Estate Plan Check-Up: Is Your Estate Up to Date?
Many clients have asked me: Do I need to update my estate plan?
In this post, I’ll provide guidelines to decide whether your estate plan is up to date, or whether you need to update your plan. These recommendations, though, are just guidelines. They apply to many people, but they do not apply to all cases. Every person’s estate is different.
Ask yourself the following questions:
Do you know what will happen to your property when you die?
Do you have a will?
Does your will describe what your current wishes are?
Have you created will substitutes so that your property will pass to your heirs outside of probate?
If you have specific desires regarding your medical care if you become incapacitated, have you put these desires in writing?
Question # 1: Do you know what will happen to your property when you die?
If you do not know what will happen to your property when you die, that’s a sign that you need to check your estate plan. Look at any estate planning documents you may have created, and see if they tell what will happen to your property when you die. If you don’t have estate planning documents, or if you can’t find your estate planning documents, that’s a sign you need to update your plan.
If you don’t have a will, and you haven’t created any will substitute that transferring property after your death, then, when you die, the state law of intestate succession will determine how your property will be distributed. In the state law of intestate succession (available here) your property will go to your relatives; the state legislature has created a formula that delineates which relatives get your property, and what percentage share each relative will get. This is one advantage of having an estate plan: You, not the government, will decide who gets your property.
Questions # 2 and # 3: Do you have a will, and does your will describe what your current wishes are?
If you don’t have a will, or if you don’t know if you have a will, you probably need to have one.
Also, make sure that your will describes what your current wishes are. If you made your will a long time ago, does your will leave property to anyone who you now don’t want to inherit your property?
Or, does your will list all of the children you now have? It’s very important that your will list the names of all of your children, as well as any children of your deceased children. This is true even if you don’t want your children (or grandchildren) to inherit your property.
Okla. Stat. tit. 84 § 131 says that if you have children born after you created your will, these children will inherit your property in the same manner as if you died without a will.
Okla. Stat. tit. 84 § 132 says that if you have children (or if your deceased children have children) and you don’t provide for these children in your will, these children will inherit your property as if you died intestate unless it appears that you intentionally omitted to provide for these children.
So, it’s very important that you at least mention all of your children, and your deceased children’s children, in your will. If I have a client who has children but doesn’t want to provide for them, I generally advise the client to include a clause that says, “Any omission to provide for ________ is intentional.” Or, I advise the client to include a clause that says this child will receive only one dollar. In that case, the child technically can’t argue that the will didn’t provide for them.
Many people, when drafting wills, overlook the law that says that if they don’t provide for children of deceased children in their wills, the children of deceased children will inherit an intestate share unless it appears that the omission of the child of the deceased child was intentional. So, they fail to mention the children of their deceased children in their wills. Many complicated probate cases have resulted from the failure to mention children of deceased children in wills. See, for example, Matter of Severns’ Estate; Crump’s Estate v. Freeman. Because of this, whenever I draft a will, I ask my client if they have had children who have passed away. In my opinion, any competent estate planning attorney should ask their clients this as well.
Question # 4: Have you created will substitutes so that your property will pass to your heirs outside of probate?
Probate is the process of distributing a deceased person’s assets. In a probate case, a “petitioner” (usually a family member, or a person named in the will) files a petition in court, and asks the judge to appoint him a “personal representative.” After the personal representative has paid all creditors and wound up all the affairs of the estate, the personal representative files a “final account” and asks the judge to distribute all estate property to the heirs.
Generally, probate takes several months and costs thousands of dollars. There are many cheaper ways to distribute property outside of probate, and I generally advise clients to use probate substitutes. Common probate substitutes are:
For real property:
Place property into a trust. A trust is a legal entity where one party (the trustee) controls property for the benefit of another (the beneficiary.) You can place real property into a trust, name yourself as the trustee and the beneficiary during your lifetime, and name other persons as trustees and beneficiaries upon your death. Then you won’t have to go to probate court. For more information on trusts, click here and here.
Place property in joint tenancy with another person having the right of survivorship. If you do this, then, when you die, all that the other person, “the joint tenant,” will need to do, is take your death certificate to the county clerk’s office, and he will then take title to the property. For more information on a joint tenancy with the right of survivorship, click here.
Execute a transfer-on-death deed. A transfer-on-death deed is just what the name implies. You write a deed, stating that the property will transfer to someone else when you die. All that person needs to do is take your death certificate to the county clerk’s office, and he becomes the owner of the property. For more information on transfer-on-death deeds, click here.
For bank accounts, stocks, bonds, mutual funds, and IRAs:
Many financial institutions will allow you to name a beneficiary on your account so that another person will take ownership of your account when you die. It’s a good idea to do this so that you won’t have to go to probate court to collect the funds.
The Oklahoma Tax Commission (which handles motor vehicle titles) has special rules for transferring motor vehicles after a person has died. In many cases, you don’t need to go through probate to transfer a motor vehicle. For information on estate planning and motor vehicles, read my blog post, “When a Motor Vehicle Owner Has Died, What Happens to the Vehicle?”
Question # 5: If you have specific desires regarding your medical care if you become incapacitated, have you put these desires in writing?
There are several types of documents that you may use to express your desires if you become incapacitated:
An advance health care directive tells whether you do, or do not want, life-sustaining medical treatment, or food or water if you become incapacitated. For more information on advanced health care directives, click here.
A do-not-resuscitate (DNR) order tells that you do not want to be resuscitated if your heart stops beating or if you stop breathing. Click here for information on DNR orders.
A medical power of attorney is a document where you give another person power to make health care decisions for you if you become incapacitated. Click here to read about medical powers of attorney.
A general power of attorney gives another person the power to make financial decisions for you, and transact business in your name if you become incapacitated. Click on this post to read about general powers of attorney.
Do you still have questions? Contact the Persaud Law Office
If you still wonder whether your estate plan is up to date, you may want to set up an appointment with our office. If you need to update your estate plan, the Persaud Law Office can help you. We have prepared estate plans for many people. Contact us today.