It would be logical to assume that you can arrange for the transfer of your assets to your loved ones after you pass away and not lose a lot in the process. Unfortunately, the powers that be see it a different way and this is why it is important to work with an Oklahoma City estate planning lawyer when you are crafting your legacy.
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Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

Time and time again, when I meet with prospective clients, they want to know how to avoid probate.  Some believe a last will avoids probate.  You have many choices when you are deciding how to transfer assets to your loved ones after your passing, but if you choose to use a last will as your primary vehicle of asset transfer your estate is guaranteed to pass through the process of probate. There is a lot that must be handled during the probate process and, depending on the specifics of your estate, it can get rather complicated.  Here’s a little more detail about the probate process.
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Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

When you search the Internet looking into the subject of estate planning, you will invariably see mention of the word probate quite frequently. There’s no particular reason why the layman would know anything about probate or even what it entails, so we would like to explain exactly what probate is before getting into why you might want to avoid it.

Probate could be succinctly described as the legal process of estate administration when an individual passes away, or, otherwise stated, the management and distribution of that individual’s assets, property, and/or possessions. The court supervises the administration of the estate; the actual hands-on administration is done by the estate executor or personal representative.

Why would you want to avoid probate? The two reasons why you may want to avoid probate would be to save time and to avoid asset erosion. Depending on the jurisdiction and the complexity of the estate, the process of probate could take anywhere from perhaps 6 to 8 months to several years in very complicated cases. Another factor that could come into play with regard to the duration of probate would be whether or not the will is being contested.

The costs associated with probate can really add up to erode the overall value of your estate. The court itself is going to charge a fee, the executor is entitled to a fee, and your probate attorney is also going to charge a fee for his or her services. In addition to these professionals, final taxes must be handled and this is usually going to require a tax accountant who will also charge a fee. In many cases an appraiser will be brought in and he or she will have to be paid as well.

So we’ve established that probate can take a good amount of time and that there are significant costs associated with the process. But is there anything good about probate? The answer is that there is, depending on what your interests are. If you are an heir who wanted to contest the will probate would provide a venue for doing that. The supervision of the probate court also ensures the transparency of the actions of the executor which protects the integrity of transactions made on behalf of the estate.

Larry Parman
Founding Attorney

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

A joint account is one way to leave funds to your family after you pass away. This type of account can usually avoid probate. Beware, however, there are some downsides to using a joint account to pass on an inheritance.

How

If you have a joint account “with rights of survivorship” when you pass away, the other owners of your account will receive all funds. Full ownership of the account can be achieved outside of probate, since the remaining account holder needs only to produce a death certificate to give to the financial institution.

Disadvantages

There are five potential pitfalls your joint account could face during the estate settlement process. First, if other owners on the account have not contributed funds when establishing the account or purchasing the asset, the monies could be seen as a gift. If the gift exceeds the annual gift exclusion amount – now $13,000 per person – it must be reported to the IRS.

Your joint account may also disinherit some heirs. If the asset is styled as joint tenancy with survivorship, only those joint tenants listed on the account receive the balance. Any family members not listed on the account will not receive any of those funds, even if you wished to include them. If those listed as joint tenant survivors choose to share funds with those not listed, they must be aware of gift tax reporting requirement if the “gift back” to others exceeds the annual gift exclusion..

Once you add another person to an account or put their names on the title of property, those assets are at risk. If your joint owner has a creditor judgment, a lien may be placed upon your account or on the title to your property. You will either have to pay the lien or forfeit some or all of those funds.

Next, if you add someone to the deed to your real estate as a joint tenant, you must get them to agree to any transfer or sale of that property. Worse, if the joint tenant is married, their spouse must also approve the sale or transfer in most states. If that joint tenant is going through a divorce or is facing other issues, this could delay closing, even cause you to lose the sale.

Finally, if you share an account with a minor, he or she cannot inherit the account until adulthood. In the meantime, a court-supervised guardian will have control of those funds for your child’s benefit. A guardianship may rob your children of some of their inheritance for legal fees.

A far superior alternative is to consider using a revocable trust. When created and used properly, you will avoid many of these problems.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

When choosing the right estate plan for you and your family, it is important to consider what the probate process entails. Once you understand probate, you can find ways to make the process easier for your loved ones.

Executor Assigned

The first step of probate is appointing an executor. The court will look to the choice you made in your Last Will and Testament. If you do not have a Will or if your Will is deemed invalid, a judge will select a personal representative. With the help of an attorney, your representative will navigate your estate through probate.

Locate Assets and Debts

First, your executor must identify all of your assets and debts. Assets may be found by perusing your Will, searching for statements from financial institutions as well as contacting family members. As a practical matter most of your assets will not be listed in your Will so it will help your executor if you keep a current list of your assets and update it each time you purchase or sell property. Debts are located by viewing your financial statements. Advise your executor in advance as to where these statements may be found. As a safety measure for your heirs, whether all creditors are local or not, a notice to creditors will be published in the local newspaper.

Determine Values

Once assets are located, they must be appraised for the date of death value. To determine debts, your personal representative will contact all creditors. You can make this process easier by having all of your debts listed with contact information.

Pay Decedent’s Bills

After assets and debts have been organized, your executor will pay all final bills. If your estate is insolvent, which means you owe more than your assets are worth, your executor will have to work with an attorney to determine which debts will be paid first and which may be left unpaid. Your loved ones do not have to pay your debts if your estate cannot.

Taxes

Next, taxes must be assessed and paid. Your executor will file your final income tax return as well as estate and inheritance tax returns if those taxes are due. Filing and paying taxes can often be the part of estate settlement that takes the longest, assuming the location of assets and debts is straight-forward. If you have a taxable estate it will take some months to receive a release from the IRS.

Distribute What Remains to Heirs

The final step in the probate process is the dissemination of inheritances to all chosen beneficiaries. Your estate executor cannot begin to distribute assets until all debts and taxes have been paid. If your executor does, then the burden of any debts left unpaid will be his or her responsibility.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

A Revocable Living Trust is an alternative to a Last Will and Testament. Like a Will, it helps you bequeath your estate holdings to your friends and family members. A Trust has three benefits that a Will does not.

Provides Privacy

A Revocable Living Trust provides privacy for your estate and your family after your death. It does so because a Trust does not go through probate like a Will. When a Will passes through probate, all court documents, including the Will itself, become public record. If you prefer to keep the details of your life and your property private, a Trust may be the choice for you.

Can Be Used for Disability Planning

Unlike a Will which can only be accessed after you die, a Revocable Living Trust is active during your life and after your death. While you remain healthy, you will retain full access and control to all property titled in the name of your Trust.

Because you can use it during your life, your Trust can also be employed as a disability plan. When you create your trust agreement, you will name a successor trustee to settle your affairs upon your death. If you should become incapacitated, your trustee can step up early to manage your property and finances. If you would also like to allow your trustee to act as your health care agent while you are disabled, speak with your attorney to make sure this language is included.

Helps Avoid Probate

The most well-known benefit of a Trust is that it will help your estate avoid probate. If you do have a Trust, you will have a basic Will called a Pour Over Will. That Will must only be utilized for probate if some of your property was not titled into the name of your Trust. In that case, your Pour Over Will names your trust as its beneficiary and will ensure your property is funded into your Trust. If your Trust is fully funded at the time of your passing, probate may not be necessary.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

Intestacy occurs when a person dies without creating a Last Will and Testament or if the existing Will is ruled invalid. In both cases, the decedent will have no say in how his or her final affairs are handled.

Probate

If there is no valid Will, probate is necessary and may be quite lengthy. The probate judge will choose a personal representative, or administrator, to handle the estate settlement process. The administrator handles the same duties that would have been performed by an executor had you created a Last Will. The administrator will work with an attorney to settle the estate according to intestacy laws. When intestacy occurs, family members are more likely to disagree with who the court appoints as the administrator and decisions they make. These disputes can tie probate up for years.

Intestacy Laws

Every state has intestacy laws. These inheritance laws govern the settlement of an estate that does not have a valid Will. Intestacy laws may differ from one state to another. If there is property in more than one state, then probate must occur in each state, and each state’s laws will determine the fate of the property in that state.

Heirs

If you do not create a Will, or if you do but your document is not valid, state intestacy laws will determine your heirs at law. When multi-state property exists, different heirs may be eligible to inherit the property in each state, and they may receive different portions of property than other heirs at law. Other beneficiaries that you might have liked to bequeath property to may be left out.

If you are in a second marriage, are part of a blended family, live with a life partner, or have any other situation where your preferred beneficiaries may not be your heirs at law, it is vital that you make a valid Will. If you do not, your loved ones may be left without an inheritance.

Drafting your own Will is not a good idea.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

Probate is a legal process that allows the court to ensure all your assets are distributed to the appropriate heirs.

This can be in accordance with the terms of your Will or, if there is no Will, in accordance with the state’s intestacy laws.

But there are some assets, like life insurance, that don’t require probate to be distributed to your heirs. This is because your beneficiary is designated in the policy document itself so it doesn’t need a court to decide how to distribute the proceeds.

But that doesn’t mean that your life insurance policy is exempt from probate – it’s not.

Many people make the mistake of naming their “estate” as the primary beneficiary to the policy. And if the estate inherits your policy proceeds, then those funds will go through probate just like all your other assets.

In addition, part of the probate process is to determine how much, if any, estate taxes are owed. To do this, the court needs to have an accurate value of your estate and your insurance policies are included in that value.

The only time this doesn’t hold true is if you are not the owner of the policy.

Of course, there are ways to exclude your life insurance from both probate and estate taxes, one of which is an Irrevocable Life Insurance Trust (ILIT).

To learn more about this important strategy of avoiding probate and minimizing estate taxes on your life insurance, contact our office today.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

Did you know there are a number of ways to shorten or even avoid probate? Probate can be a long drawn out court process that can leave families physically and mentally tired by the time an estate finally settles.

Probate is usually shorter with a Last Will and Testament than without. Estates that do not have an estate plan almost always require probate. When no Will is present, all of your property, accounts, and any policies that do not state a beneficiary will need to endure this lengthy process to determine rightful heirs.

If you have a Will, you should update it regularly. This helps to ensure that all your beneficiaries are alive and that you still have the property that you intend to leave. Any property or beneficiary change should be quickly noted with the help of your attorney.

To make probate easy for your spouse or domestic partner, have your home titled in both of your names, as joint tenants with rights of survivorship. Property that is only solely titled may have to endure the process of probate, and if there are any questions of heir, this process may drag on for some time.

You can also use joint or payable on death accounts. In fact, these types of accounts may help eliminate the need for probate. If you do have any retirement accounts, life insurance policies or other financial assets, be sure to name a beneficiary if it is not a joint or pay on death account. If you need to update an account recipient, update the actual financial document. Naming a new policy beneficiary only in your Will may cause problems in probate.

You can also use a Revocable Living Trust for a shorter probate procedure. You can fund property and financial assets into your trust. During your lifetime you will be trustee, and property can easily pass to your loved ones upon your death. A trust, if fully funded, may even help your family to avoid probate altogether.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.

While some see probate as a necessary evil, there are ways to avoid this time-consuming and expensive process. And if you do it correctly, you can also ease the stress on your loved ones as well. Here’s a few ways to bypass probate.

A Revocable Living Trust is the most effective way for your family to avoid probate after your death. You can place all of your holdings into your trust, and during your life you will be the trustee. At your death, your trust will pass to your chosen heirs. This document, when properly maintained, allows all property included in it to skip the lengthy process of probate.

Did you know that you can make your banking and retirement accounts “payable on death”? Payable-on-death designations on your banking accounts allow you to designate a beneficiary to receive that particular asset. This allows your money to go straight to your loved ones without passing through the court system.

Depending on how joint property is documented, the remaining property owner may be able to evade probate at the death of the other owner. Joint tenancy with rights of survivorship is one way to allow a piece of property to pass straight to the surviving property owner. Tenancy by the entirety is a version of survivorship joint tenancy for married couples or in some states for same-sex couples. Both of these options may be used in common law states. In community property states, the designation of community property with the right of survivorship is used to skirt probate.

Gifting pieces of your estate during your lifetime is another way to pass it to your heirs without probate and also to help your loved ones avoid hefty taxes. You can gift up to a certain amount of your property to your family members each year – $13,000 in 2010 – without them having to pay taxes on it. When they already own the property at the time of your death, it cannot be included in the probate process or your estate taxes.

Larry Parman
Attorney at Law

Parman & Easterday are members of the American Academy of Estate Planning Attorneys.