“We Don’t Have Very Much”

Every person/couple is as individual as a fingerprint, but there is one thing that I hear from just about everyone seeking Estate Planning services – “I/We don’t have very much”. It puts me in mind of a true story, that happened around 20 years ago.

“Mike” lived in Tulsa with his wife. Mike worked for the Williams Companies, and received shares in Williams, as well as shares he purchased in other tech companies. Mike moved to California to pursue a business interest, and shortly thereafter Mike’s wife filed for divorce here in Tulsa.

When Mike was served with Divorce papers, he found me on the Internet and called. Here is what he said: “My wife thinks we have all this money and she’s going to get half. What she doesn’t understand is that the shares have greatly devalued lately. We probably only have any more than about 12 million right now.”

The question is not whether you have a lot. It’s whether what you have is worth protecting.

Questions about Oklahoma Estate Planning? Visit http://www.ba-estatelawyer.com or call me at (918) 258-2711. If you would like to receive these updates and other special news about Oklahoma Estate and Probate Law, sign up for our mailing list at http://www.ba-estatelawyer.com/contact.html.

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DOES THE GOVERNMENT GET MY MONEY?

DOES THE GOVERNMENT GET MY MONEY?

A common concern is the amount one’s estate will be taken by taxes. For most people, it is not a major concern.

The State of Oklahoma eliminated the State estate tax in 2010. For anyone dying after 2010, the State of Oklahoma does not tax the estate at all.

The Federal Government does have a gift tax, which applies to inheritances. However, at present, the lifetime exemption on such taxation is 5.49 million for individuals (10.98 million for married couples). Nothing under those amounts is taxed.

Additionally, the money inherited by the heirs is not taxed. Property, such as land, passes to the heirs with the tax cost basis as of the date of the decedent’s death.

Questions about Oklahoma Estate Planning? Visit http://www.ba-estatelawyer.com or call me at (918) 258-2711. If you would like to receive these updates and other special news about Oklahoma Estate and Probate Law, sign up for our mailing list at http://www.ba-estatelawyer.com/contact.html.

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Estate Planning and the Medicare “Spend Down”.

Medicaid Spend Down

A common misconception is that the State of Oklahoma will take a person’s property if that person goes into a nursing home. While it is true that Medicaid will not pay for the long term (nursing home) care of a person with assets, the State does not actually take anything. Instead, a person with non-exempt assets ofer $2,000.00 will be required to pay for his/her long term care from their own assets until they have assets below the maximum allowed. This is called “spending down” one’s assets. While certain assets are “exempt” (not counted in the value of one’s property), for the most part, all personal assets must be depleted before Medicaid will pay for long term care. If the person going into long term care is married, and the spouse is not also in long term care, the spouse can keep the home, one car and the household furnishings, as well as certain other property as exempt, or “non-countable” assets.

Many times, you will see an ad for a free seminar promising to show you how to protect your assets from the State if you go into long term care. The truth is that many people do not have adequate resources to engage in the type of planning that avoids the “spend down” requirements. The seminars are free, but the goods being sold are not.

Questions about Oklahoma Estate Planning? Visit http://www.ba-estatelawyer.com or call me at (918) 258-2711. If you would like to receive these updates and other special news about Oklahoma Estate and Probate Law, sign up for our mailing list at http://www.ba-estatelawyer.com/contact.html.

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What is an “Heir”?

What is an “Heir”?

There is often confusion as to whether a person is an “heir” and whether or not it makes a difference. An heir is one who would receive part of a decedent’s estate if the decedent did not make other provision, such as a Will or a Trust. An heir is an heir regardless of whether or not that person actually receives property. One who has been disenherited is still an heir.

Heirship in Okahoma depends on whether or not the decedent was married at the time of death, and whether the decedent left any direct descendants (children, grandchildren, etc.) by birth or by adoption. Heirship is determined as of the date of the death of the decedent. If the heir dies after the decedent, the heir still stands as an heir. If the deceased heir receives part of the estate, then the heir’s share is distributed as part of the heir’s estate.

The principal significance of being an heir is that all heirs, whether or not they will receive any of the estate, are entitled to actual notice of all administration proceedings, and the right to participate in those proceedings.

Have a question about estate planning or probate in Oklahoma? Email me at mkdyer11@gmail.com or visit
www.ba-estatelawyer.com

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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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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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