Estate Planning

Estate Planning is the process where one determines the organization of one's assets (both real and personal property). There are many reasons for this. In the short term, it helps organize an individual's estate for tax purposes. This can be the formation of an Limited Liability Company, organizing assets in preparation for Medicare issues, formation of trusts, setting up checking accounts, establishing saving accounts, insurance policies, and the like.

Long range Estate Planning is designed to determine the separation of assets after an individual passes. This is most commonly considered in wills. However a simple will can promote problems for those who are left behind. There are estate taxes, probate costs, fees, and some assets could be lost in transition.

A Will is a document that an individual creates to direct the division of assets. Wills can also have directives on how an individual is laid to rest, who is responsible for the costs, and closes out an individual's property. This process can be utilized when there few assets.

In Oklahoma, a Will is processed by a petition to the Court. A valid will is presented to the Court and a Representative (Administrator) is appointed for the distribution of an estate. The Representative is responsible for paying off an individual's debts and distributing assets to heirs. This process generally takes about six months but can take longer. The fees involved include Court filing fees, publication costs, administrative costs, appraisals (if appropriate) estate sale fees (if appropriate), and attorney fees. The costs can range from $1,500 to $15,000 depending on the size of the estate, debts, and if the will is contested or not.

Generally, I only promote a will as the only avenue of Estate Planning if the estate is small and the list of potential heirs is limited.

One way to avoid the probate issue is transfer on death deeds (for real property), designating beneficiaries on insurance policies, rights of survivorship (for monetary accounts), direct property transfers, or total liquidation of an estate while an individual is alive.

Very rarely does an individual know (within reason) the time of one's passing. I always recommend a plan that gives an individual the greatest flexibility. If organized correctly, probate can be avoided totally.

I recommend trusts for large estates. How many bank accounts does one have, vehicles, property, or items of value. All of these can be rolled into a trust. A trust allows an individual to maintain control of the estate as a "trustee". The Trust becomes the entity that functions for the care and benefit of the beneficiary. All aspects of a will can be included in the trust. It avoids probate actions. It also allows an individually to clearly determine the division of assets. In many ways, to me, it is the ideal avenue to avoid probate issues, allow an individual to continue to grow the estate, benefit from that work while living, and clearly divide assets upon passing without needing the blessing of a district court judge.