Estate Planning Explained

Estate planning includes the growth, protection, and transfer of a person’s wealth through the creation and maintenance of an estate plan. The concept of estate planning is important and twofold: (1) to have a strategy that will maintain your financial security during your lifetime, and (2) to ensure that your intended transfer of property and assets occurs upon your death. Both of these issues are analyzed through the lens of the unique situation of the family and the possible expense of different methods used in the estate plan.

Benefits of Estate Planning

There are several benefits to having an estate plan. At a minimum, an estate plan provides clear written guidance to your loved ones on what to do with your assets when you are deceased. But perhaps the most important reason is to be in control of how your family is provided for in the event of your death or incapacity. Estate planning can address several issues including:

• Who will raise your minor children,
• Who will inherit your assets and how they will be distributed,
• Who will care for loved ones who are unable to care for themselves,
• Who will care for your pets, and
• Who will receive your life insurance and other insurance proceeds.

Finally, good estate planning can ease the time-consuming, administrative strain placed on your family during an already difficult time.

Estate Planning Statistics

According to studies^[1], 6 in 10 adults have not put a will in place. And, while many have likely heard that it is wise to avoid probate – the legal process by which the assets of a deceased are disposed of under court supervision – many do not understand why probate should be avoided. Three main issues with probate include: (1) the tying up of the decedent’s assets for months or even years while the probate is open, (2) the cost, sometimes as much as 5 percent of the estate’s value is spent on attorney and court fees alone, and (3) the loss of privacy in the probate process when it comes to the decedent’s financial information.

There are many financial and legal tools that may be used in the estate planning process. Contact us today to discuss your situation and learn about your specific options.

^[1]https://www.aarp.org/money/investing/info-2017/half-of-adults-do-not-have-wills.html

1. When was your power of attorney last updated?A power of attorney is a valuable legal document, no matter what the circumstance. Not only is it flexible and can be prepared to meet your particular needs, but it can be made effective immediately or when you are unable to manage your own affairs. It is vital to review it periodically and replace it with a new one as necessary. This need may arise if you need to name a new person to help you or if you need to add or remove powers from the document.
2. Does your trust/will still match your wishes?Once a will or trust is created, many people simply put it in a safe place and forget about it. There are several reasons to review and update these estate planning instruments (and others) including marriage or divorce, birth or adoption of a child, a recent windfall of cash or assets, the purchase or sale of a home, or a recent move to another state or country. Your life changes so your will or trust must change too to ensure that your needs and desires continue to be met.
3. Is your business paperwork in order?Whether you own an LLC, corporation, or another type of business entity each year paperwork must be filed with the secretary of state and potentially other government agencies.  Make sure all of your documents have been updated, fees have been paid, and licenses have been renewed. If they are not yet due, make sure to calendar these deadlines as to not miss them.
4. Have you met with your tax advisor recently?End-of-year planning is important any year when it comes to your taxes and potential liability, but this is especially true now in light of the 2017 tax changes passed by Congress. The IRS has been busy releasing regulations and new forms so tax season will be much different next year. Learn about your options under the law ahead of time so you are not hit with a not-so-nice surprise come tax season.
5. Have you met with the rest of your professional team? Whether the market is a bear or bull, it is important to meet with your financial advisor to go over your investment results annually and put together an investment strategy for the upcoming year. For legal questions, it’s important to meet with your attorney before a legal situation becomes difficult to manage.

These are just some of the items you should focus on when considering your personal matters and ensuring your legal life is up-to-date.

Do Not Delay

There are several reasons to review and update your legal matters, including your estate plan. Before you make any decisions be sure to contact your estate planning attorney and the rest of your professional team. Understanding how your wishes are affected by applicable law will help make you make a more informed decision and protect you and your loved ones. Give us a call today.

No one will ever be you or parent exactly like you, but more than likely, there is someone you know that could do a decent job providing for your children’s general welfare, education, and medical needs if you are no longer available to do so. Parents with minor children need to name someone to raise them (a guardian) in the event both parents should die before the child becomes an adult. While the likelihood of that actually happening is slim, the consequences of not naming a guardian are more than intense.

If no guardian is named in your will, a judge – a stranger who does not know you, your child, or your relatives and friends – will decide who will raise your child. Anyone can ask to be considered, and the judge will select the person he or she deems most appropriate. Families tend to fight over children, especially if there’s money involved – and worse – no one may be willing to take your child; if that happens, the judge will place your child in foster care. On the other hand, if you name a guardian, the judge will likely support your choice.

How to Choose a Guardian

Your children’s guardian can be a relative or friend. Here are the factors our clients have considered when selecting guardians (and backup guardians).

• How well the children and potential guardian know and enjoy each other

• Parenting style, moral values, educational level, health practices, religious/spiritual beliefs

• Location – if the guardian lives far away, your children would have to move from a familiar school, friends, and neighborhood

• The age and health of the guardian-candidates:

• Grandparents may have the time, but they may or may not have the energy to keep up with a toddler or teenager.

• An older guardian may become ill and/or even die before a child is grown, so there would be a double loss.

• A younger guardian, especially a sibling, may be concentrating on finishing college or starting a career.

• Emotional preparedness:

• Someone who is single or who doesn’t want children may resent having to care for your children.

• Someone with a houseful of their own children may or may not want more around.

WARNING:Serving as guardian and raising your children is a big deal; don’t spring such a responsibility on anyone. Ask your top candidates if they would be willing to serve, and name at least one alternate in case the first choice becomes unable to serve.

Who’s in Charge of the Money

Raising your children should not be a financial burden for the guardian, and a candidate’s lack of finances should not be the deciding factor. You will need to provide enough money (from assets and/or life insurance) to provide for your children. Some parents also earmark funds to help the guardian buy a larger car or add to their existing home, so there’s plenty of room for extra children.

Factors to consider:

• Naming a separate person to handle the money can be a good idea. That person would be the trustee in charge of the assets, but not guardian of the children, responsible for the day-to-day raising of the children.

• However, having the same person raise the children and handle the money can make things simpler because the guardian would not have to ask someone else for money.

• But the best person to raise the children may not be the best person to handle the money and it may be tempting for them to use this money for their own purposes.

Let’s Continue this Conversation

We know it’s not easy, but don’t let that stop you. We’re happy to talk this through with you and legally document your wishes. Know that you can change your mind and select a different guardian anytime you’d like. The chances of needing the guardian to actually step in are usually slim (we always hope this is the one nomination that’s never actually needed); but, you’re a parent and your job is to provide for and protect your children, so let’s do this. Call our office now for an appointment and we’ll get your children protected. 918-928-9573

For those of you who have had your estate planning recently done or reviewed, you probably discussed and executed a Financial Power of Attorney. For those of you on the fence about having your estate planning completed, this is another valuable reason why it is so crucial.  With this document, you are authorizing someone to handle your financial affairs (sign checks in your name, open up a bank account, enter into contracts on your behalf, etc.).  This can be very beneficial because if you are no longer able to do these things for yourself, someone else can immediately step in and do them for you. However, you may run into situations in which third parties are going to want the person to have more authority than just a signed Financial Power of Attorney.  In these cases, they are going to require you have a Guardian appointed.

A Guardian is essentially a court-appointed and court-“controlled” agent.  They have the court’s authority to handle your financial affairs on your behalf if you cannot.  In many jurisdictions, the court will give priority to an individual who has been named as agent under a Financial Power of Attorney, making it incredibly important that you have one prepared.  If you do not have one, each state will have a law that lists the order in which people are appointed.  In some cases, you could end up having someone handling your affairs that you would have never wanted, like an estranged parent or sibling. A financial power of attorney lets you share your wishes with the court.

To ensure that you are taken care of when you can no longer take care of yourself, it is important that you choose the right person.  When analyzing the pool of candidates, consider the following questions:

• Does he or she have the time to act as your guardian? Often times, those individuals who are the most organized and knowledgeable to help out are also the most heavily scheduled individuals and may not be able to step in.
• Does he or she live close by?Even in our digital world, some issues may take multiple steps or in-person interactions to resolve. If the individual you are looking to appoint lives far away, he or she may not be able to fully carry out their duties.
• Does he or she have the skill set needed?When acting as a Guardian, it is crucial that the individual is organized, thorough, and can communicate clearly. A person who is scattered or flies off the handle easily is not going to be a good advocate for you.

While we all want to retain as much autonomy as possible, there may come a time when we need someone to act for us.  Selecting the right individual will ensure that you are taken care according to your wishes.  If you have any questions or would like to discuss who you should appoint for this role, contact us. We’re here to help. 918-928-9573

Trustee

A revocable living trust is often the center of a well-designed estate plan because it is simply the best strategy for achieving most individuals’ goals. In many revocable living trusts, you will serve as the initial trustee and will continue to manage the trust assets as you had in the past. Your successor trustee will be responsible for making sure your wealth is passed on and managed in accordance with your wishes after your death or during your incapacity. Like each of the following individuals involved in your estate planning, it’s best to have a trusted person or financial institution carry out this vitally important role.

It’s important to make the language in your trust as clear as possible so that your trustee knows exactly how to handle various situations that can arise is asset distribution. Lastly, your trustee will only control the assets contained within the trust — not the rest of your estate, the reason why completely funding your living trust is crucial.

Powers of Attorney

Your power of attorney is the document in your estate plan that appoints individuals to make decisions on your behalf if you become unable to do so yourself. There are a few different types of powers of attorney, each with their own specific provisions. There is quite a wide range of situations covered by various powers of attorney, and we can help you decide which types you’ll need based on your current situation and future goals. Here are two common types to cover in your estate plan:

• Financial Powers of Attorney

Financial powers of attorney grant individuals the ability to take financial actions on your behalf such as purchasing life insurance or withdrawing money from your accounts to cover your expenses. A person who acts under the authority given in a power of attorney is generally called an agent. Regarding financial decisions, an institution like a trust company, can also be named. Keep in mind that trust companies will charge a fee for this service.

• Health Care Powers of Attorney

Health care powers of attorney cover a wide range of specific actions that can be taken regarding an individual’s medical needs such as making decisions about the types of care you receive or who will be providing the care.

Executor

Your executor is the person who will see your assets through probate, if necessary, and carry out your wishes based on your last will and testament. Depending on your preferences, this may be the same person or institution as your trustee. You might also see this position designated as personal representative, but it means the same thing.

Some individuals chose to go with a paid executor. This is usually someone who doesn’t stand to gain anything from your will, and is often the best choice if your estate is large and will be divided among many beneficiaries. Of course, family or friends can also serve, but it’s important to consider the amount of work involved before placing this burden on your family or friends.

Being an executor can be hard work and may have court-ordered deadlines, so it’s crucial to pick someone you know will be up for the job. They will probably need to hire a CPA to help sort out your taxes and a lawyer to assist in the process. Of course, if there’s a dispute, attorneys, appraisers, mediators, or other professionals will undoubtedly need to be involved. Choosing a spouse or someone else intimately involved in your life can be convenient because they may already be familiar with your assets and have an easier time making sure your wishes are carried out.  However, because of the time involved and the nature of some assets, they may not be up to the task at the time.

Get in touch with us today

Let us help you make the process of picking your trustee, powers of attorney, and executor as smooth and headache-free as possible. Once you have these choices in place, you’ll be able to rest easy knowing that your estate plan is in good hands no matter what life brings. Give us a call to make an appointment today. 918-928-9573.

What To Do After the Honeymoon

As you start living happily ever after, make sure to attend to these post-honeymoon to-dos during the first few days (or even weeks) after your wedding. This will help you enjoy the memories of your wedding and honeymoon for years to come. The following checklist can serve as a reminder of some, but not all, of the tasks to which you should give your immediate attention:

• Meet with a knowledgeable estate planning attorney to discuss the creation of a will or trust, or to update one from before you got married;
• Review and update your medical proxy documents and provide copies to your necessary doctors’ offices;
• Check and update beneficiary designations on any life insurance policies, 401(k)s, IRAs, annuities, and other investment accounts;
• Seek advice from your tax preparer about whether or not you should adjust your withholdings to reflect your new marital status;
• Obtain life insurance, if you do not already have coverage, and designate a beneficiary and a contingent beneficiary;
• If you have or are planning to move, notify your auto insurer, banks, employer, and anyone else of your new address;
• Add your spouse to your group health and/or dental insurance policy, if necessary; and
• Change ownership of real property, if you choose to, to reflect your marital status;

In addition to the above, if you decide to legally change your name make sure to notify the following institutions:

• Schools;
• Employer(s);
• Department of Motor Vehicles;
• Creditors and debtors;
• Social Security Administration;
• Passport office;
• Insurance agencies;
• State taxing authorities;
• Telephone and utility companies;
• Banks and financial institutions;
• Government benefit office.

Contact an Experienced Estate Planning Attorney

We are here to help guide you through the estate planning process and to make sure that the financial and legal aspects of your life correctly match your new marital status. Contact us today to learn about how we can help you enjoy your wedded bliss with financial and legal security. 918-928-9573

Who Makes a Good Guardian?

A guardian for your minor child “steps into” your shoes in the event you can no longer care for him or her. No one wants this to happen, but when a parent becomes incapacitated or dies, the minor child left behind will need care. Because a guardian plays such an important role in your family’s life, there are several factors to consider when choosing someone to take on this role:

1. Shared values. It is best to choose someone who has a common level of religious belief. For example, if you are not the religious type you may have objections to someone who would expect your child to join and regularly attend church.
2. Parenting style.Whether you run a tight ship at home or prefer a laissez-faire approach to raising children, choosing someone who will continue in your style is likely the best fit.
3. Involvement.Someone who travels all the time will not be able to regularly show up to your kids’ soccer games, gymnastics meets, band concerts, and live theater performances — an important part of being a guardian to your children.
4. Energy level.Having the stamina to be able to keep up with your child — especially during the younger years — is an important factor.
5. Other children.While a potential guardian who already has children should not be a deal breaker, you should consider how adding more children into the family will affect the dynamic, particularly when it comes to the ages of the kids.

Other Factors to Consider

In the same manner that you can choose different individuals to manage the estate’s finances and your minor children’s day-to-day needs, you can also choose more than one guardian for your kids. You may want to assign one guardian per child, depending on your family’s circumstances. That being said, setting up guardianship this way may result in your children being separated from one another, which is usually not a good outcome. Choosing someone who has the resources to care for your children — even if you have left money behind for their care — should also be a factor to consider. Finally, choosing someone who is young enough to be able to care for your child through his or her adulthood, as well as someone who is in good enough health to withstand the challenges of raising a child, are important factors that should be taken into account.

Once you have made a decision on who will be your child’s guardian, contact an experienced estate planning attorney. We can draft the documents you need in order to make this legally binding, as well as create an estate plan that suits your family’s needs and will protect your loved ones in the event you are no longer able to do so yourself. Call us today at 918-928-9573.

Most business owners have their estate planning prepared because they are worried about what will happen to their business after they are dead.  However, proper estate planning has the added benefit of allowing you to make plans for what will happen if you are incapacitated or needing to be away from your business for an extended period of time.

As the owner, you are responsible for the day-to-day operations of your business. This is a full-time responsibility. But what will happen if you can’t be there all the time?  You don’t necessarily have to be in a coma to be unable to participate in your business. You could be on an extended vacation or have a medical diagnosis that requires you to take several months away for treatment or recovery.  During this time, your business needs to continue on so that you and your employees can continue to take home money.

It is important to think ahead about who will be in charge of the day-to-day operations because a ship without a captain can be dangerous.  Not only does this individual need to understand the business, he or she needs to have the respect of your employees, and be confident in making tough decisions in your absence.  Without this planning, everyone could jump to the conclusion that he or she is in charge, or alternatively, no one will step up, resulting in chaos either way.

If you have family members working in your business it is also important to explain to them what will happen in your absence and who will be in charge so that someone does not assume they are in charge just because they are family. Importantly, remember that just because your family is involved with your business does not mean that he or she is the best choice to succeed you.

We can help you develop a plan to keep your business running while you are away. From choosing the right individual to putting processes in place for your incapacity, we are here to help. Call us today 918-928-9573.

But, when you’re the owner of a business, planning for retirement requires proactivity and strategy. It’s not just the dizzying array of choices for retirement accounts, there’s also planning for the business itself. Who will run the business after your retirement? Additionally, your estate plan must integrate into your retirement and business transition strategy.

Owners of businesses (like employees and everyone else) want to make sure they will have enough money in retirement. Business owners recognize the value of their businesses, so they are often tempted to reinvest everything into the enterprise, thinking that will be their “retirement plan.” However, this might be a mistake.

Retirement Accounts for Business Owners

Rather than placing all your eggs in one basket, it makes sense to have some “backup” strategies in place. There are many retirement account options open to business owners. Although the number of options can make things confusing, a tax and financial professional can often quickly make a recommendation for you.

For example, you may consider opening a 401(k), SEP-IRA, SIMPLE, or pension plan. This can reduce your income taxes now, while simultaneously placing some of your wealth outside your business. From a financial perspective, these account are tax-deferred, so the investment growth avoids taxation until you retire, which greatly boosts returns. The “best” plan really depends on how much income your business earns, how stable your earnings are, how many employees you have, and how generous you want to be with those employees. You must consider how generous you’ll be with employees because the law requires most tax-deferred plans to be “fair” to all employees. For example, you can’t open a pension or 401(k) for yourself only and exclude all of your full-time employees. When making this decision, consider that many employees value being able to save for their retirement and your generosity may be repaid with harder work and loyalty from the employees.

Depending on how many employees you have, you may even consider “self-directed” investment options, which can allow you to invest some or all of your retirement funds into “alternative” investments, such as precious metals, private lending arrangements, real estate, other closely held businesses, etc. These self-directed accounts are not for everyone, but for the right person, they open up a wide world of investment opportunities. The tax rules surrounding self-directed tax-deferred accounts are very complex and penalties can be incredibly high. So, if you choose to do self-directed investments, always work with a qualified tax advisor.

Outside of your business, you can likely contribute to an IRA or a Roth IRA. This can allow you to add more money to your retirement basket, especially if you’ve maximized your 401(k), SEP, or SIMPLE plan. Like the other tax-deferred accounts, self-directed IRAs are also an option, opening up a broad world of investment options.

As a business owner, you likely have a great deal of control over your health insurance decisions. If you’re relatively young and healthy or otherwise an infrequent user of health care services, consider using a high deductible health plan (HDHP) and a health savings account (HSA) to add additional money to your savings. These plans let you set aside money in the HSA which can be invested in a manner similar to IRAs. At any time after you setup the account, you can withdraw your contributions and earnings, tax-free, to pay for qualified medical expenses. And, after you turn 65, the money can be used for whatever purpose you want, although income tax will need to be paid on the distributions.

Selling or Transferring the Business

Many business owners dream of a financially lucrative “exit” when a business is sold, taken public, or otherwise transferred at a significant profit for the owner. This does not happen by accident – a business owner must first create and sustain a profitable enterprise that can be sold. Then, legal and tax strategies must be coordinated to minimize the burdensome hit of taxes and avoid the common legal risks that can happen when businesses are sold. When a business is sold, the net proceeds can form a significant component of the owner’s retirement. When supplemented by one or more of the retirement accounts discussed above, this can be a great outcome for a business owner.

On the other hand, other businesses are “family” businesses where children or grandchildren will one day become owners. Like their counterparts who will sell their businesses, these business owners must also focus on creating and sustaining a profitable enterprise, but the source of retirement money is a little less clear. In these cases, clearly thinking through the transition plan to the next generation is essential. Although the business can be given to the next generation through a trust or outright, there are also transition options to allow for children, grandchildren, or even employees to gradually buy-out the owner, if the owner needs or wants to obtain a portion of the retirement nest egg from the business.

The Importance of Meeting with a Tulsa Estate Planning Attorney

Regardless of which retirement accounts (401(k), SEP, SIMPLE, IRAs, HSAs) you select, it is wise to integrate them into your estate planning. You’ve probably already considered who you want to take over your business after you retire (perhaps a son or daughter or a sale to a third party). For your retirement accounts, an IRA trust is a special trust designed to maximize the financial benefit, minimize the income tax burden, and provide robust asset protection for your family. These trusts integrate with the rest of your comprehensive estate plan to fully protect your family, provide privacy, all while minimizing taxes and costs.

Leverage the Team Approach

Let us work with you, your business advisors or consultants, your tax advisor, and your financial advisor to develop a comprehensive retirement, business transition, and estate planning strategy. When we work collaboratively, we can focus on setting aside assets for retirement, saving as much tax possible, while freeing you to do what you do best – build your business!

Give your Tulsa estate planning lawyer a call today so we can help you craft a retirement, business transition, and estate planning strategy. Call us at 918-928-9573.