2015 program for vision bank's cle-cpe seminar · past 7 years for cle seminars sponsored by...
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VISION BANK’S ANNUAL CLE/CPE SEMINAR SELECTED SUBJECTS FOR THE GENERAL
PRACTIONER - UPDATE FOR 2015
DATE & Ada, Oklahoma LOCATION: Friday, October 30, 2015 Pontotoc Technology Center 601 W. 33rd St., Ada, Oklahoma 74820 CLE CREDIT: This course as been submitted for approval by the Oklahoma Bar Association Mandatory Continuing Legal Education Commission for approval
of 6 hours of mandatory CLE credit, including 1 hour of ethics. TUITION: FREE COURSE – FREE BREAKFAST AND LUNCH PROGRAM: Program Planner/Moderator M. Keywood Deese, Senior Vice President & Trust Officer for Vision Bank
8:30am – Registration & Continental Breakfast & Introduction of Speakers 9:00am – 9:50am – Every Trust You Have Ever Wanted To Know About And Were Afraid To Ask! by: M. Keywood Deese, Senior Vice President & Trust Officer for Vision Bank, Ada, Oklahoma 9:50am – BREAK 10:00am – 10:50am – How Do You Define An Accounting? Let Me Count The Ways! by: Kara Greuel, J.D., CPA, CFF, CGMA, CFE, Greuel Law Firm, PLLC, Tulsa, Oklahoma 11:00am – 11:50am – It Seemed Like A Good Idea At The Time! by: Kara Greuel, J.D., CPA, CFF, CGMA, CFE, Greuel Law Firm, PLLC, Tulsa, Oklahoma - Ethics
11:50am – 1:00pm – Lunch Provided by Vision Bank Catered by Papa Gjorgio’s Italian Restaurant 1:00pm – 1:50pm – Bankruptcy Basics For The Non-Bankruptcy Practitioner by: Preston Draper, Attorney at Law, Sweeney, Draper & Christopher Law Firm, Ada, Oklahoma 2:00pm – 2:50pm – “I Didn’t Know That” – Selected Topics on Estate Planning & Administration by: James Marshall, Attorney & Partner at Henson & Marshall, PLLC, Shawnee, Oklahoma 2:50pm – BREAK 3:00pm – 3:50pm – Question and Answer Session
BIOGRAPHIES OF SPEAKERS M. Keywood Deese – Senior Vice President & Trust Officer for Vision Bank, Ada, Oklahoma: Ms. Deese has been the Senior Vice President and Trust Officer with the bank since 1987. She graduated from the University of Oklahoma with a Business Administration Degree in 1975. She obtained her Juris Doctor degree from Oklahoma City University in 1979. Before joining the bank she practiced oil and gas law in Oklahoma City, including several years as the senior oil and gas attorney for the Oklahoma Corporation Commission. She is the former Chairman of the Mineral Law Section of the Oklahoma Bar Association. Ms. Deese organized and taught CLE seminars on oil and gas related topics when she practiced law in Oklahoma City. She has been the Program Planner and Moderator for the past 7 years for CLE Seminars sponsored by Vision Bank on a variety of estate and trust issues, business and bankruptcy, real estate and mineral related topics. She is a member of the Oklahoma Bar Association, Texas Bar Association, Pontotoc County Bar Association and the American Bar Association. Kara Greuel, J.D., CPA, CFF, CFMS, CFE at Greuel Law Firm, PLLC in Tulsa, Oklahoma: Ms. Greuel’s foundation in estate and trust planning and administration began as a CPA. With over 17 years of experience in tax planning and preparation, she is able to integrate tax planning strategies in her client’s estate plans, Her experience as an executive with companies in a variety of industries, coupled with extensive experience involving regulatory compliance issues for publicly traded companies, enables her to assist clients who wish to implement business succession and estate planning. Additionally, Kara’s experience as an auditor gives her the ability to analyze and investigate matters that include allegations of fraud and embezzlement. She received Bachelor of Business Administration degrees in both Finance and Accounting from Northeastern State University and Langston University, respectively, and a Juris Doctorate degree from the University of Tulsa, College of Law. Additionally, Kara is a Certified Fraud Examiner and is a CPA with a certification in Financial Forensics. She is also a Chartered Global Management Accountant through the AICPA. Kara is a member of various professional organizations and currently serves as an officer of the Oklahoma Bar Association Estate Planning, Probate and Trust Section and the Bench and Bar Committee for the Tulsa County Bar Association. Additionally, she serves as Treasurer for both Tulsa Artists’ Coalition and the Oaks Indian Mission, Inc. Mr. Preston Draper –Partner, Sweeney, Draper & Christopher, PLLC, Ada, Oklahoma: Mr. Draper founded the Ada firm of Sweeney, Draper & Christopher, PLLC, along with his law partners Kurt Sweeney and Jason Christopher in January 2011. The firm is a full-service law firm handling family law, criminal, bankruptcy, civil suits, He is a 1991 graduate of the United States Navy’s Naval Nuclear Power School; 1999 graduate of Brigham Young University; and 2003 graduate of the University of Oklahoma College of Law in Norman. As a law student, he was the recipient of the prestigious Comfort Scholarship. He began his legal career as an Assistant Attorney General at the Oklahoma Attorney General’s Office. He is admitted to practice law in the state courts of Oklahoma, the tribal courts of the Chickasaw Nation, the federal district courts for the Eastern, Northern, and Western Districts of Oklahoma, the bankruptcy courts for the Easter and Westerns districts of Oklahoma, the United States Court of Appeals for the Tenth Circuit, and the United States Supreme
Court. He previously served two years as president of the Pontotoc County Bar Association. He is currently a member of the Pontotoc County Health Board, a member of the Ada City Council, the Municipal Judge for the Town of Roff, an adjunct professor at East Central University, and Vice President of the Ada Artists Association. James R. Marshall – Attorney at Henson & Marshall, PLLC in Shawnee, Oklahoma: James R. Marshall is a member of the firm of Henson & Marshall, PLLC in Shawnee, Oklahoma. He received a Bachelor of Arts degree from the University of Oklahoma (Phi Beta Kappa) in 1972, a Master of Arts degree (International Relations) from Creighton University in 1976, and a Juris Doctor degree from the University of Oklahoma in 1979. While in law school he served as an editor on the Oklahoma Law Review. From 1972 until 1983, he served on active duty in the United State Air Force, first as an intelligence officer and then, after being sent to law school on an Air Force program, as a Judge Advocate. He served as Chief of Military Justice at Andrews AFB, MD and as Area Defense Counsel at Tinker AFB. After leaving active duty he continued as a Judge Advocate in the Air National Guard. In 1996 he was named the Outstanding Air National Guard Judge Advocate in the United States. He served as the senior Air National Guard Judge Advocate at Air Mobility Command and Air Combat Command responsible, for operational readiness and deployment issues for guard units and personnel in those commands. He retired from the Air National Guard in 2006 at the rank of Brigadier General. He has been in the private practice of law in Shawnee since 1983 with an emphasis throughout his civilian career in the areas of real estate, estate planning, and probate.
VISION BANK’S ANNUAL CLE/CPE SEMINAR 2015 COURSE EVALUATION
OCTOBER 30, 2015 PONTOTOC TECHNOLOGY CENTER
HOW ARE WE DOING? In order to make future sessions more valuable, please submit a critique of today’s seminar. Rate the speakers in the following areas. Please mark one: Excellent (5) – to – Weak (1). Circle one number in each Category.
SPEAKER KNOWLEDGE OF SUBJECT
DELIVERY QUALITY OF MATERIALS
M. Keywood Deese, Senior Vice President & Trust Officer, Vision Bank
5 4 3 2 1 5 4 3 2 1 5 4 3 2 1
Kara Greuel, J.D., CPA, CFF, CGMA, CFE 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 Preston Draper, Attorney 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1 James Marshall, Attorney 5 4 3 2 1 5 4 3 2 1 5 4 3 2 1
1. Would you like Vision Bank to do another free seminar? ___________________________ 2. What month is most convenient for you to attend Vision Bank’s seminar? ____________ 3. Suggestions for future topics and speakers: ______________________________________ ______________________________________________________________________________ COMMENTS: ________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________
VISION BANK
DISCLAIMER
These materials, including the legal research, are the product of
individual contributors, not Vision Bank. Accordingly, any statement,
citation of authority, philosophy or opinion expressed is that of the
individual contributor, and the reader is admonished to check original
citations of authority and to use these materials as a starting point for
individual research.
Vision Bank makes no warranty, express or implied, relating to the
accuracy or content of these materials.
I. EVERY TRUST YOU HAVE EVER WANTED TO KNOW ABOUT AND
WERE AFTRAID TO ASK!
M. Keywood Deese Senior Vice President & Trust Officer
For Vision Bank 101 E. Main St.
P.O. Box 669 Ada, OK 74821
Phone: (580)-436-8311 Fax: (580) 436-8391
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EVERY TRUST YOU EVER WANTED AND WERE AFRAID TO ASK!
By: M. Keywood Deese – Senior Vice President & Trust Officer, Vision Bank
INTRODUCTION: I have taught or attended estate planning seminars on trusts for over 30
years. Each of these seminars explained the virtues and purposes on a variety of trusts for estate
planning or tax purposes. I decided to take a different approach and try to present a list of all the
trusts I knew of, what their purposes are, who would create them, how to close them, and the key
elements that are unique to each trust.
Although there are implied or presumed trusts (see 60 Okla. Stat. §137), today we will be
addressing an expressed trust; that is, a trust created by a written document. The statutory
provisions dealing with trusts is found in Title 60, Oklahoma Statues, §131, set seq., with the
Oklahoma Trust Act appearing at Okla. Stat. Ann. Tit. 60, §175.1, et seq.
1. REVOCABLE LIVING TRUSTS:
Purpose:
A Living Trust comes into operation during the creator’s or grantor’s lifetime. This type
of trust is a private written agreement that is not made a matter of public record, like a
will is when it is filed for probate. The trust agreement will name a Trustee to be in
charge and manage the trust assets, make distributions and investments, etc. The
agreement should also name a Successor Trustee. The Trustee takes custody of
securities, wherever they are held, and performs all the troublesome accounting
paperwork that goes with owning property. Most living trusts today are revocable,
meaning they may be amended or even terminated at any time during the lifetime of the
grantor. This flexibility permits the trust’s creator (grantor) to observe how the trust
operates to meet his needs – and then to make changes accordingly. Often, a husband
and wife, as Co-Grantors, will create a joint living trust. Sometimes, however, the living
trust is made irrevocable – its terms fixed and permanent – after death or incapacity of
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one of the grantors. The surviving grantor may not be able to amend the trust to leave
assets to his second wife or girlfriend!
Grantor:
Anyone wanting to avoid probate proceedings and keep their estate plans confidential
will find that this type of trust solves many estate planning issues.
Special Provisions:
This type of trust can close at the death of the grantor, only after the medical, funeral or
other bills have been paid. There is no protection from creditors in a living trust. A
creditor can still satisfy a judgement against the grantor of the trust, from the assets of the
trust (60 Okla. Stat. §175.25H). The Trustee will plan how and which assets to distribute
to the next beneficiaries according to the terms of the trust. The Trustee should get
signed releases from each beneficiary, acknowledging the assets they received, agreeing
to the distribution plan presented by the Trustee and acknowledging a final accounting.
The release should place the final income tax liability, for the year the trust closes, on the
beneficiaries receiving the assets.
Helpful Hint on Closing the Living Trust:
(1.) Cost Basis of Distributed Assets - After the original grantor passes away, the Trustee
will be distributing the stocks, bonds, real estate, etc… to the next group of beneficiaries
and close the trust. The trustee should make sure of the cost basis for each type of asset
is provided to each beneficiary in a well organized schedule. This keeps the beneficiary
from calling the Trustee years later, when the beneficiary sells the stock or real estate,
needing to know the cost basis of the asset he sold. This schedule can be provided to the
beneficiary’s broker who received who received his share of the stocks and/or his CPA.
(2.) Closing the Home and Transfer of Contents - It can be a very challenging project to
close the Grantor’s home and distribute his/her personal property to the beneficiaries.
These issues should be reviewed carefully by the Trustee before accepting the trust and
hopefully before the Grantor signs the trust agreement. The more specific the grantor can
be about “which beneficiary is to receive specific pieces of furniture, jewelry, antiques,
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artwork, or gun collection”, the better it will be for the Trustee at the time of distribution.
If not done well, this can be the first family fight!
Unusual Provisions:
Revocable Living Trusts do not have to completely terminate at the grantor’s death.
Instead, the trust may provide that a new “sub-trust” be created from the remaining trust
assets and be transferred into a new trust. This new trust will have a new name and new
tax id number. These sub-trusts are often for educational trusts for the grandchildren or
special needs trusts for a disabled beneficiary or a charitable trust (See #4, #5 and #6).
Also, even though the actual trust agreement remains private and is not filed of public
record, a Memorandum of Trust is required to be filed. (Title 60, Okla. Stat. § 175.6a)
That document lists the trust name, the date it was created, who the Trustee and
Successor Trustees are and the legal description of the real estate or minerals that have
been transferred into the trust. The private terms on how the trust is to function, who
receives income, and specific gifts or personal family matters are still kept private and
not listed in the Memorandum.
2. TESTAMENTARY TRUSTS:
Purpose:
A trust created by your client’s Last Will and Testament is called a Testamentary Trust,
and can provide asset management for the benefit of his/her family for many years, after
the probate is closed.
Your client may desire that part or all of his/her estate’s assets be placed into trust to
provide professional management of his/her assets to protect the surviving spouse, older
or disabled family members, or until younger family members reach a more mature age
or finish their education. The long range management of assets and invested funds is the
primary responsibility of the Trustee and a corporate trustee should be considered if the
testamentary trust is to last for many years.
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Creator:
The grantor is the “testator” of the Will.
Unique Features of the Testamentary Trust:
Anyone serving as a Trustee of a testamentary trust needs a certified copy of the deceased
person’s will and the Final Decree in the Probate in order to manage the trust properly.
One of these two documents is not enough. If a codicil to the will was also filed and
probated, be sure the Final Decree implements the provisions in the codicil as well, if it
affects the trust. Often a codicil is used to update and change the Successor Trustee
appointments or to change percentages certain heirs are to receive.
Helpful Hints:
(1.) The Trustee and CPA will have to coordinate obtaining a new tax identification
number, separate from any tax id number used by the deceased on the probate of the
deceased’s estate.
(2.) It may be important to also obtain the estate tax returns of the deceased and the
General Inventory of the deceased filed in the probate (when the Trustee was not the
Executor of the estate as well).
(3.) Transfer notices to stock brokerage accounts and insurance companies for real estate
are essential.
(4.) If minerals are involved, hopefully the attorney on the probate proceedings will write
all the oil companies and provide the Final Decree and request new division orders for all
minerals transferring to the new testamentary trust. Sometimes though the Trustee must
send the notices to the oil companies if the attorney has not done so.
(5.) Be sure to have plenty of death certificates and certified copies of the Final Decree if
there are many assets and producing mineral interest to get transferred into the trust after
the probate closes.
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3. LIFE INSURANCE TRUSTS:
Purpose:
Life insurance is an asset of ever-increasing importance in the modern estate. Many men
and women today are creating life insurance trusts – a specialized version of the Living
trust – to assure full-time, flexible management of insurance proceeds for the protection
of their families. Instead of securities, life insurance policies now form the principal
asset of the trust. The Trustee collects the proceeds at death and combines those funds
with other assets of the insured, which are added or “poured over” into the trust by terms
of the insured’s Last Will and Testament. This type of trust can also be established as a
separate irrevocable trust during the insured’s lifetime. These are usually created to keep
the insurance proceeds from going outright to the surviving spouse (and her second
husband), and to protect proceeds for the education of the children.
Unique Features:
The life insurance trust offers an ideal way to unify insurance and other estate assets into
a comprehensive family financial plan. It affords many of the tax economies of other
trusts, along with the further benefit of skilled, long-term property management by
professional trustees – a benefit not available when lump-sum insurance proceeds are
paid to an individual beneficiary, who may be too young or inexperienced to manage a
large amount of money.
Helpful Hints on Management of Life Insurance Trusts:
(1.) Education Expense Instructions - Often, this type of trust includes detailed
instructions for the payment of education expenses of college – age beneficiaries. (See
educational trust distribution provisions discussed below in #4.) If it is an irrevocable life
insurance trust created during the insured’s lifetime, they are very difficult to terminate in
case of divorce.
(2.) Premium Payment Bills - The grantor of the trust will need to be notified when
premium payments are due, so he can contribute the funds necessary into the trust
account. Then the Trustee can pay the annual premium to the insurance company.
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4. EDUCATIONAL TRUSTS:
Purpose:
An educational trust is established usually by the grandparents, parents, or other relative
for the future education of a child. The person creating the trust, called the grantor or
settlor, transfers a certain amount of money, securities or other income producing assets
into the trust for the benefit of the child. Additional contributions to the trust can be
made every year by the Grantor (and Grantor’s spouse) into the trust, so that the pool of
money grows until the child is 18 and ready for college. The annual gift exclusion, which
currently is $14,000 per donor and recipient, is a useful way to provide the funding tax
free for these trusts over a period of years
Grantor:
These types of trusts are often used by parents after a divorce when the grantor is not the
custodial parent of the children. It provides the parent, who will be paying for the future
education, the safeguard of the Trustee being in control of the investments and
distributions, not the custodial parent (who may have remarried or who could misspend
the money).
These types of trusts can be used for the “support, maintenance, and welfare” expenses of
a minor child prior to reaching 18 years of age, as well as their college educational
expenses thereafter. These trusts are commonly created in the settlement of lawsuits
dealing with injury claims of the parents or children.
Special Provisions for Educational Trusts:
The grantor can provide instructions in the terms of the trust agreement regarding what
conditions should exist for the Trustee to make distributions for the child’s benefit. Be
careful of providing insufficient instructions, such as “the net income will be distributed
to the beneficiary”. That will be insufficient guidance to a Trustee for this type of
account! Too often distributions have to cease and the grantor should specify all the
conditions for continuing or delaying the distributions.
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Examples of Distributions:
a. Distributions for room, board, tuition, and books for college, university, or other
vocational schools.
b. Support and maintenance expenses before college.
c. Transportation expenses – (automobile and car insurance?).
d. Net income distributions after graduation from college. – (until principal distributions
start)
e. Principal distributions at certain times (graduation, one-half at 25th birthday, and one
half at 30th birthday).
f. Distribution instructions can also include guidance to the Trustee on when
distributions should cease (failure to attend college, failure to make satisfactory
progress towards the attainment of a degree, failure to maintain full-time enrollment).
g. Distributions for educational purposes can be for vocational training and not
necessarily limited to college or university classes.
Helpful Hints for Educational Trusts:
a. If the trust funds are large enough and the trust is to continue well past the college
education of the beneficiaries, the terms of the agreement can also provide other
instructions to the Trustee on principal distributions. For example, can a certain
amount of money be distributed to help the beneficiary establish or buy a business, or
cover the down payment on a home? Can the trust fund provide a “reasonable
transportation vehicle” – but not a Mercedes-Benz!
b. Medical emergencies allowing invasion of the principal should be considered.
c. Educational trusts like these have several tax advantages and can assist the grantor in
the completion of his or her overall estate plan. Your trust client should consult their
CPA when considering the creation of this type of trust.
d. It is very important to thoroughly consider who should be appointed as Trustee of this
type of trust. It is best to choose a Trustee with experience in managing educational
trusts for young beneficiaries and who is properly equipped to maintain the records
on numerous children or grandchildren’s accounts, each with differing distribution
needs and timeline.
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e. Choose a Trustee who will not be unduly pressured by family members. Example:
Parents of the beneficiary may try to pressure the Trustee to spend money for a car for
19 year old Johnnie, even though the Grandparents/grantors specified that the trust
was not to buy a car for him!
f. Choose a Trustee who will follow the legal requirements and distribution limitations
specified in the trust agreement. Example: Johnnie must make satisfactory progress
towards the attainment of a degree by making a certain grade point. If he fails to do
so, distributions are to stop and Johnnie can get a job until he is ready to go back to
school.
5. CHARITABLE TRUSTS:
Purpose:
Often when people plan their estate, they want to give money or property to a specific
charity or their church. An attorney should review the choices available when a client
needs assistance in creating a charitable foundation, or leaving assets in trust for the
benefit of a particular charity. The attorney and his client should consult with the client’s
CPA about the creation of the charitable trust.
Special Provisions:
a. A corporate trustee’s professional expertise is often used for management of a
charitable trust’s investments. This situation could arise for a church’s endowment
fund or for any charitable foundation an individual or family created in order to
benefit some type of non-profit project or organization. Our Trust Department has
charitable trusts that have been specifically created by individuals to benefit a local
church or charities or which provide scholarships for local high school students to
attend college.
b. Sometimes the charitable organization, like a church, will have an “Endowment Fund
Committee” that wants to share responsibility with a corporate trustee regarding how
the charity’s money is invested and how the income is spent.
c. Applicable statutes governing professional management of investments for churches
or charitable organization.
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1. Uniform Management of Institutional Endowment Funds Act (60 O.S. 300.1 et.
seq.) The governing board may contract with investment advisors, investment
counsel or mangers, banks, or trust companies, so to act for the governing board
in investment of institutional endowment funds. 60 O.S. 300.6 (2)
2. Oklahoma Charitable Fiduciary Act (60 O.S. 301.1 et.seq) Any charitable
organization acting as a trustee of charitable trusts in this state may employ and
delegate to investment advisors, investment counselors, state banks in Oklahoma
having trust powers, national banking associations having trust powers, and trust
companies having trust powers the discretion to make specific investment
decisions provided that the charitable organization shall at all times maintain
ultimate control of the management of the common trust fund. 60 O.S. 301.7B (3)
d. Some living trusts for grantors who have no children, grandchildren or other close
heirs, may include a list of chosen charities which are each to receive a certain
percentage of the trust before it is closed. Always include a provision in the trust that
the Trustee should obtain documentation that each charity is a 501(3)c or other IRS
approve charitable organization before distributing the money. In addition, include a
catch-all recipient to receive the amount designated to any specific charity, that by the
time of the distribution, is closed or no longer a qualified organization.
6. SUPPLEMENTAL NEEDS TRUSTS:
Purpose:
The grantor wants to either leave an inheritance in his will, or set aside money in a trust
during his lifetime, to a relative or natural heir who has a disability. For this disabled heir
to receive an inheritance outright, his social security disability benefits or other state
benefits could be jeopardized.
Specific Provisions:
The grantor established a living trust for the benefit of the disabled heir will usually
irrevocably transfer assets into the trust. (An Irrevocable Living Trust) A third party,
such as a corporate trustee or another relative serves as the Trustee. Since the “basic food
and shelter” may be provided by social security, these types of trusts are authorized to
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pay for the extra items above basic living expenses, such as Christmas and birthday gifts,
vacation, travel and entertainment.
Unusual Features:
Since the funding for the trust comes from the family, the grantor must direct how the
remaining trust funds will be distributed at the disabled beneficiary’s death. Usually,
siblings or other family members are listed as the ultimate beneficiaries. Also, charitable
organizations can be listed to receive a donation (like McCall’s Chapel School Inc. in
Ada, Oklahoma), who may have provided housing for the disabled heir.
Helpful Hints:
The Trustee should know who is the Guardian or Attorney-in-Fact for the disabled heir so
that there is communication about the beneficiary’s health expenses and other permitted
personal distributions the Trustee may be required to make. The Trustee and the
Guardian/Attorney-in-Fact will work closely together for the benefit of their joint client.
7. SPECIAL NEEDS TRUSTS:
Grantor:
If a lawsuit arises from a personal injury situation, whether it is a car wreck or medical
malpractice case, the issue of having a trust created to receive the lump-sum settlement is
a convenient solution for the long term management of the settlement money.
Additionally, if future monthly annuity payments or lump-sum periodic amounts are part
of the settlement, as long as the beneficiary survives, the trust would be there to receive
those funds in the future.
Specific Provisions:
The trust agreement will have to be created and agreed upon by all parties (including the
attorneys representing them and the Trustee) along with the Settlement Agreement to
resolve the litigation. It will take both documents to govern the future of the trust money.
The remaining funds usually revert to the federal or state government at the beneficiary’s
death.
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Helpful Hints:
(1.) Estimating the life span and future medical needs can be very difficult when the
Settlement Agreement and Trust Agreement are prepared. How often a handicap van
can be purchased, lift equipment installed as well as the insurance and tag for the van
become a major issue. Estimating future surgeries and hospital costs can be
underestimated when the lawsuit settlement is negotiated. The longer the
client/patient lives, the larger wheelchair and van is needed. Lift equipment is very
heavy and the timing for the replacement vehicle and equipment is often
underestimated in the Settlement Agreement.
(2.) In the Trust Agreement, it should be very clear what items or expenses are
considered covered medical expenses. For example, are dental bills and oral
surgeries covered by the trust under “medical expenses”?
(3.) Payroll Issues for the Caregivers:
Parents and relatives of the disabled beneficiary are usually the on-site caregivers.
Settlement Trusts of this nature need to specify the amount, hours or monthly limit
which can be paid to such caregivers and what happens with this payroll if the
beneficiary is temporarily or permanently placed in an assisted living center or
nursing home environment. Temporary trips to the hospital for surgery would be
handled separately.
(4.) Additional Issues that will Confront the Family and the Trust:
Remodeling funds for handicap bathroom and ramps for wheelchair at the home,
inadequate funds for utility bills or lift equipment, keeping the parents on a budget so
the trust funds will last long enough.
8. OKLAHOMA’S FAMILY WEALTH PRESERVATION TRUST ACT:
Purpose:
Title 31, Sections 10 through 18 of the Oklahoma Statues provides the requirements and
specifications for this Act which allows the creator of the trust to shield $1,000,000 of
contributed assets from creditors or future lawsuits. The trust may be created as a
revocable and amendable trust, or as an irrevocable trust.
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Specific Provisions:
1. Growth in income or appreciation of the value of the contributed assets are still
shielded from creditors. Therefore, if the stocks transferred increase in value, that
increase is still protected.
2. Property owners holding mortgages to property transferred to such a trust will be
considered a “related indebtedness” and will not be shielded from such debt.
Therefore, if a home with an existing mortgage is transferred into the trust, the lender
could still foreclose on the home loan, if the payments are not made.
3. An individual Co-Trustee can serve as long as the other Co-Trustee is an Oklahoma
based bank or Oklahoma based trust company.
4. A majority of the trust assets must be Oklahoma assets in order to qualify. The act
has been expanded to include tangible personal property, jewelry, art, collectibles,
vehicles, inventory, fixtures and equipment located in Oklahoma. Promissory notes
secured by a mortgage in real estate or security interests in tangible personal property,
or both, located in Oklahoma will also qualify.
5. Other publicly traded stocks, U.S. obligations like Treasury bonds, non-Oklahoma
real estate and mutual funds etc… can be included in the minority share of the trust
assets.
6. The trust beneficiaries can include: the creator’s spouse, lineal ancestors or lineal
descendants of the creator or of the creator’s spouse, adopted children under 18, and
qualified charitable organizations. Also, any trust can be a beneficiary of a
preservation trust if it is created solely for the benefit of the person(s) or charity that
separately could qualify as such.
7. A trust like this is not exempt from execution to satisfy a child support judgement
against the creator. Also, a preservation trust remains subject to the Uniform
Fraudulent Transfer Act.
Helpful Hints:
Many professionals or business owners, who are afraid of frivolous or potential lawsuits
due to their business, should consider this type of trust to protect their assets and their
family.
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9. IRREVOCABLE TRUSTS:
Purpose:
Historically, irrevocable trusts were created for three reasons (1.) for the grantor to
successfully, irrevocably transfer assets out of his/her estate to the children or
grandchildren’s educational trusts and/or (2.) for the grantor to transfer assets to a
charitable trust. (3.) for the creation of an Irrevocable Life Insurance Trust. These trust
transfers are during the grantor’s life and would get the value of these transferred assets
out of this estate for tax purposes. Currently, the federal estate tax exemption is
$5,430,000 with appropriate tax filings and tax elections, married couples may secure a
$10,860,000 exemption regardless of which spouse dies first or how the couple owns
their property (assuming that they both die in 2015). Amounts in excess of the exemption
are taxed at a 40% rate.
Gifts:
The lifetime federal gift tax exemption in 2015 is $5,430,000. Amounts transferred in
excess of the exemption are taxed at the 40% rate. For 2015, the annual exclusion from
the gift tax is $14,000. A gift no larger than $14,000 may be given to each of as many
people as you wish without incurring gift tax or using up your lifetime federal gift tax
exclusion. To qualify for the annual exclusion, the gift must be of a “present interest,”
meaning that the person receiving the gift must have the immediate right to use and enjoy
the gift, without strings attached. Couples may “split” their gifts to secure a $28,000
annual exclusion per recipient.
10. IRA TRUSTS:
Purpose:
For your clients who have IRA accounts naming their children as the beneficiaries at their
death, but would prefer to control what happens later to the money, an IRA Trust may be
an attractive choice. The beneficiaries would receive the required minimum distributions
(RMD), but the Grantor (the deceased parent) could include provisions that would control
any distributions beyond that.
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Grantor:
Sometimes when a client is receiving a lump sum distribution from an employer
sponsored profit sharing plan or has a regular IRA with a large balance, he or she would
be a good candidate to consider an IRA Trust.
Special Provisions:
1. The forms and paperwork are very specific and not all bank Trust Departments will
agree to serve as Trustee for this kind of trust. The actual trust agreement is an IRA Trust
form.
2. By spreading out the distributions, the regular RMD and limiting amounts above that,
the distributions are spread over many years and the beneficiaries are less likely to cash-
in the balance and all the deferred tax come due in one tax year.
3. The beneficiaries must be “people”, not an estate, charitable organization or another
trust! Those types of beneficiaries do not have life expectancies and the IRS would not
allow spreading the withdrawals out over a period of years.
Helpful Hints:
1. The wording has to comply with the IRS guidelines exactly and the IRA Trust’s
Trustee has to file a copy of the trust documents with the IRA custodian by October 31st
of the year following the IRA original owner’s death.
2. Form 5498 is sent out by January 31st to IRA account holders who will be required to
take a required minimum distribution during the year. Box 11 will be checked if your
client will reach age 70.5 years old during the current year. This box provides a reminder
that your client should begin taking any required minimum distributions no later than
April 1st of the year following the year your turn 70.5.
3. Form 5498 is required to be filed with the IRS by May 31st to report contributions to
IRAs and other tax-preferred savings accounts. Additionally, contributions for the
previous tax year made by April 15th are included on Form 5498 for traditional IRA and
Roth IRA accounts. Accordingly, many IRA account holders receive their Form 5498 in
May.
15
4. The investments will be directed by the Trustee. These are not self-directed IRA
accounts by customers.
5. The documents or the Trustee’s internal policies will dictate if special assets, such as
closely-held family corporations or partnership interest, will be accepted as assets. Also,
real estate and mineral interests may not be accepted as proper assets for the IRA Trusts.
Your client should interview any prospective Trustee and discuss the potential assets the
Trustee is willing to accept and manage in the IRA trust before completing the
paperwork.
11. CHARITABLE REMAINDER TRUSTS:
Purpose:
A Charitable Remainder Trust is a special tax-exempt irrevocable trust arrangement
written to comply with federal tax laws and regulations. Your client transfers cash or
assets (especially appreciated assets) to the trust and may receive income for life or, if he
chooses, a certain term of years (not to exceed 20). In fact, the income can be paid over
his life, his spouse’s life and even their children’s and grandchildren’s lives.
Special Provisions:
IRS code section 664 lists the requirements a trust must meet in order to qualify as a
Charitable Remainder Trust. The Charitable Remainder Trust was made possible by the
Tax Reform Act of 1969.
The minimum payout rate is 5% and the maximum is 50%. The payout rate may be
further limited by a 10% remainder interest requirement, which applies only to Charitable
Remainder Unitrusts. The present value of the remainder interest passing to charity must
equal at least 10% of the value of the gift on the date of contribution.
12. CHARITABLE LEAD TRUSTS:
Purpose:
A charitable lead trust is a philanthropic and estate planning tool. A donor can transfer
assets, such as cash, stocks and artwork, to a trust for a set term of years. This type of
trust is irrevocable. Once your client puts assets or cash into the trust, they cannot get
16
them taken out later. Each year, payments are made from the trust to the donor’s
designated charity/charities. The grantor who creates this type of trust and donates the
assets into the trust can take an up front income tax deduction based on the trust’s
payments to the charity.
Special Provision:
It is called a lead trust because the charities are entitled to the lead (or first) interest in the
trust asset and the non-charitable beneficiary receives the remainder (or second-in-line)
interest. If the trust’s investments fall in value, the amount available to distribute to the
non-charitable beneficiaries (your client’s heirs) may be less, because the trust must make
the charitable payments no matter what the market is doing.
Once the trust’s term expires, what is left goes to the donor’s heirs. Handling assets in
this way can shelter the assets’ appreciation from estate taxes.
Two Types of Charitable Leads Trusts:
Charitable lead trusts are of two types: charitable lead annuity trusts and charitable lead
unitrusts. In the first type, the donor sets a fixed annual gift for the charities named. In
the unitrust, the charities receive a percentage of the trust’s value each year. This means
that those benefits will fluctuate based on the trust’s investment returns or losses.
Conclusion:
For Charitable Remainder Trusts and Charitable Lead Trusts a client really needs an
estate planning attorney well versed in the tax requirements for these highly specialized
trusts. It is always advisable to have the clients confer with their CPA to review all the
provisions before the trust is executed.
II. HOW DO YOU DEFINE AN ACCOUNTING? LET ME COUNT THE
WAYS!
Kara Greuel, J.D., CPA, CFF, CFMA, CFE
Greuel Law Firm, PLLC 5100 East Skelly Drive, Suite 1040
Tulsa, Oklahoma 74135 Phone # 918-728-2699
Fax # 918-491-4708 Email: [email protected]
ASSET INCLUSION/EXCLUSION TABLE Prepared by: Helen D. Puhl Kara M. Greuel Wood, Puhl & Wood, P.L.L.C., Attorneys at Law Greuel Law Firm, PLLC, Attorneys at Law 11063 D. S. Memorial Dr., #324, Tulsa, OK 74133 8811 South Yale Ave., Suite 401 Tulsa, OK 74137 918-299-1382 - Telephone 918-728-2699 - Telephone [email protected] [email protected]
Asset Probate Operation of Law Estate Tax
1
© 2015 by Helen Puhl and Kara Greuel
Life insurance policy – life of decedent
Without beneficiary designation or beneficiary is the estate
With a beneficiary designation passes to designated beneficiary
Includable in gross estate except when owned by an ILIT
Life insurance policy –life of another
Included if there is no co-owner or successor owner
Depending on insurance contract, may pass to a co-owner or successor owner
Included in gross estate only to extent of policy value, not entire amount of the death benefit.
Jointly-held property Tenants in common interest included; if JTWROS, then not included
JTWROS passes to survivor(s) Included to extent of source of funds purchasing property provided by decedent
Bank account Included if in decedent’s sole name
POD or TOD accounts pass to designated beneficiary
100% Included in gross estate
Retirement account - IRA - 401(k) - 403(b) - Qualified annuities - SEPs
Included if the estate is the beneficiary
With beneficiary designation passes to designated beneficiary *Spousal consent may be required to designate to someone other than the spouse
Includable in gross estate *IRD issues
Company stock – closely held
In decedent’s sole name – not subject to a buy/sell agreement
If buy/sell agreement, it controls distribution
Includable in gross estate and usually carries a valuation issue
Stock options Option agreement is silent as to who may exercise option or directs personal representative to exercise option
Terms of the option agreement control
Includable in gross estate; usually carries a valuation issue and always has a basis issue
ASSET INCLUSION/EXCLUSION TABLE
Asset Probate Operation of Law Estate Tax
2 © 2015 by Helen Puhl and Kara Greuel
Stocks/Bonds Included if in decedent’s sole name
Exceptions: where company allows for beneficiary designation
Includable in gross estate; value based on stock price on date of death
Vehicles Included if in decedent’s sole name; or, if the title designates “and,” then treated like TIC
If title designates “or,” then passes to the joint title holder
Included in gross estate
Personal property
Included in the estate Finder’s keepers Includable in gross estate
Rental income/ Leaseholds
Included if rental agreement is solely in name of decedent *Personal Representative has responsibility to collect decedent’s share of accrued rents
If rental agreement is in name of decedent and survivor *Decedent’s portion could be collected by the Personal Representative
Includable in gross estate *IRD Issues
Tax refunds Included if solely in the name of the decedent; if shared with surviving spouse, then based on actual tax liability (if any) and the amounts paid by the decedent
If joint refund with surviving spouse, the surviving spouse’s portion based on actual tax liability and amounts paid by the surviving spouse
Decedent’s Portion includable in gross estate
Deferred comp and other types of IRD
Most IRD (except deferred comp) is included since it is a type of personal property
Often, the deferred compensation agreement has an internal distribution order or refers to pension beneficiary designations
All included on estate tax return. For cash basis taxpayers most IRD is shown on the estate’s or beneficiaries’ income tax returns; for accrual basis taxpayers most IRD shown on the decedent’s final income tax return
ASSET INCLUSION/EXCLUSION TABLE
Asset Probate Operation of Law Estate Tax
3 © 2015 by Helen Puhl and Kara Greuel
Dividends payable Includable if decedent or the estate was the sole holder of record on the declaration date
In some rare instances may pass with a beneficiary designation to a designated beneficiary
All included on estate tax return. For cash basis taxpayers most IRD is shown on the estate’s or beneficiaries’ income tax returns; for accrual basis taxpayers most IRD shown on the decedent’s final income tax return
Mortgages/ Notes/ Accounts payable
Includable in probate estate (except for assignment)
Possibility of non-inclusion in probate if properly assigned to an entity such as a revocable trust or an LLC
Principal and accrued interest included in the gross estate; Interest included on the estate’s income tax return (if cash basis tax payer); if accrual basis tax payer, interest includable on the decedent’s final income tax return.
LLC/ FLPS/ Partnership Only if in decedent’s sole name and operating agreement or partnership agreement are silent as to distribution
Many operating agreements and partnership agreements have strict restrictions on the transfer of the ownership; a distribution order is often built into the document
Full Value of ownership percentage is included; if anything less than the full value is included, any discounts or reductions in the value must be explained in detail on the return
Chose in action / Judgments
Typically any type of suit must be filed or continued by the Personal Representative of an estate; proceeds are includable in the probate estate; may require a probate to stay open for a long period of time
Certain wrongful death actions may be brought by a surviving spouse, surviving children or next of kin without involving a personal representative
Includable but valuation is an issue; may require an amendment of the estate tax return upon payment of the judgment. Adjustments may need to be made for indemnified amounts repaid to social security, Medicare or private insurer.
MSA/HSA Rarely; usually has a designated beneficiary
Beneficiary designation controls Included unless such interest passes to a surviving spouse
ASSET INCLUSION/EXCLUSION TABLE
Asset Probate Operation of Law Estate Tax
4 © 2015 by Helen Puhl and Kara Greuel
Custodial accounts Rarely included; decedent usually owns such accounts as a custodian (a fiduciary role)
A beneficiary designation usually controls the distribution of such custodial accounts; if the child for whom the account has been created dies, the custodian names a new beneficiary
Not included in the gross estate
Revocable Trust Assets Assets transferred are not included in probate estate
Distribution of assets are made pursuant to terms of the trust
All assets trust assets are includable in the gross estate; indicate transfers of assets on Schedule G
Other interest held as a fiduciary / trust protector
Not included in probate estate Obligation to hold as fiduciary passes to successor fiduciary
Not included in the gross estate (unless deemed to have a general power of appointment due to broadness of powers)
Intellectual property / Royalties
Includable in probate estate (unless controlled by royalty agreement)
Royalty agreement may control distribution
Includable in gross estate (huge valuation issues)
Cloud assets/ social media
Not included in the probate estate – unless agreement specifies transfer can occur on death
Can be managed by fiduciary after death if allowed by license agreement with individual sites
Not included in the gross estate
Annuities Unlikely if annuitant is decedent; more likely if annuitant is a third party
Beneficiary designation controls or successor owner if annuity is not on life of the decedent
Annuity on decedent’s life – full value (to extent decedent contributed to the purchase price) is included; annuity on third party’s life not includable
ASSET INCLUSION/EXCLUSION TABLE
Asset Probate Operation of Law Estate Tax
5 © 2015 by Helen Puhl and Kara Greuel
Tribal property / Trust land
If held in name of decedent alone, included; if trust land or headright, will must be approved by the tribe before transfer can occur; after approval, probate process in district court using Oklahoma Statutes governs transfer
Use of a beneficiary deed or joint title may affect these rights and be nullified if not approved by tribe or property may lose its status as tribal property or trust land.
If included in the Indian General Allotment Act, not included in gross estate (exempt from federal estate tax); includes trust lands acquired either in the original allotment or by inheritance, original and inherited headrights, mineral headright income derived from royalties held in trust by the U.S. Government and trust-fund cash directly derived from allotted lands.
Oil and gas royalties Included if in decedent’s sole name; use of 58 O.S. 393 directs payments only, does not affect the title to the underlying mineral interest
JTWROS passes to survivor(s) Includable – valuation is not as much of an issue since no longer have Oklahoma Estate Tax
Reversionary or remainder interests
Typically not included – except on case by case basis when gap of time between allocation and distribution
Terms creating reversionary or remainder interest generally apply
Typically not included – except on case by case basis when gap of time between allocation and distribution
Insurance claims Included; use of 58 O.S. 393 can avoid probate if under $20,000
Even if there is a joint policy holder, claim payments are usually made to both parties; no way to designate a beneficiary; some insurance companies will allow you to hold insurance in name of a revocable trust - but, this creates an issue with regards to payments from government entities on types of crop insurance and crop subsidies
Includable if asset for which claim was paid was not included on estate tax return
ASSET INCLUSION/EXCLUSION TABLE
Asset Probate Operation of Law Estate Tax
6 © 2015 by Helen Puhl and Kara Greuel
Cemetery lots Included in probate estate if no cemetery contract to the contrary.
Some cemeteries use deeds, other’s use internal contracts or “private deeds” or beneficiary designations to pass title to lots.
Includable in gross estate, but limited to the saleable value of that part of the lot that is not designed for the internment of the decedent and family members
Foreign Assets Rarely included in a U.S. probate estate. However, foreign jurisdictions may require a U.S. court determination of heirs, devisees and legatees.
Terms of account or foreign probate determine distribution
Includable in the gross estate (rebuttable presumption that entire account is owned by decedent). A credit may be allowed for inheritance, succession or death taxes paid to a foreign jurisdiction.
Goodwill Included in probate estate if owned entirely by the decedent
If assigned into business entity or trust, passes pursuant to terms of agreement.
Included in gross estate - Valuation Issue
Powers of appointment Included if exercised by the will
Some powers of appointment may be exercised by written instrument other than a will and such written instruments control
Includable to extent appointment can be to decedent, decedent’s estate, or decedent’s creditors
Qualified Terminable Interest Property
If created by will If created in a trust Includable in estate of surviving spouse
ABBREVIATIONS USED: JTROS – Joint Tenancy with Rights of Survivorship. Or in some states tenancy by the entirety may create this same type of
interest. TIC – Tenants in Common POD – Pay on Death designation TOD – Transfer on Death designation IRD – Income in Respect of a Decedent. Indicates assets passing to a beneficiary with certain income tax obligations attached
to the asset. ILIT – Irrevocable Life Insurance Trust
The Path To LitigationThe Trust Addresses reports/accountings to beneficiaries
The Trust waves reporting requirements
The trust requires reporting/accountingto beneficiary
Does the trust provide its own definitions of accounting?
Does the state have an adequate definition of accounting or report that can be used?
State has caveat prohibitingwaiver of certain reporting requirements
state statutes provide comprehensive definition of what goes into accounting:
State statuteon accounting is vauge
Must litigate
No
Yes
No Yes
Must Litigate
Is definition adequate to provide beneficiary needed information?
no Yes
Must Litigate
Must Litigate
NO
yes
The Path To LitigationThe Trust is silent about providing an accounting.
Is there a state statute on accountings/reports/ or providing some sort of information to trust
No
Yes
Does it only provide for relevant informationor other vauge terminology which does not reaveal what is happening with trust
Beneficiaries must make reasonable request because report is not mandatory?
Is reportautomatically provided to beneficiaries?
Do state statutesonly address ct ordered accountings?
Does statute provide descriptionof what must go into accounting?
Yes No
Must litigate
Must Litigate
Must Litigate
Must litigateto for more comprehensive information
Must Litigate
NO
Yes
III. IT SEEMED LIKE A GOOD IDEA AT THE TIME!
ETHICS BY: Kara Greuel,
J.D., CPA, CFF, CFMA, CFE Greuel Law Firm, PLLC
5100 East Skelly Drive, Suite 1040 Tulsa, Oklahoma 74135
Phone # 918-728-2699 Fax # 918-491-4708
Email: [email protected]
IT SEEMED LIKE A GOOD IDEA AT THE TIME…
OR Why You May Not Want to Serve
As A Trustee For The Trusts You Create
By Kara M. Greuel, J.D., CPA/CFF/CGMA, CFE
Greuel Law Firm, PLLC 8811 S. Yale Ave., Suite 401
Tulsa, OK 74137 918-728-2699
1
Have you been there? Surely, you have…
You meet with a client and begin the estate planning process. During discussions
regarding the design of the plan, the client poses a question “Can you serve as my trustee?”
There are some attorneys who routinely say yes. Others always refuse. So, the real question
becomes this – Can we? Is it allowed? Is agreeing to serve a violation of some rule of
professional responsibility? As with all good legal analysis, the answer is – it depends.
Logically speaking, the drafting lawyer would appear to be an excellent choice to serve
as fiduciary. He or she would have a particular familiarity with the client’s intent and the
circumstances surrounding familial relationships. However, if we continue the thought process
using the adage of “what could go wrong, will,” there are several issues to consider. For
example, questions may arise as to whether or not the client has exercised his or her independent
judgment regarding the appointment of the lawyer as fiduciary - especially when the attorney
may not be the best choice to serve. Further, should there be after- death contests by family
members or other beneficiaries and claims made against the fiduciary, the attorney who serves in
both capacities winds up being in a compromising position. The conflict of serving in both roles
never goes away.
The ABA, in Formal Ethics Opinion 02-426 (May 31, 2002) allows for a lawyer to serve
as a fiduciary if his or her obligations are met under Model Rules 1.4(b) and 1.7(b). These
Model Rules are reiterated in our Oklahoma Rules of Professional Conduct Section Rules 1.4(b)
and Rule 1.7(b) under Title 5, Appendix 3-A, of our Oklahoma Statutes.
Rule 1.4(b) states that “A lawyer shall explain a matter to the extent reasonably necessary
to permit the client to make informed decisions regarding the representation.” This means that
the lawyer must discuss options that the client has with regard to appointing a fiduciary and
2
particularly, an individual fiduciary. This doesn’t mean that the attorney can not also discuss
with the client his or her ability to serve as a fiduciary. However, the lawyer cannot allow self-
interest and desire to prevail against the independent professional duty the lawyer owes to the
client. The lawyer’s responsibility to the client includes providing the client with information
regarding the tasks that the fiduciary will need to perform, what skills would be ideal for being
able to perform the designated tasks and the costs and benefits of the different types of
fiduciaries – individual or corporate. A good place to start with regard to discussing the role of
the fiduciary is to review the requirements with the client. Often times the client only has a
vague idea as to the tasks that the fiduciary will have to accomplish. Reviewing a document that
would typically only be reviewed after the client’s death, may prove very beneficial. The
American Bar Association has a client brochure entitled “You Are The Fiduciary.” It’s a
handbook for those individuals who are serving as a fiduciary and an inexpensive resource for
education of your client.
Continuing in numerical order, Rule 1.7(b) states that as long as certain requirements are
met, a lawyer may serve as a fiduciary even if a conflict of interest exists under 1.7(a). Conflicts
include the representation of one client who will be directly adverse to another client, or a
circumstance in which there is a significant risk that the representation of one or more clients
will be materially limited by the lawyer’s responsibilities to another client, a former client or a
third person or by the lawyer’s own personal interest. Even so, if certain requirements are met,
the lawyer may go forward with the representation. These requirements include that the lawyer
reasonably believes he or she will be able to provide competent and diligent representation to
each affected client.
3
With regard to self-appointment, Ethics Opinion 02-426 provides that in the case of a
lawyer naming himself or herself as fiduciary, or naming his or her firm as counsel for the
fiduciary, the Model Rules allow for a fiduciary to appoint himself or his firm as the attorney to
provide services during the administration of an estate or trust. Even though these are dual roles,
there is no conflict of interest because the obligations of an attorney and a fiduciary do not differ.
The ethics opinion points out that the principal responsibility of the lawyer for a fiduciary is to
advise the fiduciary in properly performing his or her fiduciary duties. Likewise, because the
fiduciary is to act in the best interest of the beneficiaries while serving, the attorney assisting can
not advise the fiduciary to act or assist the fiduciary in acting against the interest of the
beneficiaries. The ethics opinion takes the position that the attorney for a fiduciary only owes a
limited duty of care to the legatees, devisees and creditors of an estate or to the beneficiaries of a
trust. However, regardless of what capacity an attorney is serving, the fees that are charged for a
dual representation must be reasonable.
The ACTEC Commentary to Model Rule 1.7 expressly discusses application of the rule
to appointment of a scrivener as fiduciary. The commentary reads,
An individual is generally free to select and appoint whomever he or she wishes to a fiduciary office (e.g., trustee, executor, and attorney-in-fact). None of the provisions of the MRPC deals explicitly with the propriety of a lawyer preparing for a client a will or other document that appoints the lawyer to a fiduciary office. As a general proposition, lawyers should be permitted to assist adequately informed clients who wish to appoint their lawyers as fiduciaries. Accordingly, a lawyer should be free to prepare a document that appoints the lawyer to a fiduciary office so long as the client is properly informed, the appointment does not violate the conflict of interest rules of MRPC 1.7, and the appointment is not the product of undue influence or improper solicitation by the lawyer.
For purposes of the ACTEC Commentary, a client is properly informed if the client is
provided with information:
Regarding the role and duties of a fiduciary;
4
Regarding the ability of a layperson to serve as fiduciary with legal and other professional assistance; and
The comparative costs of appointing the lawyer or another person or institution as fiduciary.
The information provided should always inform the client of conflicts of interest
including any significant lawyer-client relationship that exists between the lawyer or the lawyer’s
firm and a corporate fiduciary under consideration for appointment as fiduciary.
If you don’t make the necessary disclosures, it can result in liability for potentially
significant damages. It’s often said, “If you can’t be a good example, be a horrible warning,” To
illustrate that adage, , consider a recent case where conflicts were not disclosed and it ended
badly for the law firm. In Gunster, Yoakley & Stewart v. McAdam, a law firm was held liable for
$1,043,430 in damages because, it “wrongfully procured” an appointment of a corporate
fiduciary which caused the estate administration to be more expensive. The underlying case
reveals that the law firm had a referral relationship with the corporate fiduciary and the lack of
disclosure of the relationship caused the plaintiffs to seek recompense for all “avoidable probate
expenses.”1
Some states have enacted specific statutes relating to the issue of the appointment of the
scrivener as fiduciary. For example, New York State has addressed the issue of naming the
lawyer as executor by statute.2
These statutes permit a lawyer to prepare a will and be designated as executor as long as
the testator is informed of the following points before the execution of the will:
Any person, including a lawyer, is eligible to serve as an executor.
1 965 So.2d 182 (Fl. Dist. Ct. of App. 2007) 2 See McKinney’s SCPA §2307-A.
5
Absent an agreement to the contrary, any person, including a lawyer, who serves as an
executor is entitled to receive the statutory commission.
If the lawyer or an affiliated lawyer renders legal services in connection with the
executor’s official duties, such lawyer or the affiliated lawyer is entitled to receive
reasonable compensation in addition to the statutory commission.
To ensure that this information is provided, the testator must provide written acknowledgement
of the disclosures and the disclosure must be witnessed by someone other than the designated
executor. And although the disclosures are separate from the will itself, they may be annexed to
it. Although Oklahoma does not require it, as a measure of protection for those drafting
attorneys who are also serving as fiduciaries, I have provided a comprehensive sample
Acknowledgment and Disclosure form to this paper. Please use it, or not, as you see fit.
Another state that has addressed this issue is California. It has enacted legislation to
specifically address the appointment of a client’s lawyer as the named fiduciary. Any individual
who drafts, transcribes, or causes to be drafted any instrument of transfer, is defined as a
“disqualified person,” unless that person is related by blood, marriage or is a cohabitant.
Alternatively, an “independent” attorney can certify that the transfer was not the product of
fraud, menace, duress or undue influence. Regardless, this provision can not be
waived.3However, all is not lost should a disqualified person be named as the sole trustee. If the
court, based on the facts and circumstances, finds that “it is consistent with the settlor’s intent
that the trustee continue to serve and that this intent was not the product of fraud or undue
influence,” the disqualified person may be allowed to continue serving.4
3 Cal. Proc. C. §15642(b)(6) 4 Id.
6
Further, should an attorney also be named as a personal representative, he or she may
receive payment or fees for serving as the personal representative, but will not also receive
payment for serving as the attorney unless the court approves it. However, the court must
approve the arrangement in advance and find that the arrangement is to the advantage, benefit
and best interest of the decedent’s estate.5
Other states have adopted ethical rules that address the propriety of the scrivener serving
as fiduciary and place emphasis on slightly different ethical principles.
New Jersey ethical rules allow services, but with the disclosure and consultation
requirements of MRPC 1.7(b)(2).6
South Carolina allows for such service but subject to MRPC 1.8(c) regarding the
prohibition on lawyers soliciting gifts from clients.7
Georgia issued a Form Advisory Opinion which held:
It is not ethically improper for a lawyer to be named executor or trustee in a will or trustee he or she has prepared when the lawyer does not consciously influence the client in the decision to name him or her executor or trustee, so long as he or she obtains the client’s written consent in some form or gives the client written notice in some form after a full disclosure of all the possible conflicts of interest. In addition, the total combined attorney’s fee and executor or trustee fee or commission must be reasonable and procedures used in obtaining this fee should be in accord with Georgia law.8
The opinion held that the following items need to be disclosed to the client:
o All potential choices of executor or trustee, their relative abilities, competence, safety and integrity, and their fee structure;
o The nature of the representation and service that will result if the client wishes to name the attorney as executor or trustee (i.e., what
5 Cal. Prob. C. §10804 6 New Jersey, Eth. Op. 683 (1996). 7 SC. Op. 91-07 (1991). 8 Formal Advisory Opinion No. 91-1 (September 13, 1991).
7
the exact role of the lawyer as fiduciary will be, what the lawyer’s fee structure will be as a lawyer/fiduciary, etc.);
o The potential for the attorney executor or trustee hiring him or herself or his or her firm to represent the estate or trustee, and the fee arrangement anticipated; and
o An explanation of the potential advantages to the client of seeking independent legal advice.
These disclosures can be made orally. However, the acknowledgement and
consent by the client should be in writing.
Conventional wisdom says that rules were created because someone did something
stupid which caused the need for the rule. We’ve discussed at length some examples of state-
imposed rules for attorneys and now we’ll look at a couple of cases. Neither are Oklahoma cases.
There is only one Oklahoma case in which the issue has come up (Oklahoma Bar Association v.
Kenneth E. Bradley)9 and in that instance, the Court only concerned itself with the
mismanagement of assets that resulted while the attorney was serving as trustee. It never dealt
with whether or not his drafting of four trusts and naming himself as trustee was an ethics
violation. In the cases we will look at, one caused the need for the rules we have reviewed
above, and one supports the ability of a drafting attorney to name himself as a fiduciary.
The case of In Re Estate of Weinstock,10 along with others, resulted in the creation of
SCPA §2307-A for New York (discussed above). This matter involved two attorneys who were
father and son. They met with an 82 year old elderly man (the decedent) who was physically
disabled and had reduced mental abilities. During the first meeting between the man and the
attorneys, he indicated that the bank, which was set to serve as the executor of the estate, would
charge too much money and so he wanted to change his previous designation. During this
discussion, he talked about appointing his daughter and son-in-law.
9 746 P.2d 1130 (Okla. 1987) 10 351 N.E. 2d 647 (N.Y. 1976).
8
Also discussed during this meeting was the possible appointment of both of the attorneys
and the elderly man’s accountant. At some point during the meeting, the man agreed and the
attorneys drafted a new will. The man never had an opportunity to review the will prior to
signing and the attorneys never disclosed to the man that each person serving – attorneys and
accountant – would receive compensation for doing so.
The surrogate determined that along with over-reaching, the father and son team had
committed constructive fraud and that they should be prohibited from serving as executors under
the will. The court additionally stated that is was ok to choose the drafting attorney to serve as
the executor and doing so would not create a presumption or inference of wrong-doing. One of
the deciding factors in this case had to do with the fact that neither of the attorneys had ever met
the elderly man prior to their initial meeting and subsequent appointment as executors.
In Petty v. Privett,11 the executor of the estate brought suit against the attorney retained
by the former executor (this attorney also was involved in the drafting of the decedent’s will) and
alleged failures to account, to disperse assets and excessive and unauthorized payments. The
attorney used the exculpatory clause in the will as a defense and the trial court held that the
clause was void as against public policy.
On appeal, the Court concluded that the attorney was not barred from depending on the
exculpatory clause if the attorney proves that there is no overreaching, undue influence or abuse
of fiduciary relationship. The Court of Appeals remanded it back to the trial court to determine
those three issues.
There are many landmines to avoid when choosing how to assist your clients. Attorneys
who consistently agree to serve as trustee for clients whose trusts they draft are setting
11 818 S.W. 2d 743 (Tenn. Ct. App. 1989).
9
themselves up for problems later on. All attorneys should be aware of the statutory, ethical and
legal restrictions regarding this type of service. Additionally, they should make their clients
aware of the choices available to them in selecting a fiduciary and obtain a written
acknowledgment from the client.
Acknowledgment of Disclosure
I, _________________, (“Client”) am a current client of _______________________, attorney
at law (“my attorney”) who is associated with the firm of ___________________ and said
attorney has been engaged to perform estate planning services for me. As part of the
engagement, I have requested that my attorney serve in a fiduciary capacity with regard to my
estate and trust after my death. I have made this request after discussion with my attorney and
with full knowledge and awareness regarding important considerations. As such, I state the
following:
I understand the role and duties of a fiduciary.
I understand that any person, including a lawyer, is eligible to serve as a fiduciary.
I understand that absent an agreement to the contrary, any person, including a lawyer,
who serves as an executor is entitled to receive the statutory commission.
I understand that a layperson who obtains legal and other professional assistance may be
perfectly capable of serving as a fiduciary.
I understand and my attorney has discussed with me potential choices of executor or
trustee, their relative abilities, competence, safety and integrity and the comparative costs
of appointing a lawyer or another person or institution as fiduciary.
I understand that if my attorney or an affiliated attorney renders legal services in
connection with the official duties of the fiduciary (whether or not my attorney is serving
as my fiduciary), my attorney or the affiliated attorney is entitled to receive reasonable
compensation in addition to the statutory commission.
I understand, and my attorney has disclosed to me, any known significant lawyer-client
relationship that exists between my attorney or my attorney’s firm and a corporate
fiduciary under consideration for appointment.
I understand there are advantages of seeking independent legal advice regarding the
appointment of my attorney to serve in a fiduciary capacity for my estate planning
documents. I assert that I have either sought independent legal advice or have chosen not
to do so.
I am executing this Acknowledgment and Disclosure for use in conjunction with my existing or
newly- created estate planning documents and any amendments to those documents subsequent
to this date, unless such amendments make a change to the fiduciary succession.
Dated: ______________ __________________________________ CLIENT, Client
STATE OF OKLAHOMA ) ) ss.
COUNTY OF TULSA ) Before me, the undersigned, a Notary Public in and for said County and State, on ________________, 2015, personally appeared CLIENT, to me known to be the identical person who executed the within and foregoing Acknowledgment of Disclosure and acknowledged to me that the same was executed as a free and voluntary act and deed for the uses and purposes therein set forth.
IN WITNESS WHEREOF, I hereunto set my official signature and affixed my notarial seal the day and year last above written.
My Commission Expires: ____________________ _____________________________ Notary Public Commission No.: __________________________
WITNESS ATTESTATION STATE OF OKLAHOMA ) ) ss. COUNTY OF TULSA )
The Client is personally known to me and I believe the Client to be of sound mind. I am eighteen (18) years of age or older. I am not related to the Client by blood or marriage. The Client have declared to me that this instrument is their Acknowledgment of Disclosure and that he or she has willingly made and executed it as his or her free and voluntary act for the purposes herein expressed.
________________________________________ Witness
________________________________________ Witness
STATE OF OKLAHOMA ) ) ss: COUNTY OF TULSA )
Before me, the undersigned, a Notary Public in and for said County and State, on ___________________, 2015, personally appeared _____________________ and ______________________, witnesses, to me known to be the identical persons who executed the within and foregoing instrument, and acknowledged to me that they executed the same as their free and voluntary act and deed for the uses and purposes therein set forth. IN WITNESS WHEREOF, I hereunto set my official signature and affixed my notarial seal the day and year last above written. My Commission Expires: ___________________ ___________________________ Notary Public My Commission No.: ______________________ [S E A L]
IV. BANKRUPTCY BASICS FOR THE NON-BANKRUPTCY PRACTITIONER
Preston Draper, Attorney
Sweeney, Draper & Christopher Law Firm PO Box 190
1320 Stone Bridge Ada, OK 74820
PHONE: 580-332-7200 EMAIL: [email protected]
V. “I DIDN’T KNOW THAT” – SELECTED TOPICS ON ESTATE PLANNING & ADMINISTRATION
James R. Marshall, Attorney & Partner Henson & Marshall, PLLC
101 W. 9th P.O. Box 3488
Shawnee, OK 74802-3488 Phone # (405) 275-2550
Fax # (405) 275-2588 Email: [email protected]
“I DIDN’T KNOW THAT”SELECTED TOPICS IN ESTATE PLANNING AND ADMINISTRATION
Presented by James R. MarshallHenson & Marshall, PLLC, Shawnee, Oklahoma
Introduction
Through the years, we recognize older attorneys are a tremendous
resource for complex or convoluted fact patterns, legal issues, and family
dynamics. Talk to experienced attorneys about a situation you are facing, and it
is not uncommon for that attorney to say something along the lines of “I had a
case like that once....”, or “I think there is a statute that covers that....”, or “It
seems like there was a case dealing with that issue....”. Fortunately,
professionals are more than willing to share details of those cases and statutes,
as they might apply to your particular fact situation.
In this discussion, we will review helpful statutes and cases that impact the
practice of estate planning and administration.
First, a definition or two. For the general public the term “probate” is
generally understood to mean any proceeding through the Courts dealing with a
person’s estate, either testate or intestate. For this presentation, we will use
“probate” as the public understands it. Personal Representative includes
Executor, Executrix, Administrator and Administratrix. Title 58 OS §11.
What follows are particular statutory provisions or cases which
practitioners need to keep in mind as they prepare documents or administer an
estate.
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A. Mention the children. There is no requirement in Oklahoma that children
(natural and adopted) are entitled to a share of a parent’s estate. But, our
statutes and cases do recognize, and the law anticipates, children can
expect to share in their parents’ bounty. If a parent desires to leave a
child nothing under their estate, then the parent needs to affirmatively
indicate that intention. See Title 84 OS §132. And note that the statutory
language addresses the rights of children of a deceased child too! The
statute is specific: “When any testator omits to provide in his will for any of
his children, or for the issue of any deceased child unless it appears
that such omission was intentional...”(emphasis added). And case law
holds evidence to show disinheritance must be strong and convincing.
Estate of Hoobler, 1996 OK 56. But, the statute does not apply to
revocable trusts. Welch v. Crow, 2009 OK 20.
B. Children of the half-blood. Remember also that children of the half-
blood stand in the same category as children of the “full-blood”. This is
particularly true with regard to providing notice and with regard to taking a
share of the estate. Note the provision which may preclude a child of the
half-blood from inheriting property that did not come through the half-
blood’s lineage. Title 84 OS §222.
C. Any beneficiary of the Will should not be a witness to the Will. See
Title 84 OS §143. Depending on your fact pattern, by witnessing the
execution of the Will that individual may have forfeited their distributive
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share. The statute does provide for some relief to a witness who is a
devisee or legatee, but that relief is limited.
D. Preserving testimony. Sometimes a personal representative resides
some distance from the County where the probate estate has been filed.
The named personal representative might be in your office to sign
documents to start the probate, but may need to leave to get back to their
home and to return for the initial hearing on the appointment might be
difficult or inconvenient for the named personal representative. In order to
avoid a potentially unnecessary trip back for the initial hearing, the
personal representative’s testimony could be preserved. As a practical
matter, it is not unusual to file a probate, and, with prior arrangements with
the District Judge, have the individual testify at that time, preserve that
testimony, and have the Court adopt that testimony at the initial hearing
for appointment. Note that if you have an out of state personal
representative, Title 58 OS §162 requires that the out of state personal
representative appoint an agent residing in the county (emphasis
added) for service of process, before entering upon their duties.
E. Terminating Joint Tenancy and Life Estates. Property held in joint
tenancy or a life estate interest can be terminated by filing the appropriate
Affidavit under Title 58 OS §912, which constitutes conclusive evidence of
death of the joint tenant or life estate owner. If your estate involves both
joint tenancy property or a life estate interest, and property held by the
deceased in their name only, the filing of an Affidavit of Surviving Joint
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Tenancy may not be necessary. Certified letters testamentary or of
administration are prima facie evidence of the death of a joint tenant or a
life estate owner, Title 60 OS §74 and Title 60 OS §36.1
F. Publishing the Notice of Hearing Final Account. The Notice of Hearing
Final Account is required to be published two times prior to the Hearing of
the Final Account, Title 58 OS §553. However, if you are proceeding
under the provisions Title 58 OS §§1102-1106 notice needs to be
published just one time. Title 58 OS §§1102-1106 are the statutory
provisions that can be used in situations were the surviving spouse is the
named presonal representative and all of the estate property is left to the
spouse.
G. The personal representative in intestate estates. The order of priority
of appointments starts, under Title 58 OS §122, with the surviving spouse.
Note, however, that under Title 58 OS §122 the priority as to the surviving
spouse also has language indicating that the first right to appointment is
not only the surviving spouse but also “....some competent person whom
he or she may request to have appointed”! Depending on the facts of your
particular case, that competent person may not be a family member of the
deceased! Note too that in the event the spouse declines, and does not
request appointment of someone else, “the children” are second in priority.
This can present interesting challenges where there are children who do
not always agree, are scattered geographically, or there are trust issues
involved. Relations of the whole blood have preference over relatives of
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the half blood, 58 OS §122. Note that if the deceased was a member of a
partnership at the time of death, the surviving partner is not eligible to be
appointed administrator of the estate.
H. Appointment of personal representative without notice. In those
situations where the deceased had no Will, a Petition for the
Administration of an Estate can be prepared and filed, and the matter can
be heard forthwith (emphasis added) without notice, Title 58 OS §128.
The peititoner would need to be entitled to appointment, or waivers need
to be filed by those having a prior right of appointment. The advantage of
proceeding forthwith is that Letters of Administration can be issued without
the requirement of a hearing.
I. Preliminary heirship determination. Upon proper application and
notice, the Court can make a preliminary (emphasis added) determination
of those persons/entities having an interest in the estate. See Title 58 OS
§240. The Court can make this preliminary determination at the initial
hearing if notice of the request for a preliminary determination has been
given. In those situations where a forthwith appointment is being sought,
the statute does allow for the Court to make a subsequent preliminary
determination under Title 58 OS §240, but does require that notice be
given. Under the statute, the Court would be asked to make a
determination of the identity of the heirs, devisees and legatees. Note that
this is a preliminary (emphasis added) determination and is not a final
ruling on the proportional interest of any person entitled to receive any
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distribution of assets or property, nor does it preclude a person or entity
from coming forward to claim a right under the Will. What this provision
does allow is for the personal representative, under Title 58 OS §239, to
apply or petition (with consents of the heirs, devisees and legatees) the
Court for authority to sell, grant, lease, mortgage or encumber property
without further proceedings or confirmation by the Court. And it also allows
the presonal representative to execute deeds, leases, bills of sale, notes,
mortgages and other documents of conveyance. The advantage of this
procedure is to speed up the dispositioin of property, and save the estate
time and expense. And the statute also allows waivers of various
accountings. Some practitioners may be hesitant to use Title 58 OS §240
and Title 58 OS §239 because they feel there are too many heirs and the
likelihood of getting consents from all heirs is either going to be cost-
prohibitive, or not likely to occur. In those situations, Title 58 OS §239 (C)
could be helpful. In summary, where a Will has been admitted to probate
for at least three months, no appeal of the admission of the Will has been
filed, and if no contest with regard to the Will has been filed, and if the will
has a residuary disposition clause, then no consents of the heirs who are
neither devisees or legatees would be required.
J. Sale of property under contract when person dies. If a person dies
owning property and the property is going to be sold as part of the probate
process, statutory provisions are clear as to what is required. However, in
some situations, the deceased may have entered into a contract for the
6
sale of property prior to their death and the sale was pending at closing
when the decedent died. There is a statute that can help expedite the
closing of that property. See Title 58 OS §501. In those cases, the district
court can enter a decree authorizing and directing the personal
representative to convey the property.
K. Automobile. In the event there is a surviving spouse, in an intestate
estate, the surviving spouse shall (emphasis added) be entitled to an
automobile if an automobile is an asset of the estate. If there is more than
one automobile, then the surviving spouse can choose a vehicle as his or
her exclusive property. See Title 84 OS §232.
L. Notice to creditors/creditors’ claims. Procedures for handling creditors’
claims are at Title 58 OS §331 et seq. Sometimes the personal
representative, if there is cash available in the estate, wants to pay
creditors as soon as those creditors are identified. As a practical matter,
the personal representative needs to exercise caution. Under the
provisions of Title 58 OS §594, if there are funds available, the personal
representative is obligated to pay the funeral expenses, the expenses of
the last sickness, and any allowance made to the family of the decedent.
The personal representative also needs to retain necessary expenses of
administration. Generally, the order for payment of other debts, set out in
Title 58 OS §591 and is generally as follows, subject (emphasis added),
to the payment of costs of administration:
1. Funeral expenses;
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2. Expenses of last sickness;
3. Funds necessary for support of the family and allowed by
the Court;
4. Taxes to the United States or State, County or City;
5. Debts having preference under laws of the United States
and this State;
6. Judgements rendered against the decedent in his/her
lifetime which are liens upon the property, and mortgages
in the order of their date;
7. Demands or claims which are presented to the executor
or administrator for allowance and which are approved
within two months of the first publication of the Notice to
Creditors;
8. All other demands against the estate except those set
forth in Paragraph 9;
9. Interest resulting from the extension of time for payment
of Federal, State or Transfer Taxes.
So, as a practical matter, until the personal representative knows the
nature and extent of the claims, that personal representative is not in a
position to start writing checks. The creditors need to be identified, and
notice to the creditors to present their claims needs to be mailed.
Sometimes claims are submitted without documentation or other evidence
indicating they were incurred by the decedent. Lack of documentation can
8
be a basis for the rejection of a claim. If a claim is rejected, and the
creditor is advised of the rejection according to statute, the creditor has
the option to bring an action to establish their claim. If there are not
sufficient assets in the estate to pay all the approved creditors’ claims,
then the approved creditors may have to settle for a pro-rata share of their
claims. The practitioner needs to exercise caution to make sure the
personal representative understands the process and keeps you fully
informed as to the nature and status of claims.
M. Spousal allowance. The surviving spouse has the option to ask the
Court for an allowance during the course of the probate under Title 58 OS
§314. This allowance takes precedence over creditors’ claims. This
allowance can also be made retroactive to the time of death of the
deceased, under Title 58 OS §315. A practitioner is more likely to see the
application for a spousal allowance where there has been a second or
subsequent marriage. The right to a spousal allowance is sometimes
waived in prenuptial agreements. Usually where all the property subject to
a probate proceeding passes to a surviving spouse, the surviving spouse
would normally not apply for an allowance.
N. Homestead right. A surviving spouse, and minor children, also have a
“homestead right” in and to the home. In most cases, the home is usually
held in joint tenancy and the homestead right would pass outside of
probate. The issue of the homestead right is more likely to arise where an
individual owned a home in his or her name only, either before the
9
marriage, or acquired the home in their individual name only after
marriage. The homestead right may be waived in a prenuptial agreement.
Absent a valid waiver of a homestead right, the surviving spouse can
claim a homestead right. The homestead right is not subject to payment
of debt or liability, except for validly secured liens under Title 58 OS §313.
Title to the homestead may, in fact, pass pursuant to the terms of a Will or
by intestate succession, but the homestead right is a burden on the real
property. And Note: The homestead right, to include the remainder
interest, is not, under Hagar v. Johnson 1931 OK 438, subject to creditors’
claims, or a spousal allowance.
O. Rights to personal property. Under Title 58 OS §311 certain property
must (emphasis added) be delivered by the personal representative to the
surviving spouse and child or children and are not to be deemed an asset
to the estate. Nor shall the personal property be liable for prior claims.
The extent of the items of personal property is extensive and includes the
following:
1. All family pictures;
2. A pew or other seating in any house of worship;
3. A lot or lots in any burial ground;
4. The family Bible and all school books used by the family,
and all other books used as part of the family library, not
exceeding in value $100.00
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5. All wearing apparel and clothing of the decedent and his
family;
6. Provisions for the family necessary for one year’s supply,
either provided or growing or both, and fuel necessary for
one year;
7. All household and kitchen furniture, including stoves,
beds, bedsteads and bedding;
Also note that under Title 58 OS §312 there is to be allowed and set apart
to the surviving spouse and minor child or children all those items of
personal property or money “as is exempt by law from levy and sale on
execution or other final process from any Court, to be, with the
homestead, possessed and used by them.....” and that the personal
property will not be liable for prior debts or claims except under certain
circumstances. Various exemptions under Oklahoma statutes for
personal property are found in Title 31 OS §1 and are quite extensive.
P. Fast track probate. If it appears the ultimate distribution of the assets in
an estate are not in dispute, and if it appears there will be no issue with
regard to claims of creditors, and if the value of the assets subject to
probate are less than $200,000.00, then the practitioner may want to take
advantage of the Summary Administration procedures as found at Title 58
OS §245 et seq. Note that these statutory provisions have been modified
several times in recent years and are not quite as precise, or
understandable, as other statutory provisions regarding the administration
11
of an estate. Note also that this procedure can be used if the deceased
has been dead for more than five years or if the decedent resided in
another jurisdiction at the time of death. There appears no monetary cap
on those last two situations.
Q. Payment of bank accounts without probate. There is a provision in the
Oklahoma Banking Code, Title 6, §906, which states that a bank may
(emphasis added) transfer funds up to $20,000.00 to the known heirs of
the deceased upon receipt of an affidavit. This statutory provision seems
to limit the authority of a bank to release funds to intestate situations,
although a case could be made that if the deceased had a Will, and all
parties are in agreement to the distribution of the funds on deposit
pursuant to the Will, that a bank or other financial institution might be
agreeable to releasing those funds.
R. Payment from other entities without probate. Title 58 OS §393
addresses those situations where the decedent owned property located
within the state, and the property was valued at $20,000.00 or less. That
property may (emphasis added) be distributed, either pursuant to an
Heirship Affidavit, or pursuant to a Will. Again, the language is
discretionary, as to the person or entity holding the property.
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