Estate planning 101:

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A formalized estate plan is a legal method of assigning the future rights to any property that a person might own at the time of their death.  This can be done in a number of ways.  Whether you realize it or not, everyone has some form of plan in place.  The real question is WHO makes the decisions regarding my plan?  I say this because the laws of the state in which you live has a "default" estate plan in place for each of its citizens.  If a citizen of the state passes away and does not tell the state that they wish to have their estate administered under any other guidelines, the state will use the "default" plan.  However, each citizen can easily avoid the "default" plan provided by the state by simply having a formalized estate plan of their own.  This is usually accomplished in one of two ways: (1) by manner of a Last Will and Testament, or (2) by the use of some type of Trust device.

The first step in preparing any kind of comprehensive estate, asset, or wealth preservation plan is to determine IF any such formalized planning is really needed in your circumstances.  Depending on the types of assets you own, formalized planning may not be required to insure that your belongings and property goes to your family.  In some cases, even when you do own assets that might otherwise require formalized planning, it is sometimes easier and less expensive to deal with the asset in other ways.  For instance, in some cases simply having the proper family members assigned either as an owner to the property title or payable-on-death beneficiary to a financial account can do the trick.  In other circumstances, attempting to pass title in this manner can create additional tax liabilities for the person who receives the property.  It is best to have these questions answered by a professional.  We here at the Terry D. Cook Law Firm will provide you with a FREE consultation regarding your specific situation and answer those questions for you to help insure that you don't accidentally create any unwanted tax burdens or liabilities for your family by preparing your estate in the inappropriate manner.  Simply call our office at (918) 956-8228 or email us at TCook@TerryDCookLawFirm.com to schedule your free consultation.  Please keep in mind, however, it is virtually always a good idea to have at least a simple Last Will and Testament executed as a "fail-safe" protective measure, in case any assets end up in a position where a probate is required.  You always want your wishes known to the court if it becomes necessary, so the laws of the State don't determine who gets your assets.

Although we always recommend taking advantage of the free consultation to get an expert legal opinion on your specific circumstances and situation, many clients wish to gather as much information as they can prior to speaking to an attorney or planner.  It is for that reason that we provide the following information in this Estate Planning 101 page... to assist you in making your decision regarding your individual plan. 

There are a few quick and simple questions you can ask yourself to determine if you need to set up a formalized plan. 

QUESTION #1:  "Do I own any property that has a paper title?"  This means any real property (land, your home, mineral interests, etc...), as well as other assets like cars, boats, RVs, motorcycles, etc...  These types of assets will always require some form of planning.  If a person dies while holding title to such assets, some form of administrative oversight is required to transfer title to the next owner.  If your answer to this question is "yes", you can skip to the section below regarding "What Type of Plan is Right for Me?"

QUESTION #2:  "Am I part of a blended family?"  Many families today are the result of second marriages.  Therefore, in many circumstances each parent may have children from previous relationships.  The laws of the state in most cases tends to complicate these types of estates, and most likely will not provide the proper assignment of assets to satisfy the desires of the client.  The children of the person will have immediate rights to assets in the estate.  Therefore, in many instances, problems can arise concerning the surviving spouse.  It is almost always necessary to have formalized planning in place in the case of a blended family.

QUESTION #3:  "Do I want my own personal wishes followed, rather than the assignments provided by the state?"  This question requires you to know exactly what the intestate probate provisions are for the state in which you reside.  These provisions can be very complicated and difficult to follow for someone who does not deal with these issues on a daily basis.  Our advice is to simply take advantage of one of our free consultations regarding the matter if you have any questions or concerns regarding this issue.  However, generally speaking, it is necessary to have at least a Last Will and Testament in place to insure the wishes of the person are followed correctly.  The intestate laws of the state very rarely provide for the distribution plan that the individual desires.  For more information on this issue, see our FAQs section.

QUESTION #4:  "Do I have concerns regarding estate tax issues?"  If you have concerns of this nature, most likely your estate is of a significant size and you would absolutely be doing yourself and your family a huge disservice by not seeking the advice of a professional tax attorney in the preparation of your plan to distribute such assets.  In many instances, using the wrong plan or wrong planning method to transfer assets of this nature and/or value can actually create tax liability that may not otherwise exist.  You want to be certain that these types of errors do not occur, which can cost your family and your estate thousands of dollars.  In these circumstances, the question is not IF you need a formalized estate plan, but rather what KIND of plan is right for me?

QUESTION #5:  "Do you wish to spread out the distribution of your estate assets over time?"  If you want to be able to have long-term oversight over a gift of land, property, or money, a formalized plan is required to accomplish this.  If you do not have a formalized plan in place, the intestate laws of every state will provide for the immediate and total transfer of your estate assets to the predetermined recipients.  This means at the time the court process is over, all assets will be given to the predetermined recipients free from any future oversight or guidelines.  You cannot maintain any long-term control over the funds or property for the purpose of holding it until a recipient reaches a certain age, or to limit their use of the asset for educational purposes, etc...  If you have these types of wishes in mind, a formalized estate plan IS required.

QUESTION #6:  "Do you wish to leave someone out of your estate plan?"  In many circumstances, children have put themselves in a position to make the parent feel it is necessary to leave them out of any inheritance.  However, without a formalized estate plan in place the laws of the state will protect that child's right to inherit an equal portion of the estate.   Therefore, if you have any desire to "leave someone out" of your estate you MUST have a formalized estate plan of some form.

Determining the proper type of estate plan usually involves two aspects: (1) Does my distribution plan require a certain type of planning? and (2) What are the costs involved with each method of planning?  Generally speaking, if your wishes simply require that all of the assets, property, and financial resources of your estate be divided at the time of your death and given to those people that you assign them to, it is possible for you to accomplish this goal with either a Last Will and Testament (hereafter called a "Will") or an Estate Planning Trust (hereafter called an "EPT").  An easy way to differentiate between these two types of plans is to simply remember that an EPT can always accomplish anything that a Will can, but a Will CANNOT always accomplish all the things that an EPT can.  Additionally, a Will is administered by a personal representative with the oversight of a judge through the court systems in a public forum.  All documentation and records of this process are made a part of the public record.  Therefore if privacy is a concern, you will want to avoid this process.  Alternatively, an EPT plan is administered privately outside of the court system by your privately named, independent administrator known as your Trustee.  This administration process is handled privately, without the expense and delays of the court system.  Therefore, the administrative cost of an EPT plan is virtually always much lower than the administrative expense associated with a Will plan.  So, if your property can be distributed under the terms of a Will through the probate process, it can also be distributed under the terms of an EPT via a privately administered process.  Therefore, the deciding factor in choosing between the two forms of planning most likely will be the total expense of each type of planning.  To learn more about the total expense of each type of planning method, simply contact us for a FREE consultation.  For more information regarding the different types of planning methods, visit our FAQs (frequently asked questions) section of this site.

Simply making the arrangements to distribute your assets when you are gone is really only half of the process when it comes to comprehensive estate planning.  Although most of the time, this is where general practitioner attorneys will usually stop.  Don't fall victim to this limited thinking on this matter.  It is important to not only have a plan that makes sure at the end of the line, your wishes will be followed to distribute any and all of the assets in your estate, but it is just as important to have a plan that helps insure that there actually will be assets left at the end of the day to need distributing.  Many things can affect the overall value of an estate, or cause the need to spend much of, or even all of, the value of your estate prior to any distribution of assets at all.  An example of such unplanned cost might include unforeseen creditors, such as a liability lawsuit against you in the circumstance that you were ever to be at fault in an accident (auto wreck, injuries that take place on your property, etc...).  Another, and probably a much more likely problem, is the unplanned and unforeseen costs of long-term medical care.  Short-term medical expenses are covered by our medical insurance policies.  These may either be private personal coverage policies, like an employment health plan, or for those over the age of 65 it will most likely be Medicare and/or some variety of Medicare supplement.  However, once an issue lasts over 100 days these insurance policies will no longer cover these health issues.  At that time, the health problem becomes a long-term care issue and some other source of funding must be available.  These are the situations that can bleed an estate of virtually ALL of its value in a very short amount of time.  Statistics show that 65% of all Americans will need some form of long-term health care before they pass away.  Therefore, if you are a married couple reading this... the odds are that at least one of you will need care.  This is not meant to scare you, but merely to educate you on the facts and allow you to take the time now, while you are healthy and do not need long-term health care, to make the right decisions to protect all the assets and savings that you have worked so hard for your entire lifetime to acquire.  Planning your estate without considering these issues is a huge mistake and equates to only making half a plan.  Be sure to consult a professional regarding how you can not only make your wishes known in your estate plan, but also how you can maximize your personal protection and eliminate, or at least minimize your exposure to these estate dwindling possibilities.  For a FREE consultation regarding how you can best protect your estate assets against future creditors and/or long-term health issues, call us now at (918) 956-8228 or email us at TCook@terrydcooklawfirm.com .

The final cost of a plan can be different for everyone.  A lot of the expense is directly related to the specific circumstances.  However, every potential client receives a free telephone or in-home consultation regarding their specific planning needs and once we have discussed your individual needs and what options might work best for you, our attorneys will provide a clear estimate of the exact cost of creating your plan.  Most of the time our staff can create your customized and personalized plan for a predetermined and pre-agreed upon flat rate.

ABSOLUTELY NOT!!!  The creation of the legal documents for an estate plan is only the beginning.  If you create a Last Will and Testament as your choice of planning, eventually there will be a probate process that will require additional legal services and expenses.  In most cases, it is our advice to our clients to use other forms of planning devices to avoid the courts and the probate process and the expenses that come with it.  Those additional legal fees later down the road can easily be avoided by use of other planning mechanisms, such as estate planning trusts, etc...  BUT, even with estate planning trusts... once those legal documents are created for you the work is still not finished.  The creation and execution of the paperwork is actually the easy part.  Yet some attorneys stop their work at that point and leave it up to you... the untrained client, to finalize the more difficult task known as "funding" the trust.  The process of "funding" the trust is making sure that all real estate is properly deeded to the trust and the proper legal documents are filed in the proper governmental agencies to insure that the trust will actually function in the manner in which you desire at the time you need it to do so.  It also includes guiding you to make sure that all of your financial assets and accounts are either transferred directly to the trust, or at a minimum set up to be payable upon your death to the trust to guarantee that your appointed trustee can maintain direct and unimpeded access to those accounts once you are passed on.  If the trust is not "funded" properly, it most likely will not function as it was designed when the time comes and your family will find themselves stuck in exactly the place your have set out to avoid... probate court.  Here at Terry D. Cook Law Firm, we always include all the services associated with the initial funding of your trust to make sure that your wishes can be carried out by your designated trustee without any need for interference from the court system, or any other outside parties.