Probate is the court supervised procedure for winding down a person's affairs after death. It includes discovering and gathering of assets, and paying bills, of the decedent. However, it is only necessary if assets are owned in an individual's name; otherwise assets pass to another person by operation of law after death (for example, due to a beneficiary designation, payable on death clause, or joint tenancy with right of survivorship). Assets in probate are either distributed according to the terms of a Last Will and Testament or by state law through Intestate Succession if there is no Will. A personal representative (otherwise known as "executor") is appointed by the Court to act on behalf of the estate. This process generally takes from about 6 months to over a year, depending on the complexity of the estate and whether a Federal Estate Tax Return is required.
Durable Power of Attorney
A durable power of attorney is a revocable document that authorizes another individual the power to act on behalf of another. It is "durable" because it endures beyond disability or incapacity. It can be restricted to only certain functions or broad in the sense that the attorney-in-fact (the person given the authority) is able to perform any action or make any decision a person can. A power of attorney is only revocable while a person has capacity. It becomes void upon a person's death. It is often useful to avoid the instigation of Guardianship proceedings.
Health Care Power of Attorney
A Health Care Power of Attorney limits the authority of an attorney-in-fact to health care decisions (which cannot under Oklahoma law include removal of life sustaining treatment and food and water in the event of terminal illness or coma, which is covered by the statutory form of an Advanced Health Care Directive or Living Will). It is detailed concerning the types of health care decisions that can be made, and also what information can be shared with and by health care administrators. Because of the health care community's interpretation of HIPPAA regulations, this authority must be specific.
While a purpose of creating a trust document is to avoid court supervision of the administration of estate assets, a lawsuit may sometimes be necessary to enforce trust administration, remove trustees, force trustee accountability, interpret trust terms, or amend or terminate an irrevocable trust.
A revocable trust is one that can be revoked, modified or amended at any time by the person who created the trust, known as the "grantor" or "settlor". Assets are handled in much the same manner as when owned in an individual's name. One important benefit of a revocable trust is that if all of a person's assets are conveyed to the trust, probate is avoided by the beneficiaries. A trust can also allow administration of assets for beneficiaries for a term of years, and under desired conditions, beyond the grantor's death. A revocable trust becomes irrevocable upon a sole grantor's death. A trust, whether revocable or irrevocable, may be useful for incapacity planning as assets can be consolidated and management provisions can provide for successor trustees.
Irrevocable trusts cannot generally be amended, terminated or cancelled (except in certain limited circumstances). Because of their irrevocability, they have the advantage of shielding assets from creditors of the beneficiaries who are persons other than the grantor (Oklahoma law does not allow an individual to create a trust for him/herself that shields assets from creditors). Irrevocable trusts can be very useful for estate tax planning purposes. They may hold assets for the benefit of a surviving spouse without those assets being included in the spouse's estate. In order for this to be effective, distributions of principal are limited to certain purposes and the spouse can't control or demand use of the assets beyond the limited purposes (which are actually fairly broad). Irrevocable trusts are also useful when a beneficiary should not receive assets outright, as when the beneficiary is vulnerable to creditors, divorce or mismanagement problems.