Estate Planning

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  • #1293
    okie B

    In the spirit of this board, I’ve been trying to think of what I could do, or write-up, that might contribute to helping people become more self-reliant here (besides gracing you all with my amazing wit and charming personality ). Kinda hard since I’m a relative newb compared to so many of the wonderful people on here who so very graciously share their knowledge and experience. But there is some advice I might be able to give…hesitantly…with reservations…

    Confession time first…Okie B is a lawyer.

    Gasp! Groan. I’ll give you a moment to contain your horror. As you take the time to compose yourself, let’s pass the interlude with some entertainment. What do you call a thousand lawyers at the bottom of the ocean? A good start.

    Moving right along…

    As a lawyer, I am only licensed to practice law in Oklahoma, but I can pass along some general legal information to everyone. And if anyone sends me a legal question, I can already tell you that the answer 99.9% of the time will be “It depends.” If you have a question, you are better off asking a local attorney for advice than asking me because the law that applies can be vastly different depending upon where you are at.

    Having said all of that, I want to bring up a particular point of interest that everyone should include in their prepping – estate planning. This could be as simple as making out a will, or as convoluted as, well , your worst nightmare. The point is that as long as you are still alive, the power is in YOUR hands to decide how it’s going to go for your loved ones.

    Imagine this…you’ve stockpiled a year’s worth of food. You’ve bought a little homestead and planted a huge garden. You’ve installed wind turbines and solar panels, and there is a little stream nearby, so you are pretty much off the grid. Your gun cabinet is stocked and extra ammo is stored. Your chickens are producing, you’ve got a trade system set up with the neighbor for fresh milk, and you’ve even stashed some gold and silver. You go to the store to pick up some more wheat, and some drunk teenager smashes head-on into your car at 80 miles an hour. Nice knowing ya, see you on the other side…

    Your family now has to try and legally settle your well-stocked estate. You might have heard before that family members tend to…uh…disagree…sometimes. Let me tell you from first hand experience… It is WAR. It brings out the ugliest side of human nature. Families who have gotten along so well and love each other so much will fight (sometimes literally) to the death over who gets the family bible or grandma’s old quilt. I have seen entire estates eaten up in legal costs where no one gets anything because the survivors cannot even agree how to split or share what’s there.

    This can be minimized, if not avoided, by having a will in place. The requirements for a will varies depending upon where you live. You might be able to do your own will, but I still highly recommend that you speak with a local attorney. Why? Most states have specific requirements for a will, even if you do your own, and if those requirements are not fulfilled, your will is just another piece of paper. Furthermore, a good attorney will help you craft a will that is still valid even when the circumstances of your life change. For instance, a colleague of mine likes to talk about what he calls the family reunion tragedy. Imagine that you and your family attend a family reunion. You are there with your spouse, your kids, your parents, your cousins, your aunts and uncles, and everyone is having a good time. Crazy aunt Clara shows up with a vat of potato salad. Aunt Clara is getting up there in years and starting to get a bit forgetful and scattered. When she made the potato salad, she accidentally confused her jar of paprika with her can of rat poison. Wham-o, bam-o. Your family has just been wiped out. Who gets your stuff now? A will that has been prepared with contingencies will make sure that your stuff still goes to someone you would like to see have it rather than having it default to the state.

    A lot of people avoid making a will because they have heard that probate is awful. Well, not having a will just makes it worse. Everyone has to have their property accounted for when they die, even if they don’t have anything. Regardless of whether you have a will or not, there is still going to be some work to be done by your survivors. And probate laws are not the demons they once were. Again, talk with a local attorney and express any concerns you may have about the probate system. If they can’t answer your questions immediately, they do have the resources to do some research and find out some answers for you.

    There are also some different options that you may be able to utilize so that at least some of your property passes outside of your estate. For instance, many accounts utilize “payable upon death” or “beneficiary” designations, such as IRA’s, insurance policies, bank accounts, or even savings bonds. What that means is that when you die, these things automatically go to the person you have designated and only go to your estate if the person you have designated dies before you or cannot accept the property for one reason or another.

    Another thing to consider is changing how you “own” your property. In real estate (and some bank accounts, annuities, personal property, etc.), you can own your property as “joint tenants” with another person. What this means is that you both own the property. Here is a distinct legal concept – you both own ALL of the property, not just 50%. This is a double edged sword. If you and this other person part ways for any reason, you may have to give up half of its worth just so the two of you can go on and do your own thing. If you are the person providing all of the asset to begin with, this sucks for you because you’ve just lost half of your asset. However, if, say for instance, you own your homestead in joint tenancy with your child, and you are killed in a car accident. Your child now owns your homestead in fee simple absolute (owns it all without anyone else claiming they inherit your portion). This happens AUTOMATICALLY (although they will likely need to file an affidavit of surviving joint tenant – not a big deal really). Because your child has a 100% ownership interest in the property while you are still alive, he (or she) continues to own 100% of the property when you die. Your ownership interest just disappears. Because your ownership interest is extinguished, there is nothing to be claimed in your estate.

    Another thing you have probably heard about is in regards to trusts. Trusts can be very important, very powerful tools in your estate planning. However, most people really don’t need one. Trusts are not the miracle solution that a lot of people think they are. Trusts have to have a trustee. That’s all fine and well if you are still alive to do it, but what happens when you die or if your trust becomes too convoluted for you to handle by yourself? You have to PAY a trustee to do it for you. And trustees do not work cheap. You also have issues with what type of trust to set up. The ones that are usually the most secure are also usually the ones that strip you of some control over your property. Most people like to have control. Another problem is kind of a dirty little secret in the legal world – most lawyers don’t really know how to craft a well-worded trust. Oh, we all know the principles behind forming a trust, and most could cobble something together that works. But just like the difference between a house built by a master craftsman as compared to a house built by…oh, say me (not a handy, skilled person) – when the wind blows and adversity sets in, a well-crafted house is much more likely to withstand the pressure. And it’s likely to be more comfortable and with more amenities. If, after educating yourself about estate planning, you decide that a trust is right for you, make sure you work with an attorney who has experience in this field.

    One last thing before I end this little diatribe…what is going to happen to you when that theoretical drunk teenager hits your car and you DON’T die? What happens if you end up on life support somewhere? Does your family know what you would want them to do? This is a very difficult, very emotional, and often very controversial time for family members. Think about the Terry Schiavo case from a while back. It can rip families apart. Some states use what are called “living wills” to address this issue. Others use “advance directives.” Whatever form or style your state uses, educate yourself about it. Then do it. Then make your spouse do it.

    The power to spare your family needless suffering is in your hands. And isn’t that what prepping is all about?

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