Planning for Rightsizing

by Cody Jones

Are you looking around at all the space in your home thinking this is too much for me to handle?  Do you see stairs in your home that you cannot easily climb?  Are you walking into a room struggling to remember why you walked into the room? Are you missing community because you are outliving your friends and loved ones?  You are not alone.

 From a different perspective, are you part of the sandwich generation – taking care of your kids while also spending more time addressing the needs of your parents?  Do you worry about your parent’s forgetfulness or tendency to trust the unknown caller on the other end of the line? Do you worry about their ability to navigate their own home? You are not alone.

 Sometimes we humans are like the frog in the pot of boiling water.  We do not notice, or more likely, we choose to ignore the signs and fail to make changes until it is too late.  We delay the changes because we love our home.  We love the memories we have in our home.  We do not want to bear the cost of a long-term living facility. We are still able to do most things, so it seems too early to make any changes. And maybe we are just a little too stubborn. 

 As estate planners, we often hear the phrase "if this happens to me” when we should be considering the phrase "when this happens me."  As we age, we become more like a child, needing assistance and guidance.  Rarely does this happen suddenly, but also rarely does it happen without warning.  We have counseled many children who see their parents aging, but their parents refuse help. For all of our friends reading this, please know an honest, transparent approach by both the children and the aging parents can make this transition so much better for everyone involved.  Have the conversation early, explore nearby options for senior living, process the information while you are healthy and mobile, and develop a “what if” plan together.

 Most people have heard the phrase downsizing. To some, this sounds overwhelming and restricting. It sounds like a loss.  A local realtor I know refers to downsizing as rightsizing instead.  Doesn’t that sound so much more … right?  Rightsizing is finding a home or living community or tweaking your existing home early so that you can transition through the end of life gracefully.  Rightsizing is finding the right location, with the right items, near the right people, with the right accessibility, at the right time.  One of the biggest mistakes is waiting until the crisis happens to make these changes.  Rightsizing frees you from the worries before the crisis occurs and gives a gift to your loved ones to make it more convenient for them to help as your abilities decrease.

 The good news is an entire industry exists to help people through this process.  Retirement communities and independent living communities are happy to discuss their facilities with you in advance.  You can contact a trusted realtor, preferably a certified senior housing professional, to consider an age-restricted neighborhood or patio home community with less maintenance.  Consider neighborhoods near senior wellness centers or church facilities that offer senior programs. You can reach out to a professional personal organizer or estate liquidator to help you decide what personal belongings to keep – oftentimes a third-party perspective can save frustration.  And as always, you should review your estate planning documents to make sure your incapacity-planning documents are in order and your assets will be managed according to your wishes during your lifetime and upon your death.

 If you are looking for a place to start, may we suggest you consider attending the Crossings Care Series: Moving Mom & Dad offered at Crossings Community Church in the Spring. More information can be found at https://lifecare.crossings.church/careseries

House Bill 2548: the Oklahoma Uniform Power of Attorney Act

by Cody Jones

On November 1, 2021, the new Oklahoma Uniform Power of Attorney Act (the “New POA Act”) went into effect under 58 O.S. § 3001, et seq.   The new legislation repeals the Uniform Durable Power of Attorney Act (the “Old POA Act”) which was found at 58 O.S. §1071, et seq.  A durable power of attorney and/or health care power of attorney validly executed under the Old POA Act prior to November 1, 2021, remains valid even after the repeal of the Old POA Act.  Nevertheless, you should be aware of such changes in the law if circumstances create potential confusion or a desire to update your documents.

The New POA Act provides remedies for incapacitated persons against an agent who abuses his or her authority under the power of attorney document – a welcome change in the law.  It also provides standing for the principal’s guardian, spouse, parent, descendant, or certain other individuals to petition a court to review an agent’s conduct if the principal lacks capacity to file such petition.

However, in replacing the Old POA Act, the New POA Act eliminates the previous statutory basis for clients to execute a power of attorney for health care decisions.  The New POA Act expressly does not authorize a person (referred to as the “principal”) to delegate to an agent the power to make healthcare decisions for them.  It does authorize the agent to access the principal’s health care information under HIPAA and communicate with the principal’s health care providers.  An advance directive under the Oklahoma Advance Directive Act is still available for a person to make end-of-life decisions regarding life sustaining treatment and, specifically, administration of nutrition and/or hydration intravenously, in narrowly defined healthcare conditions (terminal condition, persistently unconscious condition, end stage condition).  And, the Advance Directive Act allows for the appointment of a health care proxy (essentially an agent; same concept different label) with the delegated authority to make medical treatment decisions.

The new law has created confusion concerning what authority can be delegated to an agent in a power of attorney signed after October 31, 2021. It is our understanding the state legislature is working to remedy this confusion.  Until they do so, we are adapting the new durable power of attorney form and the existing advance directive form to assist our clients in delegating authority to persons they trust to make decisions for them in the event of our client’s inability to make decisions for themselves due to an incapacitating illness or injury.

Issues in Unplanned and Poorly Planned Estates

by Cody Jones and Ashley Ray for the Oklahoma Bar Journal February 2019

The term “estate planning” implies that a plan for the administration of an estate exists, which, of course, most estate planning attorneys would prefer. However, those same estate planning attorneys likely spend much of their time administering estates of decedents who did not have a plan in place at their death or who had a plan in place that was poorly prepared or never updated. This article addresses some common issues attorneys might encounter in unplanned or poorly planned estates.

IMMEDIATE NEEDS UPON DECEDENT’S DEATH

Disposition of Remains

When a loved one dies, addressing the immediate needs of the individual’s estate can be chaotic for the family. One of the first decisions the family must make is determining the manner of the disposition of the decedent’s remains. If family members all get along, this may not be a contentious decision. When emotions run high and family members do not see eye to eye, this decision may become volatile. If the decedent had exercised thoughtful foresight while alive, he or she could have executed an assignment of right regarding disposition of remains pursuant to 21 Okla. Stat. §1151 (2011), which would have delegated to someone the right to control the decisions regarding the decedent’s remains. If no such assignment exists, the individual with priority to control the decisions is determined pursuant to 21 Okla. Stat. §1158 (2011), which is similar to the statute determining those individuals who will have priority to serve as administrator of an intestate estate.[1] The Oklahoma Court of Civil Appeals has previously found it is “highly impractical” to obligate a funeral home to determine all persons who are in the same degree of kinship to the decedent and obtain consent from all of them.[2] Thus, in poorly planned estates, the decisions regarding disposition may be decided on a first-come, first-served basis. In order to avoid such disputes among children, for instance, an assignment of right regarding disposition of remains is advisable.

Pets

The welfare of pets is also an immediate concern upon someone’s death. If it is not desired for pets to be surrendered to the local shelter, an individual should have a discussion with friends and family to identify who would be willing to care for the pets – perhaps even including provisions within the individual’s estate planning documents to provide accordingly. A pet owner might consider creating a “pet trust” for the benefit of his or her domestic animals.[3] Without such planning in place, what happens when the care for pets has not been considered in advance? By statute, dogs are considered the personal property of the owner, and by analogy other domesticated pets may also be considered personal property.[4] Thus, the provisions for personal property under a will and the provisions for exempt property allowed the family likely control pursuant to 58 Okla. Stat. §12 (2011). The greater concern, however, is the immediate welfare of the animals. If law enforcement has reason to believe an animal has been abandoned or neglected by the owner and no one is coming forward to care for the animal, the officer may obtain a warrant and the animal will be impounded.[5] The owner (or the deceased owner’s representative) will receive notice of a hearing to determine if the animal was in fact abandoned, and if the court determines a violation has occurred, the animal will be surrendered to a shelter or euthanized, depending on the circumstances, and costs will be allocated to the owner or the owner’s estate.[6] Thus, it is in the best interests of the estate for the personal representative or immediate family members to care for the pets of the decedent or locate someone who can until further disposition can be made.

Social Media Accounts

Another issue that may be an immediate concern after death is an issue that has arisen with the growth of social media. What should the family do with the decedent’s social media accounts, especially when the unfortunate news about the decedent’s death is spreading? Being aware of the options for management of a deceased person’s account for each networking website can prevent additional, unnecessary anxiety for the family. Although thoughts, prayers and fond memories may be publicly expressed and appreciated on social media sites, awkward or inappropriate messages may also be posted to the decedent’s page, in which case they may linger indefinitely if no one is appointed personal representative. Upon appointment as executor or administrator of the estate, the personal representative is given the power by statute to control the decedent’s social networking, blogging and emailing service websites.[7] However, each website has its own policy and procedures. For example, Facebook allows users to appoint a “legacy contact” to manage the decedent’s page, which can be memorialized or deleted following the decedent’s death.[8] Most other social networking websites require an immediate family member or personal representative to contact the company to either memorialize, deactivate or delete the user’s account.[9] Memorializing an account, which prevents others from making changes to the account, is an immediate action on most networking websites. Deleting the account, however, may take several months. Thus, it is in an individual’s best interests to explore relevant social media website policies in advance in order to control the account management soon after death.

Original Documents

Lastly, another immediate concern upon death is locating the decedent’s original estate planning documents, if any, and safely securing them for as long as necessary because documents can and do go missing if not properly secured. If an individual has a planned estate, yet the plan cannot easily be located, then even the best laid plan can go awry quickly. The original documents may identify the nominated personal representative, which will give the personal representative assumed authority to make decisions regarding the safety of the decedent’s pets, the security of the decedent’s home and the security of the decedent’s accounts. The original will should be delivered to the named executor in the will or otherwise filed with the district court, if possible, pursuant to 58 Okla. Stat. §21 (2011). While determining if a probate of the will is necessary, the named executor should secure the document in order to avoid proceedings to prove a lost will under 58 Okla. Stat. §81 (2011), if a probate is ultimately deemed warranted. Practitioners should make a habit of noting in their clients’ files where their client intends to store their original documents, hopefully ensuring someone other than the client will have access to them when needed. Although the practice cannot prevent the loss of all documents, this file note may be invaluable when the family contacts the decedent’s attorney upon the decedent’s death.

ISSUES DISCOVERED AFTER IMMEDIATE NEEDS ARE ADDRESSED

The Effect of Divorce on Beneficiary Designations

After the obvious concerns are addressed in the first few days after a death, issues in the decedent’s estate tend to surface. Discovering the decedent failed to update beneficiary designations before death is one of the most common issues estate attorneys must face. Although property division is a significant issue dealt with during a divorce, updating the beneficiary designations on such property postdivorce can often be overlooked. By statute, all provisions in a will in favor of a decedent’s ex-spouse are revoked.[10] Likewise, all provisions in a trust created by a decedent in favor of the decedent’s ex-spouse, which are to take effect upon the death of the decedent, are also revoked.[11] What happens to assets naming the ex-spouse as primary beneficiary if a property owner fails to update the beneficiary designations on assets passing by contract outside of the decedent’s probate or trust estate? For instance, are the provisions of a payable-on-death designation on a financial account enforceable upon the decedent’s death? Under 15 Okla. Stat. §178 (2011), “all provisions in the contract in favor of the decedent’s former spouse are thereby revoked” upon divorce, subject to a few exceptions. This statute applies to life insurance, annuities, compensation agreements, retirement arrangements and other contracts executed on or after Nov. 1, 1987, and to depository agreements and security registrations executed on or after Sept. 1, 1994. This begs the question, is a transfer-on-death deed naming an ex-spouse still enforceable at death if it was never revoked by the grantor-owner? Although similar to a will, a transfer-on-death deed is expressly not a testamentary disposition, so 84 Okla. Stat. §114 (2011) is seemingly inapplicable to a transfer-on-death deed.[12] The transfer-on-death deed is also not a bargained for contract in which consideration is exchanged, so 15 Okla. Stat. §178 (2011) is also seemingly inapplicable. Thus, arguably, a transfer-on-death deed designation may survive a divorce, which is something family law practitioners should be mindful of in addressing a property division.

One other exception to the revocation of a beneficiary designation upon divorce involves the ex-spouse’s interest in ERISA benefit plans.[13] In Egelhoff v. Egelhoff ex rel. Breiner, the United States Supreme Court held that a Washington statute revoking the beneficiary designation of an ex-spouse was pre-empted as it applied to ERISA benefit plans.[14] Given this decision, Oklahoma’s version of the Washington statute, 15 Okla. Stat. §178 (2011), would be ineffective in terminating an ex-spouse’s interest in a decedent’s ERISA plan. Therefore, a divorced decedent must have updated the ERISA plan’s beneficiary designation to someone other than the ex-spouse, or the ex-spouse must subsequently waive such interest, otherwise the plan will be administered with benefits being paid to the named ex-spouse, which may or may not be part of the divorce settlement.

The Effect of the Beneficiary Predeceasing the Decedent

Perhaps more commonly than after divorce, owners fail to update beneficiary designations after a named beneficiary dies. This may be due to the owner’s neglect or due to the owner’s incapacity and inability to change beneficiary designations. Upon the owner’s death in such situations, the language of the document will typically control if the asset passes 1) to the estate of the deceased beneficiary, 2) to a contingent beneficiary or 3) to the decedent’s estate. If a contingent beneficiary is not named, most assets will default to the estate of the decedent.

However, if a contingent beneficiary is not named on a bank account, the share of the deceased primary beneficiary shall be paid to the deceased beneficiary’s estate rather than the decedent’s estate.[15] This runs contrary to most expectations that a gift to a deceased beneficiary will lapse.[16] In the case of real property under the Nontestamentary Transfer of Property Act, a gift of real property pursuant to a transfer-on-death deed will lapse if the grantee beneficiary does not survive the owner.[17] If no contingent beneficiary is named, the real property will be trapped in the name of the deceased owner and default to the deceased owner’s estate.

Failure to update beneficiary designations on individual retirement accounts can trigger unwanted estate administration as well as unwanted tax consequences. When there is no living beneficiary designated for an IRA, upon the accountholder’s death, the IRA passes according to the terms of the associated financial institution’s plan. If an account holder fails to name a designated beneficiary, then oftentimes the IRA benefits are distributed based on who the financial institution states is the default beneficiary. The institution may have a few layers of default beneficiary designations for the account – such as passing to the decedent’s spouse, then children and then to the estate.[18] These default designations may result in negative tax consequences that could have been avoided if the account holder had updated the beneficiary designations.

When an IRA is made payable to a decedent’s estate there is a unique scheme for distributions because the IRS does not consider an estate to be an individual.[19] Logically, a nonindividual, such as an estate, does not have a life expectancy over which to stretch out required minimum distributions. Whether there ends up being a more or less favorable outcome for the eventual takers of the estate depends on if the original account holder survived to the age of taking mandatory distributions.[20] If the account holder did not reach such age, then the eventual takers of the IRA must distribute the balance of the account by the end of five years.[21] If the original account holder did survive past the age of taking mandatory distributions, then the eventual takers may stretch the IRA distributions over a period calculated by “[u]sing the life expectancy listed next to the owner’s age as of his or her birthday in the year of death” and “[r]educ[ing] the life expectancy by one for each year after the year of death.”[22] While the second option does not allow the individuals to stretch the IRA over their own lifetimes, it will allow some benefit from delaying distribution, and the resulting tax, of the entire amount.

To qualify for inherited IRA treatment, 26 U.S.C. §408(3)(C)(ii) (2018) requires that the “individual for whose benefit the account or annuity is maintained acquired such account by reason of the death of another” and that they were not the “surviving spouse.” Although not binding authority, in a private letter ruling (PLR) the IRS discussed the issue of whether the ultimate beneficiaries of an estate can qualify for inherited IRA treatment.[23] In that PLR, an estate was the designated IRA beneficiary, received the IRA and conveyed it to a trust. The trust was to terminate and distribute all assets to the deceased’s four children. The IRS allowed the four children to each establish an inherited IRA for each respective share. Thus, failed designations may not have negative tax consequences, but this is by no means guaranteed.

The Backfiring of Joint Tenancy Ownership

Oftentimes, the death of a named beneficiary triggers issues when individuals exercised self-help to avoid probate. One of the more common options for avoiding probate is titling assets in joint tenancy with rights of survivorship. This can be dangerous planning for individuals, particularly the original owner, because it exposes the asset to the creditors of all the joint tenants. Additionally, if the joint tenants do not die in the expected order, the use of joint tenancy may backfire. For example, if the oldest
owner, typically the one who was trying to avoid probate, is the sole surviving owner, the owner may no longer be able to make alternative arrangements due to incapacity. Joint tenancy may also create confusion if utilized only for convenience prior to the decedent’s death, in which case the use of joint tenancy on a bank account may result in a constructive trust argument.[24] Self-help through joint ownership might also create inequitable results. Many times, joint tenancy is utilized by the decedent subject to the mutual understanding between the owners that the survivor will manage and distribute the assets according to the decedent’s wishes. However, the surviving joint owner may decide not to fulfill the decedent’s wishes, in which case the surviving owner may reap a windfall. Additionally, the surviving joint owner may lack capacity or have new creditor issues, in which case even if the surviving joint owner was well-intentioned, the decedent’s wishes for the property will remain unfulfilled.

Tasking the surviving joint owner to fulfill the decedent’s wishes may also trigger gift tax consequences for the surviving owner’s estate. For a surviving owner to fulfill a decedent’s wishes for others to benefit from the asset now wholly owned by the survivor, the survivor must give the assets to other individuals. In doing this, the survivor must keep in mind that these transactions may have gift tax consequences. Each individual has a lifetime gift tax exclusion representing the total amount they can give away over their entire lifetime without gift tax consequences. With the passage of the Tax Cuts and Jobs Act (TCJA) in 2017, the basic exclusion amount increased significantly. After being indexed for inflation, the thresholds for 2019 are now $11,400,000 for an individual and $22,800,000 for a couple.[25] Additionally, each year an individual may gift a certain amount without cutting into their lifetime basic exclusion amount.[26] The individual may give up to $15,000 annually to any person as of 2019 without utilizing his or her lifetime exclusion amount. In order to avoid any gift tax consequences while honoring the decedent’s wishes, a surviving joint owner must avoid giving more than $15,000, or potentially $30,000 for a donor couple, in a taxable year.[27] If the surviving owner decides to gift more than this in the taxable year, the sum over the annual gift tax exclusion will reduce the survivor’s lifetime gift tax exclusion amount, creating potential problems if the surviving owner already has a substantial estate.

CONCLUSION
As is evident, the road to avoid conflicts and cost after death is often paved with good intentions. Practitioners clearly cannot follow their clients throughout their lifetimes making sure fiduciary powers are adequately assigned, assets are appropriately titled and beneficiary designations are frequently reviewed. Perhaps it would be useful to give an estate information handbook to clients to review and complete independently on an annual basis, providing them a convenient resource for all their beneficiary designations, funeral wishes, fiduciary appointments, online information and any other relevant asset information. Such handbook would not prevent the consequences of an unplanned estate, but it might prevent what was once a well-planned estate from turning into a poorly planned estate due to circumstances beyond the estate attorney’s control.

1. See 58 O.S. §122 (2011).
2. Brady v. Criswell Funeral Home, Inc., 1996 OK CIV APP 1, ¶9, 916 P.2d 269, 271.
3. 60 O.S. §199 (2011) (stating trusts for the “care of domestic or pet animals is valid” and such instrument shall be liberally construed).
4. See 21 O.S. §1717 (2011).
5. 4 O.S. §512(A) (2011).
6. Id. §512(C).
7. 58 O.S. §269 (2011) (stating the personal representative has power “to take control of, conduct, continue, or terminate any accounts of a deceased person”).
8. See “Managing a Deceased Person’s Account,” Facebook www.facebook.com/help/275013292838654 (last visited Oct. 3, 2018) (select “Facebook Help Center”; then follow “Polices and Reporting”; then follow “Managing a Deceased Person’s Account”).
9. Practitioners and clients should explore policies for addressing decedent’s accounts on Twitter, Instagram, LinkedIn, Facebook and Pinterest and discuss such matters with their clients.
10. 84 O.S. §114 (2011).
11. 60 O.S. §175 (2011). Note §175(B)(6) permits the trustor to name the ex-spouse as a beneficiary in an amendment executed after the divorce or annulment.
12. 58 O.S. §1258 (2008), stating a transfer-on-death deed “shall not be considered a testamentary disposition.”
13. See Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141 (2001).
14. Id. at 147-51 (“The [state] statute binds ERISA plan administrators to a particular choice of rules for determining beneficiary status . . . [I]t runs counter to ERISA’s commands that a plan shall ‘specify the basis on which payments are made to and from the plan,’ §1102(b)(4), and that the fiduciary shall administer the plan ‘in accordance with the documents and instruments governing the plan,’ §1104(a)(1)(D), making payments to a ‘beneficiary’ who is ‘designated by a participants, or by the terms of [the] plan.’ §1002(8).”).
15. 6 O.S. §2025(A)(2) (2011).
16. 84 O.S. §142 (2011).
17. 58 O.S. §1255(B) (2011).
18. See, e.g., Morgan Stanley Funds Designation of Beneficiary Form, Morgan Stanley Investment Group (March 2017)www.morganstanley.com/im/publication/forms/msf/designationofbeneficiaryform_msf.pdf.
19. I.R.S., Dep’t of the Treasury, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) 9, 10 (Feb. 6, 2018).
20. See I.R.S., Dep’t of the Treasury, Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) 10 (Feb. 6, 2018).
21. Id.
22. Id.
23. See I.R.S. Priv. Ltr. Rul. 2012-08-039 (Nov. 17, 2011).
24. See Isenhower v. Duncan, 1981 OK CIV APP 31, 635 P.2d 33 (“The proper basis for impressing a constructive trust is to prevent unjust enrichment.”). See also 60 O.S. §74 (2011) (discussing joint tenancy); 60 O.S. §137 (2011) (explaining when a trust is presumed).
25. See Tax Cuts and Jobs Act of 2017, Pub. L. No. 115-97, §11061, 131 Stat. 2054, 2091 (2017).
26. See 26 U.S.C. §2503 (2017).
27. See 26 U.S.C. §2513 (2017).

Originally published in the Oklahoma Bar Journal -- OBJ 90 pg. 7 (February 2019)

Preparing Your Estate: 10 Loose Ends To Tie Up Before You Die

by Cody Jones

Creating an estate plan can provide peace of mind for our clients because if all goes according to plan, their beneficiaries will be equipped and prepared to settle their estate according to their written wishes.  However, when our clients walk out the door of our office armed with their detailed plan, change doesn’t come overnight.  It takes some effort from our clients to make sure the plan is fully implemented and properly maintained.  These are a few of the unresolved or incomplete matters we often see, which can cause the plan to go awry. 

1.      Safe Deposit Boxes.  Your safe deposit box is subject to a box rental agreement and access to the box is limited upon your incapacity or death.  Review the box rental agreement.  If you have a revocable trust, make your trust a party to the box rental agreement.  Otherwise, you should coordinate with your financial institution to make sure someone you trust has authorization to access your safe deposit box upon your death or incapacity, which may require adding them as a joint or successor owner on the account.

2.      That “Small” Bank Account.  Many of our clients dismiss their assets of limited value, assuming they will not cause their survivors or caretakers any trouble, but many times it’s these small assets that require the most work after an owner’s death.  If you have a revocable trust, transfer the account ownership to your trust, ensuring the successor trustees will have easy access to these funds.  If you do not have a trust, consider adding a payable-on-death designation to the account to ensure the funds in the account are accessible by your survivors.  Otherwise, your survivors may need to pay an attorney to gain access to the account.  Such expense often exceeds the value of the account.  This issue is easily avoidable if you take the small step during your lifetime instead of leaving unfinished business which requires big steps after your death. If you opt to add a payable-on-death beneficiary designation, please make sure you update your beneficiary designation if a named beneficiary predeceases you. Otherwise, the funds in the account may not be allocated to the beneficiaries you prefer.

3.      Those Minimal Minerals.  Even if your mineral interests are not worth much now, they may be worth much more after your death. One of the most common triggers for probates and estate administrations are mineral interests that clients failed to either transfer to their revocable trust or otherwise provide for succession of ownership  by deed during their lifetimes.  A simple quitclaim deed during your lifetime can avoid significant cost after your death, a cost most of our clients intend to avoid with their estate plans.

4.      Boats, Trailers, Motorcycles, and Other Motorized Objects.  They have titles too.  If your name is the only name on the title at your death, the ownership is trapped in your name.  Barring a few exceptions, no one will have authority to sell this asset without being appointed by the court.  Once again, if you have a revocable trust, take the easy step to transfer the title to your trust now.  Otherwise, you might consider adding a co-owner to the asset to make sure the person you wish to receive each asset can easily assume ownership upon your death. 

5.      Bonds, Paper Bonds.  United States Savings Bonds are no longer issued as paper bonds, but many of our clients have old Series E Bonds or something similar.  More likely than not, these bonds do not have a beneficiary. If you have bonds in your name upon your death, these bonds will undoubtedly trigger an estate administration.  Please contact us so we can advise you on how to convert your paper bonds and update ownership during your lifetime. 

6.      The Future of Your Pets.  If you have pets, do you know what will happen to them upon your incapacity or death?  Have a conversation with your loved ones to make sure they know your wishes.  Make sure they have the knowledge and ability to assume caretaking responsibilities for your pets as you desire, and if not, direct them as needed.  The more they know, the more likely your wishes are fulfilled.

7.      Old Beneficiary Designations.  If your spouse or child predeceased you, please review your beneficiary designations on your retirement accounts and life insurance policies.  Oftentimes, the surviving spouse forgets to update these designations.  If your named beneficiary is not living upon your death, the proceeds of these assets will likely be payable to your estate, triggering a costly estate administration or probate.  Updating your beneficiary designations is an easy loose end to address. 

8.      Pesky Passwords, Codes and Keys.  Make sure your loved ones have access to your passwords, keys and access codes for your cell phone, email, social media, online billing, financial institutions, security systems, internet streaming services, and other similar accounts.  If you have a code for your safe, ensure someone other than yourself has access.  If you have multiple keys, make sure they are labeled as necessary.  If you do not want to give individuals access to this information during your lifetime, we will gladly keep this information in your client file for your heirs and successors, as needed.

9.      Trusted Advisors.  You know yourself and your assets better than anyone, and you know who you trust for advice for various purposes.  Consider making a list of these trusted advisors for your survivors so they do not need to reinvent the wheel.  Let them know who your CPA, financial advisors, attorneys, doctors, realtors, and other professional advisors are.  This information can be extremely helpful and cost-effective, particularly when your survivors live out of state.

10.  Blended Families.  Blended families often have different desires than what is provided for under state law. Please call us to make sure your estate plan fits your family situation.

Dispelling the Myth that Estate Planning is for Old People

by Cody Jones

• “I/we don’t have enough assets to have a trust.”
• “I won’t need an estate plan until I’m older.”
• “I/we have too much debt for an estate plan.”
• “I just want to know who will take care of my kids if I die.”

I often hear these responses when the twenty- and thirty-somethings I meet discover I’m an estate planning attorney. Although we’re told to plan for the worst and hope for the best, that advice rarely translates into preparing for our incapacity or death.  Instead, our time is spent focusing on careers, finances, homes, families, and other adventures. As a thirty-something, I too am often guilty of forgetting my days are numbered, hoping I’ll have plenty of time to plan for the not-so-fun “adult” decisions of life.  In doing so, we disadvantage our loved ones by leaving them to pick up the pieces without any foresight from us. Plus, we sacrifice the advantages of planning ahead. 

1. Death is guaranteed, and incapacity is likely for all of us - no matter our age.  If you have experienced the loss or incapacity of someone you love, you know it is difficult.  We seldom think clearly in times of great tragedy. Planning ahead for such events can prevent additional stress in already stressful times. Such plans may include nominating someone you trust to care for you if you are incapacitated and documenting end-of-life decisions you would make if you were able.  Nominating an agent or proxy for your health care may also prevent the need for a costly court-supervised guardianship. 
   
    
2. Not planning ahead can create confusion.  Upon your death or incapacity, your loved ones will have heightened emotions, and each will react to grief in a different and personal way.  One of the most sensitive questions that may be asked is who will take care of your minor children or other dependents. This may be a difficult question for you to answer, but it is even more difficult for others to answer when you cannot.  Discussing the nomination of a guardian for your minor children or other dependents with your spouse and loved ones while you have the ability to express your reasoning and consider their input can help avoid controversy over an already difficult decision.  Nominating a guardian helps provide a smooth transition for your children or other dependents and their caregivers. 
   
    
3. Planning ahead can make planning later easier. Just as a football team is better prepared for the big game if the coach has a game plan, you can be more prepared for managing your estate as it increases in value if you create the framework from the beginning. Part of this framework may include a revocable trust that outlines how your assets may be used upon your incapacity and controls the distribution of your assets upon your death.  You don’t need an abundance of assets to justify having a trust.  If you have assets without beneficiary designations, such as a vehicle and a house, preparing a trust may be prudent.  Even if you have debt associated with an asset, such as a mortgage, the equity you own is an asset of your estate.  If you die and the legal ownership of the asset is trapped in your name, your loved ones will likely need to go through a court-supervised probate to access the value of the asset. A probate is avoidable if you properly utilize a revocable trust. Creating a trust to own your assets as you acquire them throughout your life can be less time-consuming and less expensive than implementing the same planning with a lifetime’s accumulation of assets later in life.  With a trust already prepared, you can simply buy an asset in the name of your trust at the time of purchase and rest in the assurance the asset will be controlled by the trust upon your death or incapacity. 
   
    
4. A plan eases the impact of unexpected circumstances.  A revocable trust also provides a plan for unanticipated situations that joint ownership with rights of survivorship cannot address. Joint ownership only works well if at least one of the owners survives and has capacity.  If both you and your spouse die or become incapacitated simultaneously, a revocable trust contains provisions to address such circumstances.  Similarly, after your death if a beneficiary of your trust unexpectedly suffers from substance abuse or develops a disability, the trust can provide protections to avoid misuse or exhaustion of the trust funds which outright ownership cannot avoid.

Unexpected circumstances do not have an age limit.  Take time today to look at your family situation and personal assets. Who will care for your children if you pass away?  Who will care for you if you are incapacitated? What will happen to your assets upon your death or incapacity?  If you don’t have answers to these questions, or if you have adult children who cannot answer these questions for themselves, make an appointment so we can help you plan ahead and provide everyone certainty and peace of mind.

Using Affidavits to Transfer Mineral Interests

A Story About a Man Named Jed

by Cody Jones

An oil and gas operator calls you to tell you he’s interested in leasing your mineral rights in western Oklahoma.  Your first thought is what mineral rights?

With the introduction of new drilling technologies, mineral interests that have been dormant for years have become hot commodities.  Through cold calls from operators or mineral acquisition companies, many of our clients are discovering they have rights in minerals of which they were previously unaware.  

More often than not, the story goes something like this: Grandpa and Grandma die, leaving five children to take over the farm.  Over time, four of the children decide to leave the farm, and one remains to oversee the operation.  The siblings convey the land in bits and pieces, granting quarter-sections to each other and reserving mineral rights, or some portion thereof.  The siblings then pass away, leaving their interests to their children.  Rinse and repeat.  The minerals haven’t been leased in decades, so the younger generations are unaware that anyone still has an interest to lease.  Then Jed, the one cousin who still lives in the county, receives an oil and gas lease proposal in the mail – the modern day version of shooting and hitting bubblin’ crude.

Jed discovers his father inherited the minerals from his grandfather, so Jed assumes he and his siblings own the minerals.  The only problem is that no probate was conducted when Jed’s father passed away, and the severed mineral interests are the only asset remaining in his father’s estate. Thus, Jed doesn’t have a final decree or a deed transferring the mineral interests to him and his siblings. They can’t reap the economic benefits of the minerals without proving ownership.  Thankfully, Section 67 in Title 16 of the Oklahoma Statutes provides a possible alternative to probate – an affidavit of death and heirship (c.f. 16 O.S. § 3.2(A)).

Jed can record an affidavit of death and heirship in the county records to establish the rebuttable presumption of ownership.  The affidavit must recite the following: (1) that the decedent died without a will, or if the decedent had a will, the will was never probated and a copy of the will is attached, (2) the names of the decedent’s heirs and their relationship to the decedent, and (3) that the affiant is related to the decedent or otherwise has personal knowledge of the facts stated therein.  A properly prepared affidavit is not a true substitute for a deed or decree because it will not provide marketable title until it has been recorded without challenge for ten years.  However, many operators will assume the risk of relying on an affidavit and lease the mineral rights from the presumed heirs in the meantime.  In this way, Jed and his siblings can receive income from the minerals, but they cannot sell or transfer their interest until they obtain marketable title. 

The simplicity of the affidavit appeals to many of our clients who stumble upon mineral interests, but the affidavit can only be used when severed mineral interests are the only remaining estate assets.  If surface interests or other assets are involved, a probate or intestate administration may be necessary.   Furthermore, clients should weigh the risks of waiting ten years to obtain marketable title.  During the interim, an instrument may be filed which contradicts the heirship alleged in the affidavit. Similarly, the client may die or become incapacitated before the client’s interest vests, in which case the client may have lost the opportunity to control the disposition of his or her interest.  Lastly, if the client foresees possible family discord regarding ownership of the mineral interests, an affidavit may not be the easiest, or cheapest, alternative in the end.