Oklahoma Court of Appeals Reiterates Surviving Spouse Rights

The Oklahoma Court of Civil Appeals has reiterated certain rights of surviving spouses in Probate proceedings. Surviving Spouses have always been granted special protections by our statutes.

The case involved a husband that, before he got married, transferred property into a revocable trust. Part of the property was a piece of real property referred to as “the farm”. After husband and wife married, husband, as Trustee, conveyed the farm to one of his daughters. Three statutory provisions become relevant here:

  1. When a married person conveys real property in Oklahoma, the spouse must sign the deed;
  2. When a married person dies without a Will in Oklahoma, the surviving spouse is entitled to a “forced share” that is no less than an undivided 1/2 interest in the property acquired by the joint industry of the parties;
  3.  During the administration of an estate, a surviving spouse is entitled to an “allowance”  against his/her share until the property is distributed.

Surviving Spouse first argues that the farm should be considered part of the estate because property in a revocable trust is considered to be part of the decedent’s estate. The Appeals Court ruled against her, because the “forced share” statute only allows the spouse to take half of what the parties acquired jointly as a couple. Since the house belonged to the husband’s trust prior to the marriage, it was never part of the estate that wife could claim.

Wife next argued that the conveyance was invalid, because she never joined in the deed. The Court essentially said that the wife’s claim is moot, because even if she prevails, the result will be that the land will again be the property of the trust, and it will have no effect on the Probate proceedings. Wife argued that if the property was recovered into the trust, it would be available to pay her allowance. The Court disagreed, pointing out that a surviving spouse can draw allowance only against that part of the estate that he/she will eventually receive.

Finally, wife argues that she should have the homestead right of a surviving spouse in the farm. It was undisputed that, at the time of husband’s death, the couple lived at the farm. Oklahoma allows the surviving spouse to live in the homestead for the remainder of his/her life so long as the right is not waived or abandoned. Here the Court held that the issue of title does not matter as to homestead. Even though the farm may be titled in the Trust, or even in the decedent’s daughter, the wife had the rights of homestead. The matter was sent back to the Trial Court for a determination as to whether wife had abandoned or waived her homestead rights.

 

Read the Decision here.

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Avoiding “Mass” Panic

Thirty years ago, I was sitting an a classroom at Tulsa Junior College, (now TCC), taking an “Intro to Psychology” course. During the semester, we looked at the emotions that businesses try to tap in their advertising.  Among the top emotions was fear. Often that fear is simply a product of ignorance.

Now fast forward to last night. I watched a commercial for Mass Mutual Insurance Company, where a man and woman (presumably brother and sister) are talking about their recently departed mother. Their mom had no insurance, and the couple were worriedly wondering how they would pay for the costs of the funeral and other expenses like her medical bills.  Oh, if mom had only had the foresight to purchase life insurance.

Certainly, I deal with many people every year with the same concerns. The problem is that the commercial deals in half-truths. While it is certainly true that those left behind will be responsible for any funeral, burial or other post-mortem costs that they choose, there is no legal obligation to do anything. As hard-hearted as it sounds, the kids can simply refuse to do anything, and it becomes an issue for the local authorities. Even then, a small funeral and burial policy is fairly inexpensive, and can cover these expenses.

But what about the other bills? Medical, credit card and other debt is never the responsibility of the next generation. The only way that a person can be held liable for the expenses of another (even a parent or child) is when that person signs an agreement to be liable for that debt. The only relief that a creditor has for the debts of the deceased is the property owned by the deceased at the time of death.

Two comments are appropriate here. First, a different set of rules apply to the spouse of the deceased, but here other protections are in place for the surviving spouse. Secondly, I am not advocating that you do without life insurance. It is a powerful tool in estate planning, but the cost must be considered when considering the benefit.

It costs nothing to consult with a competent Estate Planning Attorney to get answers to these and other questions. For Oklahoma Estate Planning questions, call me at (918) 258-2711.

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Oklahoma Adds to “Slayer” Statute

By now, it is fairly well known that a person who kills another cannot legally inherit, or financially gain, from the victim. Effective November 1, 2015, the list of persons covered by the provisions of the law will grow.

Under the current law, no person who is “convicted of murder in the first degree, murder in the second degree, or manslaughter in the first degree, as defined by the laws of this state, or the laws of any other state or foreign country, of having taken, caused, or procured another to take, the life of an individual” may inherit from the victim, or collect any benefit payable or transferable by reason of the death. This would include proceeds of life insurance policies, money accounts with a “pay on death” provision or survivorship interest in jointly held property.

Under the amended version of the statute, anyone who has been “convicted of abuse, neglect or exploitation of a vulnerable adult” is also prohibited from deriving any benefit from the death of the victim, whether or not the death was caused by the actions of the person so convicted.

While these amendments seem very straightforward, there will undoubtedly be challenges at some point in the future, especially in cases where the victim expresses a voluntary intent to include the offender in a distribution after the conviction occurs.

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Nuts and Bolts of the Oklahoma Power of Attorney

I am often contacted by someone who says “I need to get a Power of Attorney for my mom”. My first question is “What is her current mental state?” About half the time, the response is that Mom has deteriorated in recent years, and has trouble with memory, not only about happenings, but about people, including family. At this point I have to tell the caller that it’s too late for a Power of Attorney, which is something given, not something taken.

A Power of Attorney is something that must be given by a person who is mentally competent to a person chosen by the person given the Power. The person who is granted the Power is referred to as the Attorney in Fact (AIF). The person giving the Power is the “Grantor”. The Power states the limits of the power (little “p”) granted to the AIF. In granting the Power (capital “P”), the person has choices to make as to the scope of powers granted, and the duration of the Power.

SCOPE OF POWERS

The powers granted fall into one or both of two categories. Financial powers, which often allow the AIF to sign and enforce agreements, write checks, enter into business transactions and make other business or financial decisions on behalf of the person granting the Power, are the most common powers given. Additionally, the Power of Attorney can grant medical powers, which allow the AIF to make routine and everyday medical decisions which do not include end of life decisions. Medical powers often allow the AIF to choose the Doctors, Hospitals and other health care providers, as well as approve medication changes for the person giving the power. Often the medical powers specify that they may be exercised only if the grantor is not capable of making the decisions for him/herself.

DURATION OF POWERS

The issue of when a POA becomes effective and terminates usually centers on four happenings: the execution of the Power; a valid revocation; the loss of mental capacity of the Grantor; the death of the Grantor. A POA always terminates with the death of the Grantor or the valid revocation of the Power by the Grantor. To be valid, the revocation must be in writing, and must be executed while the Grantor has full mental capacity. Subject to these terminating events, the duration of the Power depends on the type of Power given. There are three types.

A General POA takes effect immediately upon execution and terminates upon the death or mental incapacity of the Grantor.

A Durable POA only takes effect upon the loss of mental capacity by the Grantor, and continues until the death of the Grantor, or until it is trumped by the imposition of a Guardianship by an appropriate Court.

A General Durable POA takes effect immediately upon execution and remains in effect, even if the Grantor loses mental capacity, until valid revocation, subsequent Guardianship or the death of the Grantor.

Powers of Attorney must fall under one of the three “Duration” types, and must specify the extent of the powers, whether financial, medical or both, and must be executed while the Grantor has full mental capacity. As for the caller, whose Mom is beyond the point of capacity, the only solution is to make application to the Court for a Guardianship.

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OKLAHOMA COURTS TO GET UNIFORM PRIVACY RULES

Change is coming to the system of access to Oklahoma Court Records. The current system is a hodgepodge, to put it mildly. Under the current scenario, Court records are accessible for the State’s 13 largest Counties through the Oklahoma Court Information System at http://www.oscn.net. Records for the other Counties, along with some Municipal and Tribal Courts through the Oklahoma District Court Records System, at http://www.odcr.com. For both systems anyone can see the Dockets (list of events) for any case, beginning with the date such records were electronically recorded, which is different for each County. For OCIS Counties, anyone can also see images of the actual documents filed, from and after the date the County began scanning the documents. The same is true for ODCR Counties, but only if you have a paid subscription. The individual Court Clerks decide, up to a pint, which records scanned and made available. (Records of Adoptions, Guardianships and Mental Health Cases, among others, are required to be sealed)

A few years ago, the Oklahoma Supreme Court issued rules that require a single uniform system for electronic storage and access to District Court Records. The pilot program (Noble County) is currently being tested. Now, however, discretion is being taken away from the Court Clerks in determining what records will be made available. Effective November 1, 2014, the Oklahoma Supreme Court is being charged with the implementation of uniform rules that will apply to all District Courts. These new rules could dramatically impact how people should approach their lawyers in the drafting an filing of documents.

Here are some examples:
-A person pleading guilty or no contest to a felony is required to complete and sign a Record of Plea form. This form contains the full name, date of birth, address and Social Security Number of the Defendant;
-In child custody cases, a wage assignment is sometimes filed, to allow for direct withholding of child support from the wages of the payor. This form contains the names, dates of birth and Social Security Numbers of the parties and the minor children;
-Orders amending birth certificates for name changes and other actions must contain, name, date and place of birth, and other information for the issuing authority to amend the records.

Once the new rules are in place and implemented, every public document filed in any Oklahoma Court, will be scanned and made available to anyone with a computer anywhere in the world. The best advice to anyone is to avoid the rush and begin practicing vigilance now. Tell your lawyer you want to review every document that will be filed at the Courthouse, and look for the inclusion of any personal identification data. If it is there, see if it can be redacted, at least partially (only the last 4 digits of account numbers and Social Security numbers). If not, see if it will be a “public record” accessible by internet download. In extreme cases, you can ask your attorney to file the document(s) under seal. This will cost more money, and will require extra care, but will be well worth it in the long run.

Finally, pay attention to the rules creation process. Prior to implementation, the Supreme Court will publish proposed rules, and ask for comments and input from the public. The best way around a bad rule is to prevent it from being enacted in the first place.

If you believe this information is valuable, please consider sharing it on Facebook, Retweeting it, or passing it along to the Social Media of your choice.

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The Risk of “Do It Yourself”

I encounter it frequently.  Well meaning and well-intentioned people who only want to do what the law allows – avoid probate or taxes.  Unfortunately, these well meaning people all too often rely on their own Google research, or the advice of other well meaning people (friends, family, co-workers).

Here is a quote from Bankruptcy Judge Terence Kern in a recent matter decided in Tulsa:

Whether for carpentry or estate planning, it is usually a good idea to use the right tool for the job.  Unfortunately, when it comes to estate planning and asset transfer, people are often ill-informed about the tools available to them and the perils of choosing the wrong one.  If a parent wants to gift an asset to a child only upon the parent’s death or incapacity, state law provides tools to accomplish that end.  Unfortunately, use of the wrong tool could unwittingly result in a present transfer and the unintended loss of the asset.

In the case before Judge Kern, a couple had transferred their home to their daughter by Quitclaim Deed.  The purpose was to avoid Probate after they passed.  The couple continued to make all insurance and tax payments on the house, as well as all repair and upkeep costs.  When the daughter declared Bankruptcy, the couple argued that the intent was to create a trust, where the couple retained all “equitable” interest and the daughter received only “naked legal title”.

Unfortunately for this couple the bottom line is that Judge Kern ruled that the Bankruptcy could seize and sell the couple’s home – not because the property was conveyed to the daughter, but because of the way i was conveyed.

There are ways to avoid probate that will not put the property at risk, keeping in mind that if the real intention is to keep the property from the State in the case of a Nursing Home stay, such transfers may be incredibly difficult or even impossible.  As with carpentry, the discovery that the wrong tool was used may come too late.

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New Year’s Resolution – Estate and Medical Planning

One of the most common comments that I hear from clients in divorces, real estate transactions, HOA Disputes and adoptions, is :I need to make an appointment to discuss a (here you can insert “will”, “trust”, “Power of Attorney”, “property”, etc.).  I actually hear back from less than 5 percent of them.  The phrase “out of sight, out of mind” seems truer every year.

I also find that part of the hesitation is an embarrassment that the person is not more knowledgeable about the estate and end-of-life tools that are available.  Here is a list of the major items, and some considerations for each:

Will:  A will is a written set of instructions to a person or persons (the executor) relating to disposition of the property left behind.  A will has no legal significance whatsoever unless and until it is introduced in court by way of a Probate action.  Only an original will may be introduced to the Court.  It can be “holographic” (entirely written, dated and signed by the hand of the person making the Will), or “statutory” (executed in the presence of two witnesses that have no interest in the estate and a notary).  The property that belonged to the deceased becomes property of the “estate” and the executor has the power to dispose of or distribute, property of the estate.  If a person dies owning property without a will, then someone must petition the Court to be the representative of the estate (the Administrator), and a statute specifies how the property is to be distributed. (Which varies depending on whether or not the deceased was married or not, had children or not, etc.).

Trust:  A trust is a legal entity, capable of owning property and conducting personal and professional business.  The person(s) creating the trust is/are the Trustor(s).  The person authorized to act on behalf of the trust is the Trustee.  The Trustor and the Trustee may be one and the same.  The persons who will ultimately receive the Trust property are the beneficiaries.  After the Trust is created, the Trustor(s) transfer their property to the Trust.  When the Trustor dies, there is no need for probate, as the successor Trustee will take over the duties, and distribute the property per the instructions of the Trust document.  The Trust is more expensive than the Will, but it is less expensive than a probate, and the transition of ownership of the property is seamless and immediate.  Issues other than probate avoidance (such as protection from creditors) involve more discussion and more restrictive choices).  Aside from probate avoidance, many have considerations of immediate distribution.  Some fear that transferring a sizable amount of money/property to their next of kin may not be advisable, as young adults are not always ready to handle such an amount.  For these people, the Trust can designate that their heirs will only receive the property in installments over time, or upon the attainment of a certain age.

Joint Ownership:  Certain property (bank accounts, land, motor vehicles, etc) can be jointly owned so that title to the property passes immediately to the survivor upon the death of the other.  This avoids probate, but can only be used when there is only one beneficiary, such as an only child.

POD/TOD:  Bank Accounts, 401(k) accounts, brokerage accounts, or other monetary holdings can be transferred by the “POD” (Pay on Death) provision of the account.  Simply notify the Bank that you want to have a designated POD and the bank can provide you with the paperwork.  Land can be distributed by way of the TOD (Transfer on Death) Deed.  Once recorded, this Deed allows the survivor to record an affidavit within 9 months of the death of the property owner, which vests full title in the survivor.  The TOD Deed only takes effect if it is recorded prior to the death of the owner, the owner still owns the property at death (the owner has complete ownership, and can sell or give away the property prior to death), and the Deed is still effective at the death of the owner (it may be revoked at any time by recording a revocation).  The property is still subject to any liens or mortgages on the property at the time of death, and the successor must satisfy the encumbrances in order to take full title.

Also related to the TOD Deed is the “Dresser Drawer” Deed.  In this case, the owner executes an actual Deed to whoever the owner wants to have the property after death.  The property then belongs to the successor as soon as the Deed is delivered to the successor.   With this arrangement, the successor agrees not to record the Deed until the owner dies.

Another important consideration for most people is the conduct of their personal and medical affairs if they lose the ability to make decisions.  This can be due to catastrophic illness or injury, or conditions related to aging.  A different set of tools are available to plan for such events.

Power of Attorney:  A Power of Attorney (POA) transfers to another (the Attorney in Fact), the authority to take action on behalf of the maker of the POA.  It can be “General” (taking effect immediately, but losing power upon the mental incapacity of the maker), “Durable” (only taking effect upon the mental incapacity of the maker, but lasting until the death of the maker) or “General/Durable” (taking effect immediately and remaining in effect if the maker loses mental capacity).  All POA’s can be revoked by the maker at any time, so long as the maker has mental capacity.   All POA’s lose effect totally upon the death of the maker.  The attorney in fact cannot do anything under the power upon the maker’s passing.  Another important consideration is that only a person with mental capacity can make a POA.  If mental capacity is lost, creating a POA is no longer an option.  The only option at that point is to seek a Guardianship through the District Court.

Medical POA:  The Medical POA grants the Attorney in Fact the authority to make medical decisions, which may include end of life decisions, on behalf of a person who does not have the capacity to make such decisions because of debilitating illness or injury.  An important consideration is to insure that HIPPA language is as broad as possible so that the Attorney in Fact has the ability to access necessary medical records, and receive full reports from the health care providers.

Advance Directive:  The Advance Directive, sometimes called a “living will” is a document that explains the makers wishes if the maker is ever suffering from an “end of life” condition, and is not capable of communicating decisions to health care providers.  The Oklahoma form also provides for anatomical gifts and the appointment of a health care proxy (person empowered to make medical decisions for the maker).  Once completed, this document should be provided to the maker’s primary care physician and/or the designated health care proxy.

The POA, Medical POA and the Advance Directive (or any combination of two of them) can be combined into the same document, but can only be for one individual.  There cannot be a joint document for both husband and wife.

For additional information related to Estate and Medical planning, please call me at (918) 258-2711.  You can also follow me on this blog and Twitter.

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