have a Spouse or Children? You Need an Estate Plan

By: Sarah Stewart Legal Group

Despite advice from leading financial and business professionals singing the praises of sound estate plans, recent statistics show that more than 50% of Americans do not have estate plans in place. Without an estate plan, U.S. Courts will decide who receives your assets. Is that what you want?

Though the local Court rules can be concerning for people who are married with children, they can be even more concerning for those who are single and do not have children.  In Oklahoma, the Court will leave your assets, automatically, to your “closest relatives.”  The Court defines these relatives as parents, siblings, etc. in a distinct order. This may not be your personal familial relationship.  If it is not, you will need an estate plan.

Moreover, under Oklahoma law, no one is legally required to take care of you when you are unable to make decisions for yourself.  If you become incapable of making your own decisions, your family and friends will have the pleasure of fighting out among themselves who will help care for you. Or, the state will step in. If that is not what you want, you need a sound estate and incapacity plan.

What Now?

You need to determine the best estate plan for you.  Some people prefer the ease and simplicity of a Last Will and Testament.  However, this document has its drawbacks.  You can name who you would like to receive assets from you, but you cannot put restrictions on those assets (say for a minor child or loved one with Special Needs) and your loved ones will have to pay for and go to Court to transfer your assets. If that is bothersome to you, you will want to consider a trust.

Also, you will need to decide if you have a trusted person you would like to help care for you when you are unable.  If so, you should consider a Durable Power of Attorney for financial and medical reasons so that this person can step in if you are unable to care for yourself. A trust can also offer some of these protections.

The most important tool in your estate planning arsenal will be the Advance Directive.  This document is the only legal document in Oklahoma that allows someone to withdraw life-sustaining treatment on your behalf.  Under Oklahoma law, no relative or loved one has that legal right without this document.  If there are any situations where you are certain you would not want life-sustaining treatment, get an Advance Directive.

Decide Who You Want to Get What

You will need to decide what assets you would like to pass to whom.  Make a detailed list of what you own and who you want to have those things when die.  This will be the basis of your Will or Trust so be as thorough as you would like.  Also, think about who you can trust to manage your assets and follow your instructions when you are gone.

It is never too early to plan. These documents can always be updated and changed as life and circumstances require.  Start today, in case the unexpected happens to you and your family.

 

5 Results of Ignoring Your Estate Plan

By: Sarah Stewart Legal Group

Estate planning is a difficult subject for many of us.  We don’t like to face our own mortality.  But, the truth is, death is one of life’s greatest certainties and we will all have to face it eventually.  The longer you wait, the more likely it is you will face the following 5 consequences for your delay:

(1) Your Heirs will Have to go to Court

Whether they are seeking to help you manage your finances and health when you are no longer able to do so, or trying to sort through your assets and debts after your death, without an estate plan, your heirs will go to Court to deal with your issues.  Preparation can make a huge difference in the lives of your loved ones when the unexpected happens to you.

(2) Your Family will Lose Money

When people go to Court, it costs money.  There are filing fees the Court takes, and, unless your family has a probate and guardianship attorney in it (and many times even then), there are attorney fees required to go to Court.

You can try to go it alone, but that can be frustrating and take a lot more time and money because the family member has to research what documents to file, prepare them, take off to go to Court, and usually, come back and do it all over again because they missed something the first time, or second time, or third time…I think you get the picture.

Judges allow people to represent themselves in Court, but they are held to the same legal standards as attorneys because, well, the law is the law and you and the Judge have to follow it. Save your family the hassle and money and make a plan today!

(3) Losing Time

Not only does going to Court in itself take time and preparation, but leaving your estate open to the possibility of going to Court opens the door to fights in the family.  Even if they have no valid reason to fight, family members can tie up your assets for months just because they want to fight.  Maybe they don’t like your son Billy.  Maybe they blame you for their divorce.  Who knows?  Family dynamics are complex.  An estate plan is the best way to guard your loved ones from messy family interests.

(4) You Will Lose Your Choices

If you do not have a proper plan in place, the Court will decide for you, based on local law. The Court’s decision may not always be what you want.  For instance, did you know that if you don’t have an estate plan, your spouse may only get 1/2 or less of your assets when you die?  No?  Most people don’t.

Or, if you have minor children and are divorced, did you know your ex will get the privilege of “managing” your money for your children after you die? Does that make you uncomfortable?  It probably should.

(5) Struggles with Property in Other States

If you own property in more than one state, you can take everything we’ve discussed here and magnify it by the number of states you own property in.  Every property will have to go through probate in the state where the property is owned.  Does that make your head spin?  Imagine what it will do to your family.

It is never too soon to start thinking about what will happen if you are unable to make decisions for yourself or if you pass away.  Start planning now!

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