Most of our clients in Oklahoma for estate planning are looking at three basic types of estate plans:
- Plans revolving around powers of attorney.
- Plans revolving around wills.
- Plans revolving around trusts.
We can help with all of these estate plans, and each will make more sense depending on the clients’ situation.
Powers of Attorney
These are vital for anyone over the age of 18.
These plans work by authorization. You are allowing someone to make decisions as if they were you.
POAs can be refused
However, they do leave some potential issues. Banks and other institutions sometimes refuse to accept these documents. With the right legal pressure, you can usually get them to comply, but the reason to do this planning in the first place is to stay out of court!
When you’re alive, you have the capability of revoking a power of attorney you made, at any time. If you’ve died, you obviously can’t do that anymore, so the state of Oklahoma does it for you.
Your POA won’t do your family any good once you’ve passed away.
What else is in a POA plan?
Power of Attorney plans should be paired with a HIPAA Authorization and Advance Directive. This gives some basic coverage to a healthcare crisis both on the financial and medical side.
If you’re a parent with young children, you should also nominate guardians for your kids if something happens to you.
If you’re a parent and have a child over 18, if they end up in the hospital, there’s a strong likelihood that their doctors simply won’t talk to you. It’s against the law!
An easy way around that problem is to ensure your children have these same documents, especially a HIPAA authorization and Healthcare Power of Attorney.
What’s the Takeaway?
Powers of Attorney are an essential piece of a plan, but they are an incomplete solution. They can be refused and will expire.
Will-based plans add a will on top of the Power of Attorney plan. This can help in a few situations, especially as a way to name guardians for kids if you pass away.
They can also make sure that your property gets divided the way you want it and override the default Oklahoma laws about who gets what.
But that is mostly where their usefulness ends. Like we’ve already discussed, they don’t take effect until you die, and they only have limited control over your assets.
This may be a fit for a couple who don’t have children, and they just want to make sure their partner gets everything when they die. It will still necessitate probate, but it’s a simple plan. Better solutions here are things like joint ownership and beneficiary designations, but these won’t work in every situation.
The best way to think about a will is “we didn’t plan best for all our assets during life, and this will is a safety net to catch them after I’m gone”
What’s the Takeaway?
Wills are reactive and limited.
Trust-based plans will include everything we’ve mentioned so far (and yes, even a will!).
The beauty of trust planning is that we make all these decisions now. Who takes care of you, who takes care of your kids, where your stuff goes. These things get decided now. Ownership of assets changes now.
This means we don’t need a judge in guardianship or probate to give us the answers. We already know!
If you’ve named all your healthcare decision-makers, then when you have a health crisis, we don’t need a guardianship.
If your trust owns (or is the beneficiary of) your assets, then we don’t need probate.
This image shows how a trust plan can protect and provide for you and your family for decades to come. One estate plan can really make that much difference.
First, you are in control and all the property benefits you.
Then if you become incapacitated, your trustees take over, but the property still benefits you. So, for example, if you’re in a nursing home, your trustees are paying your bills if you’re no longer capable of being a trustee.
Then if you pass away, those same trustees can still be in charge, but now make sure your kids are protected and have structure while benefiting from your property.
Then, once your kids are old enough, they can take over for themselves, and still benefit.
What’s the takeaway?
One plan. Decades of protection and provision.
(To learn about some of the other most common misunderstandings in estate planning, and how you can avoid them, click here to download our short guide, The Four Biggest Estate Planning Myths).