A lot of people say that they do not have estate plans in place because they don’t know where to begin. Others say that it is too time-consuming. As a result, there is this idea that estate planning is extremely complex. It seems intimidating, so people just put it on the back burner.
When you understand the basics, you see that it is really not that complicated. With this in mind, we will break it down to the essential components in this post.
Asset Transfers
Obviously, the first order of business is to take steps to get your assets into the hands of your loved ones after you pass away. You could state your wishes in a will. There is, however, a major drawback that you should consider before you make any decisions.
A will is admitted to probate, which is a time-consuming and expensive legal process. The court provides supervision while the estate is going through probate. The court supervision continues until the executor completes the administration tasks.
It can take about eight months if everything goes well. There are cases that have been stuck in probate for longer periods of time. The inheritors receive nothing while the estate is being probated. This waiting game is not a good thing for the rightful heirs to the estate.
If you use a living trust instead of a will, probate will not be necessary after your death. You would be the trustee while you are living, so you would not lose control of the assets. This is the most commonly used alternative to a simple will.
There are other asset transfer methods that are used to satisfy certain goals. We will not get into them here, because we are trying to keep things simple.
Child Guardianship
You should name a guardian for your children if you have minors still living in your home, and this is done with a will. Since children cannot inherit money directly, you would not use a will to leave inheritances to minor children.
A living trust would be a good choice in this regard. A testamentary trust is another option. This is a trust that is contained within a will, and would go into effect after your passing.
Choice of Trustee or Executor
When you are creating your estate plan, you have to name an estate administrator. The executor is the administrator of a will as we have stated, and a trustee is the administrator of a trust. You will name a successor trustee to assume the role after death if you have a living trust.
An administrator takes care of many important responsibilities, so you should designate someone that has the right skill set. You also have to make sure that they are willing to take on the job.
If you do not know anyone personally that would be a suitable administrator, you can engage a professional. Trust companies and the trust departments of banks provide trustee services.
Incapacity Planning
The last piece of the puzzle is the incapacity planning component. This is necessary because a significant percentage of elders become unable to handle their own affairs eventually.
A living will is a document that is used to state your life-support preferences. You should also have a durable power of attorney for health care to name someone to make decisions for you that are not related to living assistance.
Doctors would not be able to share medical information with the representative unless you have a HIPAA release, so this should be added. For financial matters, you name an agent in a durable power of attorney for property.
If you have a living trust, you can name a disability trustee to manage the trust in the event of your incapacity. It can be the successor trustee that will administer the trust after your death, but this is not a requirement.
Schedule a Consultation Today!
We are here to help if you are ready to work with an Oklahoma City estate planning lawyer to put a plan in place. You can contact us to set up a consultation appointment, and we can be reached by phone at 405-843-6100.
After helping his own family deal with a lengthy probate and the IRS following his father’s untimely death in a farm accident, Larry Parman made a decision to help families create effective estate plans designed to reduce taxes, minimize legal interference with the transfer of assets to one’s heirs, and protect his clients’ assets from predators and creditors.