3 Non-Tax Reasons for Estate Planning

Introduction – Non-Tax Reasons for Estate Planning

The Tax Cuts and Jobs Act doubled the federal estate tax exemption to over $22 million for married couples. Some are now asking: “What’s the point of estate planning?” Minimizing estate taxes should be a goal for high net worth clients. Yet, it’s not the only reason to plan. In fact, estate planning is more important now than ever. Here are three reasons why:

Taking Advantage of New Business Provisions

The Tax Cuts and Jobs Act significantly altered business taxation. First, the legislation lowered the corporate tax rate to 21%. Second, it created new, favorable treatment for pass-through entities. This includes partnerships and S corporations. Given these provisions, business owners should reevaluate how their companies are structured. Changes could result in a lower tax bill.

Preparing for the Possibility of Incapacity

Medical experts predict that the incidence of Alzheimer’s and dementia will triple by 2050. Thus, it makes sense to prepare. Durable powers of attorney, Advance Directives for Health Care (also known as a living will) and trusts allow loved ones to make decisions for you in the event of incapacity.

Protecting Beneficiaries

Estate planning is about your legacy. You have worked hard for your money. Nevertheless, in the absence of proper planning, your beneficiaries’ inheritances can be lost to creditors, divorcing spouses or even the government. Fortunately, trusts can protect that money by controlling the timing and manner of distributions.


Don’t let the increased federal estate tax exemption give you a false sense of security. Estate is still something everybody should do. By planning properly, you can minimize income taxes, plan for incapacity and preserve your legacy for generations to come.

Two Indicators Your Estate Plan Needs Updated

Introduction – I Already Have an Estate Plan…Now What?

Estate planning is something many people put off for years or even decades. After all, nobody wants to think about death. Once you have an estate plan in place, then, it would be understandable to set it aside and focus on more pleasant things. Unfortunately, however, estate planning is not a one-time event. In order to ensure that your wishes are fulfilled, you should update your estate plan over time. How often? Here are two key indicators:

 Change in Personal/Financial Circumstances

A change in your circumstances calls for a review and update of your estate plan. If you have additional children, for instance, you’ll want to make sure that your will or living trust provides for them. On the financial side, an increase in your net worth due to investments, saving or inheritance may require amending your estate plan to minimize estate taxes.

New Laws

Recently, Congress passed and President Trump signed the Tax Cuts and Jobs Act. Among other things, the Tax Cuts and Jobs Act modified the business tax structure as well as doubled the federal estate tax exemption. With regard to the former, if you own a business, you may consider reorganizing the business as a different type of entity (e.g. converting from a C corporation to an S corporation or LLC). Concerning the latter, in the event your estate is valued at less than the new exemption amount ($10 million, indexed to inflation), an existing living trust could be simplified to remove some of the more restrictive provisions.

Conclusion – Good Estate Plans Must Be Fluid

This post has summarized a couple reasons for updating an estate plan. There are no doubt many other factors at play. The bottom line is that estate planning is fluid. As you formulate your goals for 2018, updating your estate plan should be on the list. Happy New Year!

Estate Planning and Tax Reform


Recently, President Trump signed the most significant tax reform in generations. The legislation will have considerable impacts not only on the nation’s economy but also on estate and business planning. Beginning next year, many changes are afoot. Two such changes relate to taxation of estates and certain business entities.

Doubling of the Estate Tax Exemption

The current estate tax exemption is $5 million, indexed to inflation. Tax reform doubles the estate tax exemption for deaths after December 31, 2017. As a result, individuals can now pass up to $11 million (or $22 million for married couples) to their heirs tax-free. Given the increased estate tax exemption, clients should revisit existing estate plans. In particular, there exists an opportunity to simplify complex trusts.

Deduction for Pass-Through Businesses

The term “pass-through business” refers to one in which the owner reports business income on their personal tax return. Examples of pass-through businesses include partnerships and LLCs taxed as S corporations. Tax reform created a new 20% deduction for owners of pass-through businesses. While there are limitations for certain service-oriented businesses such as doctor’s offices and law firms, the new deduction is a potentially major tax break for small businesses. Consequently, small businesses presently structured as a C corporation should consider reorganizing as a pass-through entity.


It remains to be seen how tax reform will operate in practice, and estate and business planning strategies will be refined as the IRS fills in the details over the coming months. Nevertheless, now is the time to take advantage of tax reform’s benefits, especially the increased estate tax exemption and the preferential treatment of pass-through businesses.

Estate Planning 101 – Incapacity

Estate Planning 101 – Incapacity

When most people hear “estate planning”, they think about post-death. Yet, a sound estate plan also deals with incapacity. None of us can predict Alzheimer’s or stroke. Therefore, it’s best to be prepared. What follows is a summary of the key estate planning documents for addressing incapacity.

Durable Power of Attorney

In a durable power of attorney, you appoint an agent to make decisions regarding your finances and health care. A durable power of attorney can be either immediate or springing. An immediate durable power of attorney is effective as soon as you sign it. By contrast, a springing durable power of attorney takes effect only in the event you are determined to be incompetent. Most springing durable powers of attorney require two doctors to make this decision.

Living Trust

The living trust is an excellent tool for managing incapacity. Banks and financial institutions sometimes refuse to work with an agent under a durable power of attorney. In other cases, they could mandate the execution of additional forms. Successors trustees almost never face such difficulties. Moreover, with a living trust, you have the freedom to define incapacity however you like. For example, you can designate a special panel of people – comprised of doctors, family members and even your pastor – to make the decision concerning your incapacity.

Advance Directive for Health Care

An Advance Directive for Health Care sets forth your wishes on end-of-life treatment. This is important since opinions pertaining to life support vary widely. By making your wishes known ahead of time, you can remove the burden on your loved ones and lessen the likelihood of emotional disputes. An Advance Directive does one more thing: it gives you a chance to donate your organs and other body parts to transplantation and research.


While incapacity is unsettling, it’s a possibility everyone must confront. A durable power of attorney, living trust and Advance Directive for Health Care help ensure that you will be treated with dignity both during your life and after death.

Living Trusts – The Gift That Keeps Giving

Can you believe it? 2017 is already almost in the books. In the midst of holiday shopping, you may want to consider adding a living trust to your list. Here are three reasons why living trusts are the gift that keeps giving for generations to come:

Privacy and Ease of Administration

Let’s face it: probate is the last thing you want to deal with when grieving the loss of a loved one. By contrast, living trusts maintain privacy and provide ease of administration. That’s because trust administration is handled in-house, i.e. outside the court system. What’s more, the trustee – unlike the personal representative in a probate case – does not have to comply with burdensome notice requirements and strict deadlines for completing key tasks.

Living Trusts Protect Beneficiaries

Sadly, no one has a perfect life. Whether it be from debt and creditor issues, tax problems or a shaky marriage, we want to protect our families. Structured properly, living trusts give you the opportunity to do so. This ensures that your hard-earned money goes only to the people you want.


As medical advances allow us to live longer, the risk of incapacity increases. Unpleasant as the thought may be, at some point you may become unable to manage your financial affairs. Durable powers of attorney are a good start. However, successor trustees usually have an easier time dealing with banks and financial institutions than an agent acting under a durable power of attorney. Living trusts also enable you to specifically define what constitutes incapacity depending on your individual circumstances.


December is a time when we reflect on the year that was. In addition, many of us enjoy time away from work. When making your list and checking it twice, think about estate planning and living trusts.

Estate Planning Update: Federal Estate Tax No More?

Introduction – Estate Planning Today

For years, the primary goal of estate planning attorneys was minimizing or eliminating estate taxes at both the federal and state level. In 2010, the state of Oklahoma abolished its estate tax. Now, the federal government may do the same. That’s according to a blueprint that the Trump Administration and key Congressional committees released today. It’s called the Unified Framework for Fixing Our Broken Tax Code.

How Would the Unified Framework Impact Estate Planning?

The proposal would eliminate the federal estate and generation-skipping transfer taxes, which in 2017 apply to estates valued at greater than $5.49 million. What does that mean for you? If enacted into law, individuals would be able to pass unlimited sums of money to their heirs tax-free. Although relatively few Americans pay federal estate taxes, this would nevertheless represent a significant shift in the focus of estate planning. Rather than worrying about taxes, estate planning attorneys and their clients could concentrate on avoiding probate and protecting heirs from creditors and lawsuits. What’s more, clients with complex estate plans might have an opportunity to simplify their documents.

Conclusion – Estate Planning Attorneys and Clients Stay Tuned

It remains to be seen whether there’s enough support in Congress for this plan. However, given the ramifications of such a major change to our tax laws, estate planning attorneys and their clients should closely monitor the proposal’s progress.

Making Oklahoma Probate Easier

Probate is the court-supervised process of a distributing a deceased person’s property and money. Due to the time and costs involved, one should strive avoid it. However, for a variety of reasons, that is not always possible. What, then, can the Personal Representative do to make it easier? Here are three tips:

Follow Orders of the Probate Court

Personal Representatives have a fiduciary duty. This means the law requires them to act in the best interests of the estate. During a typical probate case, the court will enter a variety of orders – from authorizing the sale of property to decreeing distribution. The Personal Representative should strictly comply with all court orders.

Communicate with Family During Probate

Often, lack of communication is the biggest source of friction between the Personal Representative and other family members. Throughout a probate case, the law mandates notices to heirs and beneficiaries under the Last Will and Testament. Yet, the Personal Representative should go a step further and inform the parties even when formal notice is unnecessary. I advocate a family meeting at outset to help everyone get on the same page.

Keep Track of Probate Expenses

The Personal Representative usually incurs expenses and receives income. It is important that he or she keep track of receipts and disbursements as they occur. Before being discharged, the Personal Representative must file an accounting. If the Personal Representative does not keep accurate and timely records, there could be a delay in closing the estate.


In a time of grief, probate is the last thing anybody wants to endure. But the Personal Representative can facilitate a less burdensome experience by following court orders, communicating with family and keeping track of expenses. One more thing: Oklahoma probate laws are complex and highly technical. While some are inclined to represent themselves, I highly recommend employing competent counsel. For more on the duties of a Personal Representative, click here.

Estate Planning 101: Revocable Living Trusts

Estate planning and revocable living trusts. Between summer vacations, outdoor activities and backyard barbeques, it may not be top of mind. However, with the Fourth of July behind us, now is a good time to address this issue before the back-t0-school rush. Today I am beginning a series of posts entitled Estate Planning 101. The first topic is revocable living trusts.

Revocable Living Trust Defined

A revocable living trust is a legal arrangement whereby a person (the trustor) transfers property to another (the trustee) who manages it for beneficiaries. Because the trustor can amend or terminate the arrangement, it is called revocable.

How Do You Create It?

The trustor creates a revocable living trust by signing a legal document and transferring their property to the trustee. The process of transferring one’s assets to the revocable living trust, which estate planning attorneys call “trust funding”, is a vital step. Absent funding, the estate plan will be ineffective. For most people, funding entails signing new signature cards for bank accounts, completing beneficiary designation forms for IRAs, 401(k)s and life insurance policies and recording deeds for real property including the primary residence.

The Advantages of Revocable Living Trusts in Estate Planning

First and foremost, revocable living trusts avoid probate – a huge benefit. Probate is expensive and time-consuming. Probate also results in the loss of privacy and makes legal challenges to your estate more likely.

In addition to probate avoidance, revocable living trusts are advantageous for asset protection. What is asset protection? This means ensuring that your beneficiaries’ inheritances do not inadvertently end up in the hands of other parties such as creditors, ex-spouses or the government. Click here for more on asset protection in revocable living trusts.

Lastly, revocable living trusts can minimize or eliminate estate taxes.


Revocable living trusts are an excellent estate planning tool. Some balk at the cost. While more expensive than a basic will, they offer several advantages. A knowledgeable Norman, Oklahoma estate planning attorney can assess your circumstances and help determine if a revocable living trust is right for you.

Oil and Gas Probate

Many Oklahoma families own oil and gas rights, which can be a significant source of income. Unfortunately, mineral owners frequently misplace records detailing their oil and gas rights. Further, title problems arise. As a result, the oil and gas companies delay royalty payments. Among the biggest reasons for this delay is probate.

What is Probate?

Probate is the court-supervised distribution of a deceased person’s property. It involves the filing of a petition with the district court. What’s more, the personal representative or executor must publish notices and attend hearings. Oklahoma law requires probate for all property owned by the deceased individually, even if there is a last will and testament. The process usually takes anywhere from 6 months to 1 year to complete.

Why is it Important for Oil and Gas Rights?

Oil and gas companies typically allow heirs to sign leases based on an affidavit. However, unless the mineral interest is very small, they withhold royalties until probate is finished. That said, one can easily avoid it. First, the mineral owner can transfer the oil and gas rights to a revocable living trust. Second, the mineral owner can execute a Transfer-on-Death Deed. Lastly, the mineral may consider a lifetime transfer of the oil and gas rights to reduce or eliminate estate taxes.  The author recommends these techniques only with the guidance of a knowledgeable estate planning attorney.


Oil and gas affects all Oklahomans. If you own oil and gas rights, probate should be top of mind. Although one is best to avoid it. To learn more about revocable living trusts and probate avoidance, click here.

Last Will and Testament vs. Revocable Living Trust

For estate planning, one must choose either a last will and testament or revocable living trust. These documents differ in important ways. But for several reasons, a revocable living trust is probably the better estate planning tool.

A last will and testament requires probate. This is expensive and time-consuming. Probate also reduces privacy. Everything is filed in court. Thus, it’s public knowledge. By contrast, the court system has no involvement in administering a revocable living trust. Consequently, just the trustee, attorney and family members learn the details of your estate.

The second key distinction between a last will and testament and revocable living trust is incapacity. Whether due to a stroke, accident or Alzheimer’s disease, you may someday be unable to manage your financial affairs. A will only governs the distribution of estates after death, meaning it cannot deal with incapacity during lifetime. However, a revocable living trust takes effect immediately. If a trust’s creator later becomes incompetent, the successor trustee named in the document assumes legal responsibility for dealing with the trust property. This ensures payment of taxes, expenses and providing for your care.

Lastly, a revocable living trust offers more flexibility in estate planning than does a basic will. One can use a trust to protect assets from the creditors and divorcing spouses of beneficiaries. Furthermore, a knowledgeable estate planning attorney can structure a revocable living trust to reduce or eliminate estate taxes.

Estate planning is not something to be taken lightly. It requires careful consideration of one’s goals as well as personal and financial circumstances. Contact a Norman, Oklahoma estate planning attorney today to get started.

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