According to the American Association of Retired Persons (AARP), only 60% of adults in the United States have a written Estate Plan. For the remaining 40% with unclear plans for their future, joining the ranks is relatively easy. An estate planning attorney in Oklahoma may be able to help families achieve a greater sense of security and certainty, no matter what the future might bring. Estate planning may involve inheritance, medical decisions, charitable giving, and much more. All Oklahoma families can benefit from a well crafted estate plan, regardless of their level of wealth. To learn more about these options, consider a consultation with My Estate Advisor today.
A Last Will and Testament is the starting point for most estate plans. While more complex estate planning tools target the needs of high-net-worth individuals, anyone can create a Will.
The average estate planning client uses a Will to identify who will receive assets in their estate. These individuals are called “beneficiaries,” and the assets pass to them through a process called “probate.” Someone who dies without writing a Will passes away “intestate.” This is something most families want to avoid, as they will have no control over the distribution of the assets. In this situation, the probate court follows a predetermined formula called “intestate succession.” This process may cause unintended family members to inherit significant assets – even if this is not what the decedent (the person who passed away) would have wanted.
Living Wills and advanced directives allow individuals to make end of life healthcare decisions before they become incapacitated. For example, the client might use a living Will to communicate that they do not wish to be placed on life support if the attending physician does not believe they can recover.. Alternatively, an advanced directive might facilitate the donation of the body or specific organs.
An estate planning client who needs more control may decide to establish a trust alongside their Will. Trusts fall into two main categories: Revocable and Irrevocable. Also known as a “living trust,” a revocable trust is more flexible – and the client can adjust it at any time during their life. For example, the client may need to add a new child as a beneficiary – or remove an ex-wife. Like a Will, a revocable trust identifies beneficiaries – and the assets they should receive when the client passes away.
One of the key differences between Wills and Revocable Trusts is probate avoidance. Beneficiaries who inherit assets held in a trust can do so without going through probate. This is a key priority for many families, as probate can be expensive and time-consuming. Because this process occurs in the probate court, it is also inherently public – and many families value the contrasting confidentiality of revocable trusts.
The term “legacy planning” may refer to any financial strategy that helps secure and build family wealth beyond death. Revocable trusts can help limit disputes between family members, paving the way for streamlined inheritance. Legacy planning is a top priority for business owners who want their family members to take control of operations after their passing. A revocable trust allows entrepreneurs to name successor trustees who will run their businesses not only upon death, but also incapacitation.
Estate planning is not all about money. Many families in Oklahoma prefer a more “values-based” approach, and they may pursue ethical or charitable goals with a revocable trust or charitable trust. Although the main priority is to make a positive impact on the world, charitable trusts also offer notable tax benefits. To discuss these tax benefits in more detail, consider a consultation with My Estate Advisor.
While an estate planning client can alter a revocable trust, they cannot make any changes to an irrevocable trust after its creation without court intervention. This approach may be less flexible, but it offers several benefits for asset protection and tax planning.
Often, families focus on mitigating estate or inheritance taxes when building legacy plans – and irrevocable trusts can help achieve this goal. On the state level, Oklahoma has neither estate nor inheritance taxes. On the federal level, however, all high-net-worth American families face potential estate taxes. Clients may put assets into an irrevocable trust specifically crafted to limit their estate tax exposure and net more to their beneficiaries.
Irrevocable life insurance trusts (ILITs) are popular among high or ultra-high-net-worth families. This process involves transferring life insurance into an irrevocable trust. As a result, the insured person no longer owns the policy. Instead, the trust becomes the legal owner of the policy – shielding its value from estate taxes and gift taxes. This trust may also protect assets from creditors and help with legacy planning.
A special needs trust (SNT) sets aside assets for someone with disabilities or health issues. The Special Needs Alliance notes that an SNT can preserve eligibility for various forms of government assistance. Applicants may lose access to these programs if they exceed maximum asset limits. When a grantor (the person who creates a trust) transfers assets into an SNT, the irrevocable trust becomes the legal owner of those assets. As a result, the applicant can lower their on-paper net worth – becoming eligible for needs-based government benefits.
Another type of irrevocable trust is a charitable giving trust. One specific example is a charitable remainder trust (CRT), which can theoretically allow beneficiaries to experience considerable tax benefits while still accessing much of the wealth “pledged” to charity. CRTs have recently lost some of their effectiveness, with the Internal Revenue Service (IRS) cracking down on abuses within the past few years. My Estate Advisor may be able to help charitably inclined individuals use charitable giving trusts in a compliant yet beneficial manner.
A power of attorney grants decision-making authority to a predetermined individual called an “agent.” If the client becomes incapacitated, the agent makes crucial decisions about financial matters, healthcare, or both.
A financial power of attorney gives an agent the legal authority to make financial decisions when a “principal” becomes incapacitated. For example, the agent might make business decisions while an entrepreneur is comatose. They might also decide whether to sell assets to pay for expensive medical treatments.
A healthcare power of attorney gives an agent the legal authority to make healthcare decisions when a principal becomes incapacitated. For example, the agent may decide whether to remove the principal from life support. They might also decide whether to try a risky, experimental treatment option.
Estate planning could be easier than many families realize. While internet research is often a positive first step, an estate planning attorney in Oklahoma may be able to explain these concepts in more detail. More importantly, an attorney is able to offer guidance based on the unique needs and priorities of each family. Estate planning should be a personalized process, and families can discuss their specific goals alongside My Estate Advisor. Reach out today to continue this conversation.
