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Category: Estate Planning (Page 1 of 4)

7 Things To Do When Your Loved One Dies

By Sarah Stewart Legal Group

Few things in life are harder than losing someone you love.  Grieving is hard enough, but many times, loved ones are left to not only grieve, but also sort through and take care of the assets of the deceased.

In those sad, stressful, cloudy moments after your loved one dies, what should you do to start the process of distributing your loved one’s estate?

(1) Find Their Estate Plan

The most helpful documents someone can prepare for their family are estate planning documents.  An estate plan can include a Will, Revocable Trust, Irrevocable Trust, Durable Power of Attorney, and other documents.

Since Durable Powers of Attorney are invalid after a person dies, you will want to search for Will or Trust documents.  Look in safety deposit boxes, fireproof safes in the home, and other well-know places for safe keeping of important documents.

(2) Create an Inventory of Their  Assets

You will need to determine if you will need to file a probate.  One way to help you decide, and also help you prepare if a probate is necessary, is to create an inventory of the deceased’s assets.  Make a list of all real estate, bank accounts, stocks, bonds, automobiles, expensive furniture, expensive furs, expensive jewelry, and other notable assets. If these items are valued at more than $50,000, include real estate, and aren’t jointly owned or held in a trust, beneficiaries aren’t named, or beneficiaries are deceased, you will need to file probate.

(3) Determine Jointly Owned Assets and Assets with Beneficiaries

Any assets in this category will pass outside of probate.  Most assets that are jointly owned, held in trust, or have named beneficiaries can be transferred with a Death Certificate immediately after death.  Life insurance policies, retirement accounts, bank accounts, and stocks and bonds often have beneficiaries named.

(4) Determine the Deceased’s Creditors

You will need to look through the deceased’s mail to determine creditors.  You are not personally liable for any of the deceased’s debts, but the estate is.  So, any money that is left over from the deceased will go to paying these expenses to the extent possible.

(5) Find Real Estate Documents

You will need the Deeds of any real estate to help you determine what the deceased owned and transfer that property. The deeds will also help you determine if the property was owned jointly, or in a Trust, and does not need to go through probate, or if it will have to go through a probate procedure in your local courts.

(6) Forward all Mail

You will need to forward the deceased’s mail so you can keep track of assets and creditors.  The easiest way to do this is to forward their mail to you.

(7) File Probate

If you have identified property that was not held in Trust, owned jointly, or with beneficiaries, it is likely you will need to file probate.  Probate is a Court procedure in the County (or one of them) where property is located in the State of Oklahoma.

There are different options available for different sized estates with different waiting periods and requirements. If probate is necessary, we suggest reaching out to an attorney to learn about your options.

New Developments in Probate Case Highlight Aaron Hernandez’s Family Wealth and Estate Plan

By Sarah Stewart Legal Group

We are all familiar with the name Aaron Hernandez, but allow me to give you a brief reminder.  Hernandez played tight end for the New England Patriots.  His career came to a screeching halt in 2013 when he made national headlines for his indictment in the murder of Odin Lloyd.  In 2015, Hernandez was found guilty of first-degree murder in the Lloyd death and charged with 2 additional counts of murder for a 2012 double homicide in Boston.

His trial for the double-murder began in March 2017.  In April, shortly after he was acquitted in the Boston deaths, he was found dead in his jail cell, apparently from suicide.

Since his death, his estate has been burdened with debt and other problems.  Recently, the Judge in his estate case, ordered disclosure of a secret trust, set up by Hernandez on behalf of his 5 year old daughter.  The “AJH Irrevocable Trust” is rumored to house many of Hernandez’s assets to protect them on his daughter’s behalf from his creditors.

Hernandez’s estate is insolvent, in that he owes roughly $2.8 million in debts, but only has $1.2 million in assets.  The trust, unless found to be a fraudulent conveyance to thwart creditors, will fall outside of the estate and be free from the creditors’ grasps.

An irrevocable trust is a vehicle where the creator gives certain assets to a trustee to hold for the benefit of one or more beneficiaries.  Since the assets are no longer within the creator’s control, they are no longer subject to the creator’s creditor claims. This was a smart move on Hernandez’s part, since the families of the 3 murder victims are bringing law suits, his attorneys are calling in their legal fees, and the government is issuing tax liens on his property.

Trusts are living, changing documents that can be twisted and turned to meet the drafter’s wishes, whatever they may be.  Trusts of any kind are useful tools to consider in your own family wealth and estate plans.

5 Tips for New Parents to Prepare for Baby

By Sarah Stewart Legal Group

A new baby brings parents so much joy. There are so many things you have to do to prepare- get baby clothes, diapers, bedding, design a nursery, just to name a few. The list seems never-ending.

Usually one of the last, but most important, items on a new parents’ to-do list is to get their financial and legal plans in order.   We’ll cover the 5 most important ways to prepare for new baby legally and financially today.

(1) Get Life Insurance

Life Insurance serves a very specific purpose. Life Insurance allows you to protect your family financially and prepare if something happens to you.  Life insurance helps your children pay for college and/or your spouse take care of the day-to-day necessities, like daycare, food, and shelter, if you are not there to contribute.

(2) Set Up A Monthly Automatic Draft Deposit for Savings

Many banking institutions allow you to schedule a monthly draft from your checking account to your savings account. Set up a high yield savings account with a monthly draft you can afford so you can guarantee you are building your emergency fund.  Experts recommend having 3 to 6 months of bills in savings in case an emergency arises. Even a small monthly amount will add up over time.

(3) Make an Estate Plan

Now that you have a bouncing bundle of joy on the way, you need to think about who will take care of him or her if you and your spouse die.  It is not a pleasant thought, but it is much better to decide now than to not have made the decision at all if that day comes sooner than you expected.

You will also want to be sure you have a plan in place for how your money will be spent for your children’s care.  Without a trust, the money will go to the children’s Guardian, or the children if they are 18, as soon as you die.  If you want to make sure the money is protected, or have specific wishes for when the children can access the money, you will need a Trust to enforce those wishes.

(4) Reduce Debt

One of the greatest scams of all time is credit card debt.  Anyone who has suffered from stifling credit card debt knows the downfalls of using credit cards for purchases.  Having a baby will only accelerate those problems.  Make a plan and budget now to help you be free from debt.

(5) Put Money Aside for Baby

Whether you choose a simple free savings account with your local bank, or a 529 education savings plan for advanced education, it is important to have some money stashed away for your child’s future-whether that future be education, entrepreneurship, or traveling the world.  Over 18 years (or more), even a small monthly savings can add up.  So, start saving today.

A new baby brings so much joy, excitement, and responsibility.  Be sure to use this guide to prepare for your baby and your financial future.

Tips for Slaying 6 Financial Planning Monsters

By Sarah Stewart Legal Group

Retirement can seem so far away, until…well, it isn’t.  When planning for your financial future, there are 6 monsters that can steal your security and peace in your golden years.

(1) Living Paycheck to Paycheck

Are you one of many Americans who finds yourself with no money left after paying your bills at the end of the month? Do you have an emergency fund available?

You may need to budget so you can stash some cash away for your future.  Track your expenses and income for a few months to see where your money goes.  Is there anything you can cut back?

Determine what you need and what you want. Cut back on the entertainment and eating out expenses you have each month and put some money away for emergencies. Strive to have at least 3 months of monthly expenses in savings for an emergency fund.

(2) Reduce Debt

The average American family is drowning in credit card debt, student loans, and mortgages.  Credit card debt is the worst debt you can have.  Interest rates are generally high, and the continual compounding of the interest rates and new debt make it almost impossible to get out of debt when you start.  Cut up your credit cards now and vow not to take on anymore credit card debt.

Pay the minimum monthly payment on each card and work on paying down the lowest balance as soon as possible.  Once that one is paid, apply all the money you were paying to that card to the next highest balance until it’s paid off.  Continue until you are free of credit card debt. Don’t forget to check your credit report annually for fraudulent accounts.

(3) Retirement Planning

Have you planned how much money you will need for retirement?  Have you set retirement goals?  Most employees will fund a 401k through their company, hopefully, the company will make contributions as well.  Find out how much you can put in your account each year and how much your company matches.  Consider using other retirement planning tools as well.

(4) Estate Planning

Many people avoid thinking about estate planning.  They tend to think they’re too young, their estate is too small, or they just don’t understand the process.

Estate planning is more than deciding who gets what when you die.  A good estate plan will also help you plan in case you are unable to make decisions for yourself and decide who will care for your children, and how, if something happens to you. If you already have an estate plan, be sure to review it when major life changes occur so you can be sure it still reflects your wishes.

(5) Planning for Long-Term Care

Long-term care is common for the elderly in today’s world.  With government options like Medicaid constantly on the chopping block, your safest option is to rely on yourself to fund your care. Facilities can cost anywhere from $40,000 – $70,000 per year, depending on the level of care you need and the options and luxury you’re looking for in end of life care. Make sure to budget for the possibility of long-term care in your retirement plan and consider long-term care insurance.

(6) Forgetting to Plan

Be sure to create a financial plan that includes all the aspects of planning we covered here.  A sound financial plan with estate and insurance planning can help you avoid any pitfalls.

3 Reasons to Have an Estate Plan Even With an Estate Tax Repeal

By Sarah Stewart Legal Group

One of the biggest current national headlines is the political discussion regarding changing tax laws and abolishing estate (“Death”) taxes at a Federal level.  Though such a repeal can be beneficial to high income families, don’t fall into the trap of believing an estate tax repeal means you do not need to plan for your estate.

Today, we discuss 3 reasons to make an estate plan, regardless of a Federal estate tax repeal.

(1) You Want to Choose Who Gets What

If you want to choose who gets your assets when you die, you need an estate plan.  Abolishing estate taxes will not change local laws that direct who gets what when someone dies without a plan in place. If you don’t decide, the government will.

If you have a blended, or complicated, family situation, it is even more important to get an estate plan in place.  Families where parents have more than one marriage are well known for having conflicts when the parent dies.  We can all recall cases like Anna Nicole Smith and her battle to access her late husband’s assets.  Putting a strong plan into place can help alleviate problems, and fights, for your family in the future.

(2) Your State May Have Estate Taxes

Getting rid of the Federal Estate Tax will not ensure estate taxes will be gone nationally.  Each state makes their own laws for estate taxes. Often, states that do have estate taxes have a much lower exemption amount than the Federal law.  In Oklahoma, we have not had an estate tax for years, but if you own property in other states, you may be subject to a state estate tax after your death.

The District of Columbia and 14 other states have estate taxes.  At least 6 states tax recipients of gifts under an inheritance tax.  Be sure to check the local laws of the states you have property in to decide if you will need a plan for estate taxes.

(3) Planning for Federal Taxes

Estate taxes are not the only Federal tax concerns of families whose loved one has died.  Repealing the tax will not do away with other federal taxes such as the capital gains tax and the taxes on heirs who receive inheritances.  You will still need to be aware of your potential tax liability and how to minimize your liability.

If the estate tax repeal passes, it will help simplify Federal taxes for some U.S. families.  However, the repeal is not an excuse to skip estate planning.  Every family needs to make a plan for their deaths.  Plans alleviate the stress and heartache your family will have after your death and gives you the power to decide for yourself how your well-earned money will be split.

Reach out to professionals to help you plan for your family today!

Tom Petty’s Lessons on End of Life Care

Image from a Journal of Musical Things

By Sarah Stewart Legal Group

On October 2, 2017, music fans around the world sobbed when legend Tom Petty died.  Fans received the admittedly surprising news that Petty suffered a heart attack and was quickly taken off life support. Petty’s family made this decision so quickly because they followed a do-not-resuscitate order put in place by the musician.

Much like Petty, all of us can benefit from a plan for our end-of-life care.  A well-thought-out plan can save your family money and heartache.

According to a 2010 study, Medical expenses in the last year of life average about $11, 618.  With inflation, we can estimate those expenses would be closer to $18,000 today. For families requiring nursing home or assisted living facility care, this number can be much higher because monthly averages for these facilities run from $4,000 – $6,000 per month.

Advance Directive for Healthcare

One important document to help you make your end-of-life care plans is an Advance Directive for Healthcare.  Only 26. 3% of adults admit to having this undeniably important document.

An Advance Directive only goes into effect when the person who made the document is incapacitated.  That means he or she is unable to make decisions for him or herself.

In Oklahoma, if you do not have this document in place, no one is legally able to make medical decisions on your behalf and/or withhold life-sustaining treatment.

The Advance Directive will memorialize your wishes in different situations regarding life-sustaining treatment, allow you to choose a proxy to make medical decisions for you if you are unable to, and determine if you would like your organs and other body parts donated or science or transplantation.

Do Not Resuscitate Orders

Do Not Resuscitate (DNR) orders are often used by patients who are already suffering from serious illnesses. The patient, or agent for the patient in certain situations, indicates his or her wishes medical staff not try to resuscitate the person if they are in need of CPR. Healthy people will likely not want a DNR.  Healthy people will want to get CPR if they are in a life-threatening situation.

Durable Power of Attorney

Durable Powers of Attorney (DPOA) allow people to choose someone to help them with medical and financial issues, either immediately, or after they can no longer care for themselves. The agent chosen by the person creating the document can stand in the creator’s shoes to take care of matters on the creator’s behalf. The extent of the agent’s powers are outlined in the document itself. If you choose to have your DPOA go into effect immediately, you can override your agent’s decisions, unless you are incapacitated.

Without these estate planning documents, your family will wind up in Court, doing the best they can to make these decisions with a Judge’s supervision. If you have any ideas on how you want your care to go, and who you want to help, you need a plan. It is always wise to work with local attorneys instead of filling out online forms when making end of life care plans.

Local attorneys generally do not charge much more and they can walk you through the documents to help you understand them and tailor them to meet your specific needs.  They will usually also have a copy of your plans on-hand in case your family is unable to find your documents.

 

Why You Should Follow Hugh Hefner’s Example

By Sarah Stewart Legal Group

Picture from eonline.com

We all know Hugh Hefner.  As the mogul businessman with the groundbreaking idea behind Playboy magazine, he was quite the controversial figure.  Despite your personal beliefs about Hugh’s business and life choices, he is a role model for all of us in one aspect of his life– Estate and Financial Planning.

Say what you will about Hef, but his business acumen was amazing.  He started Playboy in 1953 with $8,000 and transformed it into a global business.  Hef was able to take his eventual fortune from this business and plan well for his retirement and the twilight years of his active lifestyle.

Hef began planning for his future and his empire in about 2010 when he divorced Kimberley Conrad. Records show his net worth at the time was around $43 million and his income was about $3.5 million a year.

With the rise of the internet, Hef knew his business could suffer.  So, he made a decision in 2011 to make Playboy private by partnering with a private equity firm.  This move netted him more than $207 million. He included a deal in the purchase contract that gave him 37% of the stock and a $1 million per year income from the new business.

Hef took his estate planning prowess to a new level in 2012 when he negotiated a pre-nuptial agreement with his 3rd wife. Through the agreement, he established a trust solely for the benefit of the wife and kept all of his agreed, non-marital assets separate.

With this decision, Hef dodged a common estate planning bullet.  He was able to keep his wife happy and keep his assets separate and protected for his adult children.  Those who don’t take these steps in blended families, often have disagreements, and many times full out wars, over assets after the parent’s death.

It is likely Hef used several trusts to plan for his children and spouses after his death.  In fact, it is rumored that he even left half of his estate to a charitable trust to minimize estate taxes.

Hef’s one mistake was leaving his 37% share of the company tied up in stock.  Now, his heirs will have to sell the stock to realize the value, which is hard to determine since the public will not be able to purchase a private company’s stock.

Overall, though, Hef’s planning was sound and inspired.  He was able to take a business that would soon be affected by the technological revolution of the internet and turn it into a free home and yearly stipend. He was able to plan for the people who were most important to him without sparking a massive legal battle.  And, he even planned out his burial, purchasing a plot next to his first model, Marilyn Monroe. I have no doubt his family is eternally grateful for his foresight.

We can all take a cue from Hef’s playbook.  No matter the size of your estate, planning is essential, especially in blended families.  Make a plan for yourself and your loved ones centered around your retirement, and your eventual death. The hardest step is the first step.

Reach out to an experienced estate planning attorney and financial planner to help you plan for your retirement and family today!

4 Considerations for Retirement Planning

By Sarah Stewart Legal Group

Retirement planning is a difficult and confusing task.  But, it is necessary.  When planning there are 4 considerations you should address that could affect your retirement account’s bottom line and your lifestyle when you retire.

(1) Taxes

The only things certain in life are death and taxes.  No matter your age, you will be responsible for State and Federal taxes, including income taxes.  Make sure to account for future taxes in your retirement plan, or your future budget will be thrown off.

For instance, if you stash all of your money into a Traditional 401(k) or IRA, your withdrawals will be subject to income tax. If those monthly withdrawals are high enough, your Social Security income may be taxed as well. The solution is to plan for taxes while drafting your plan.

One tool to consider is a Roth IRA. Roth deposits are made with after-tax dollars, so future withdrawals are not subject to income tax or required minimum distributions.  So, Roth accounts can save you a large tax bill in the long run.

(2) Inflation

On average, inflation causes the U.S. Dollar to lose 3% of its value per year.  So, you must account for the fact that your retirement account will lose at least 3% of its value each year.  To beat inflation, be sure to pick a portfolio that has a historically high enough return to overcome the value lost.

(3) Long-term Care

People are living longer and longer each decade, making the costs of long-term care a likely item you’ll need in your retirement budget.  In our current market, long-term care can cost anywhere from $4,000 – $6,000 per month.  That’s quite the hefty price tag. Medicare usually won’t provide much, if any, assistance in long-term care and State and Federal funding in this area is constantly in flux and one of the first budget lines to go when States are tightening their wallets.

Consider getting long-term care insurance to help with long-term care expenses.  People generally can get low premiums on this type of insurance if they purchase it early enough, usually in their 50s.  It is easier to budget for the insurance premiums associated with long-term care insurance than it is to predict how much long-term care facilities will charge when you need them. But, always use an abundance of caution in planning for your long-term care expenses in retirement planning.

(4) Estate Planning

Anyone who has been through a probate can tell you what a burden the procedure can be for the family.  The burden only increases if you have not completed some form of estate planning. Probates are expensive, time-consuming, and emotionally draining for the loved ones you leave behind.

Also, if you do not take the time to write out a Will or other plan, the State will determine who gets your assets and how, based on the laws they have put in place for these matters.  You will need to consider your goals and wishes for your family and look at the pros and cons of having a Will, Trust, Durable Power of Attorney, Advance Directive, and other documents in your arsenal.

How to Avoid Probate on Real Property without a Trust

By Sarah Stewart Legal Group

Many people believe having a Will allows their heirs to avoid probate.  But, this is simply not true.  If a person has a Will, the heirs have to go to court to distribute the assets of the deceased.  The Will provides instructions to the Court for how those assets will be divided.

Though having a Will gives you control of who gets what when you die, it does not stop your heirs from having to endure the costs and stress associated with the court process of probate.

If you’re looking to reduce your heirs’ stress, and keep them out of Court, the most common estate planning tactic is a Trust.  However, if you are opposed to a trust for any reason, there are other probate avoidance options.

Probate Avoidance on Non-Real Estate Assets

Most people are aware of the options for probate avoidance for personal, non real estate, assets. Those options include, for bank accounts, naming payable on death beneficiaries and joint owners.  For stocks, bonds, and mutual funds, you can name beneficiaries and contingent beneficiaries.

In Oklahoma, you also have the option to sign and file a Transfer on Death Deed to allow your heirs to transfer your real property after your death by filing Affidavits and a Death Certificate with the County Clerk where the property is held.

Owner can Sell or Transfer without Permission of the Beneficiaries

A Transfer on Death Deed allows the owner to keep ownership of the property until the day he or she dies.  That means he or she can sell, lease, or doing anything else he or she wishes with the property without the consent of the Transfer on Death Deed beneficiaries. TOD Deeds also allow the owner to change his or her mind and choose new beneficiaries as he or she needs throughout his or her life.

In this respect, Transfer on Death Deeds are better than joint ownership, because if you need to sell the property or otherwise change your mind about ownership, as a joint owner, every owner has to consent to and sign off on the change.

Avoid Probate and Smooth Transfer

As discussed before, the property will transfer as soon as your heirs file their Affidavits and Death Certificate with the County Clerk.  There is no need to probate the estate, and no delay in the transfer of property.  The transfer is complete the day the Affidavits and Death Certificate are filed and your heirs can agree to do what they wish with the property.

TOD Deeds are one tool in a large toolbox available to you for estate planning purposes.  Everyone needs a unique and personalized plan that fits their needs and helps them reach their goals.  Please reach out to a professional to help you fully plan your estate.

 

 

How to Plan for Your Digital Assets

By Sarah Stewart Legal Group

What happens to your digital assets after your death?  Who takes care of your social media accounts, email, and online savings and checking accounts? What happens to those accounts when you die? Do they continue on inevitably, or can they be closed?

Though a large amount of estate planning still takes place with paper documents, digital assets are extremely common and must be addressed as well. Digital estate plans help determine if your digital assets have any monetary value and helps your loved ones know what you have and where.

(1) Inventory

To make a plan, you have to know what you have.  Compile a list of all the online assets you have and their usernames and passwords, including but not limited to:

  • Social media accounts
  • email accounts
  • websites
  • online insurance, bank, and credit card accounts
  • online bill pay
  • media files
  • online payment tools (Google Wallet, PayPal, etc.)

(2) Proper Storage of Your Inventory

Your inventory will have a lot of important, personal information.  You need to make sure you protect it. You can store the inventory in a safety deposit box at a bank, with an attorney, or in a safe. You may also consider online applications that were created solely for digital asset planning purposes, such as PasswordBox or SecureSafe.

(3) Name an Executor

Much like traditional estate planning, you will need to choose someone to manage your online accounts and assets. Make sure you choice is trustworthy, technologically savvy, and responsible. Give your Digital Executor information on where to find your inventory.

(4) Write Your Plan

What do you want your Executor to do with your digital assets? As with any estate plan, make sure your instructions are clear, to avoid confusion. Add a list of instructions for each digital asset you own.

(5) Pay Attention to Terms and Conditions

Review the terms and conditions for the places that hold your digital assets.  Each site may have different rules and procedures for handling assets of members after death. For instance, Facebook will allow you to close or “memorialize” an account.  Google has an “Inactive Account Manager” that allows users to decide what they want to happen to their accounts when they have been inactive for a predetermined amount of time. And Twitter requires more paperwork and redtape for families to access their loved ones’ accounts.

As our world becomes more and more digital, digital estate planning will continue to grow.  As you join new sites and amass more digital assets, be sure to update your plan so you don’t get so far behind you can’t catch up.

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