We have spoken with countless clients over the years. They are making very important decisions, so communication is key. We answer all questions thoroughly, and we provide detailed explanations.
In this post, we will look at some questions that we are often asked, and we will provide brief answers. This will give you a basic foundation of information to draw from. There are other resources available on this website that you can utilize to learn more.
What happens if I don’t have any estate planning documents?
If you do not have a last will or a trust at the time of your death, the condition of intestacy will be the result. Under these circumstances, the probate court would step in to determine how your assets should be distributed. The court would appoint a personal representative or estate administrator to handle the business of the estate.
The exact intestate succession laws vary somewhat state-by-state. In Oklahoma, if you pass away with surviving children but no spouse, the children would inherit the entirety of your intestate estate.
If you leave behind a surviving spouse and no children, siblings, or parents, your spouse would inherit everything. A surviving spouse would inherit all of the property that was accumulated by combined effort if your parents are still living. They would also get a third of the remaining property, and the parents would get the rest.
These are a handful of the possible scenarios, but you can see that your own true wishes may not be carried out if the state makes the final decisions.
Will my estate be subject to taxation?
Generally speaking, inheritances are not subject to regular income taxes. Plus, appreciated assets are given a step-up in basis for capital gains purposes. To explain by way of example, let’s say that your uncle paid $100,000 for some stock he bought 20 years ago. He leaves it to you in his will, and it is now worth $1 million. The assets would get a stepped-up basis, so you would not be responsible for those gains.
There is a federal estate tax, but most estates are not subject to it because there is a large exclusion. In 2022, the exclusion is $12.06 million, and the maximum estate tax rate is 40 percent. However, the exclusion is going to be reduced to $5.49 million in 2026 when a provision in the Tax Cuts and Jobs Act expires.
Trusts are only for the wealthy, right?
This is a very common misconception. First, there are different types of trusts. There are irrevocable trusts that are used to obtain estate tax efficiency. Some of them accomplish different objectives that are not related to extraordinary wealth. There are also revocable living trusts that can be useful for a wide range of people.
One benefit of the revocable living trust is the avoidance of probate. If you use a will instead of a trust, you would name an executor to administer your estate. They would be required to admit the will to probate, which is a court supervised process.
Probate is time-consuming, and it is also expensive. There are court costs and legal fees, and the executor is entitled to be paid for his or her time and effort. With a living trust, the assets can be distributed to the beneficiaries outside of probate. This is a major advantage, and there are others.
Schedule a consultation!
If you are ready to work with an Oklahoma City estate planning lawyer to develop a plan, we can help. We will answer your questions, make recommendations, and help you put a plan in place that will bring your wishes to fruition when the time comes.
You can set the wheels in motion if you call us at 405-843-6100, or you can use our contact form to send us a message.