A well-designed estate plan achieves four objectives. First, it helps ensure your property is distributed in the manner you desire which reduces the emotional stress for all. Second, careful estate planning reduces the time and money your survivors will spend settling your affairs. Third, a good estate plan provides for contingencies, such as disabilities, minor children inheriting, etc.; and fourth, prudent estate planning can reduce income and estate taxes. Fortunately, estate taxes are only applicable to fairly large estates. But, pension plan income taxes are common in almost all estates. Perhaps the main driving force behind estate plans in Oklahoma is avoiding probate. Transferring assets in probate is expensive, time consuming, and slow. Other times the catalyst is to address existing and possible future physical and mental disabilities of those involved. Thus, it is crucial to tailor the estate plan to the circumstances, including the size of the estate, the different types of assets, and address the complexities related to the surviving family members, including blended families. Essentially, good estate planning is a tool to help your family. The next several sections explain the “nuts and bolts” of estate planning.

What is Estate Planning?

Estate planning is arranging your affairs utilizing several types of laws including that of trusts, wills, taxes, probate, insurance, property, LLCs and corporations, family law, etc.

The most basic estate plan is probably using joint tenancy deeds, and then perhaps Pay on Death accounts, or Transfer on Death deeds. These are inexpensive and do work, but issues can arise with the unanticipated.
For example, the intended joint tenant beneficiary passes away first, or he or she ends up with creditor problems (many times the IRS) entangling another’s assets. Sometimes even a current gift that is meant to take effect upon death results in inadvertent income taxes. Thus, a well-intended simple estate plan can be a financial mistake. Fortunately, a Will can
solve some of these problems.

A Will – The Basic Document

A Will is a written document by which you make provisions for the disposition of your property upon your death. A personal representative (PR) is appointed pursuant to the Will and approved by the probate court. The PR gathers and accounts for your property and make distributions according to the provisions of your Will, including the payment of debts, all of which is done under court supervision.

However, not all property “passes” pursuant to a Will. Thus, probate property has to be coordinated with property that passes “outside” the Will or probate. Generally joint tenancy assets, life insurance, and pension plans are not governed by a Will. Thus, it is important to know what property
will pass pursuant to a Will, and what property is transferred out side of a Will, and just as important, what property passes to another subject to a debt or mortgage.

A rule of thumb: a Will controls property that is owned in your name individually at the time of your death, or is otherwise paid to your estate by contract or other agreement.

A Will has five major drawbacks, including it:

1. Requires probate.
2. It cannot provide a plan for mental or physical disabilities while one is alive.
3. It does not protect your privacy or that of your family
4. It can be easily contested in a probate
5. Probate invites creditors, real and putative, demanding money.

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