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«ESTATE PLANNING A Simplified Guide for Oklahoma Farm and Ranch Families Circular E-726 Oklahoma Cooperative Extension Service Division of Agriculture ...»

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Executor or Administrator Fees The executor and administrator are referred to commonly as “personal representatives” of the decedent. The executor is one appointed in the will of the decedent. The administrator is appointed by the District Judge. The person named as executor, if otherwise eligible, must petition the court for letters testamentary. If a personal representative is not named in the will, the court issues letters of administration to persons eligible to serve as administrators.

The surviving husband or wife (or competent person whom such husband or wife may recommend for appointment) is first legally preferred to receive letters of administration. Then other classes follow in order: children; father or mother of decedent; brothers; sisters; and grandchildren; next of kin; creditors; and any other person legally competent.

A business partner of the decedent is not eligible to serve as administrator.

The fees allowed the personal representative are based on a percentage of the appraised value of the estate as shown upon the tax return (before exemptions and deductions reduce the estate to taxable value). The schedule as provided by Oklahoma Statutes14 for determining the fees for the personal representative is as follows: 5 percent of the first $1,000; 4 percent of the next $5,000; and 2 1/2 percent of excess.

In the event of complex and time consuming litigation requiring the personal representative to spend time for consultation and preparation for trial and for travel and unusual personal expenses, the court will be inclined to increase the fees to the personal representative.

Except in the case of paying for the cost of obtaining a bond to secure his faithful performance, the administrator’s fee will be no higher than that for an executor. Their duties generally are the same, and the time and expense in the performance of their duties usually will be similar. The only difference might be when the will of the decedent prescribes unusual duties or confers certain authorities on the executor that would differ from the duties and powers of an administrator.

Court and Other Costs Court and other costs will also vary, depending on length of time used in the proceedings, contests, and disputes;

the length of will; and size of estate. For each instrument in the court proceedings that is filed in the office of the court clerk, a fee governed by statute is charged against the total cost. For this reason the length of the instrument, as well as the nature of it, influences the court costs. If there are parcels of land involved in the decedent’s estate, they must be appraised separately; and if they are scattered through the country or over the state (and in other states), additional costs will accrue for the three appraisers’ travel and time.

The total of publication fees will vary with length of each notice. The cost of notices is affected by the length and number of times that hearings must be had on accounting and actions of the personal representative.

Funeral expenses and costs of last sickness must be paid from estate funds. These costs will, of course, vary considerably. Other costs that may be incurred are sale expenses,


fees, and internal revenue stamps. Income taxes and federal and state estate taxes will also vary from estate to estate.

Often liquid assets are held in joint tenancy and life insurance policies name specific beneficiaries. Under these conditions, no cash would be available to pay estate settlement costs and taxes. This is why some estate counselors recommend the estate be named as the beneficiary of some life insurance.

Business Information Left to Survivor Many couples allocate responsibility for management decisions or for record keeping and bill-payment to one spouse. This may pose problems if the responsible spouse dies without sharing important information with the surviving

spouse. Spouses should keep each other advised as to the following:

• The location of valuable papers such as deeds, wills, leases, insurance policies, military service records, marriage certificate, birth certificates, and social security records. Also, a record of each person’s contribution to the purchase of property may be important. This would include records of earnings and property inherited.

• Records and inventories of the business, including any outstanding debts, notes, and mortgages.

• Records of employment and investments.

• The names of the banks where checking and saving accounts are kept.

• The names of persons usually consulted on business, legal, and personal matters.

General Estate Planning Guides Consider alternatives – An analysis of several alternatives should be made. Very likely there will be one plan or a combination of plans for a particular family that is better than the others.

Discuss proposals with persons concerned – This is especially important if a child or children are taking over the farm.

Leaving the farm a productive unit and seeing that an unreasonable debt load is not assumed by a child while trying to buyout the other heirs may be very important. Most families, unfortunately, are hesitant to discuss property transfer arrangements. The responsibility for initiating this action should usually be taken by the parents. These discussions contribute to the interest and welfare of the entire family.

Protect parents – The financial security of the parents should have a high priority in every plan. A comfortable home for the parents with income sufficient to take care of emergencies should be insisted upon by the children.

Treat children equitably – It may not be equitable for all the children to receive equal shares. The size of share may justifiably be larger or smaller depending upon the contributions made to the parents or the farm, financial assistance received from the parents, health, or other reasons. These factors should be recognized by the parents and understood by the children.

Consider estate tax, gifts, marital deduction, and costs – These items can be of vital importance in large estates.

Have some liquid reserves – It requires money to settle estates and debts, and taxes must be paid first. Unless cash is available through insurance or other sources, some of the property may have to be sold, possibly at a loss.

Obtain competent business advice – Certain phases of the plan may require expert help to achieve the best plan. If indicated, perhaps the banker, an appraiser, a farm management specialist, an insurance counselor, or others should be consulted.

Consult a lawyer – After considering the alternatives and as part of your planning, a lawyer should be consulted. Working out the details, the applying the law, and creating legal documents is the practice of law.

Take action – Knowledge and a plan are important, but they must be activated to achieve the desired results.

Keep plans current: review and revise if necessary – Conditions will change over time. The transfer plans may have to be revised due to changed family composition, changes in laws, or a changing financial condition.

Glossary of Terms Administrator–A male person appointed by the probate court to administer the estate of a decedent who dies without naming an executor.

Administratrix–A female appointed to perform the duties of Administrator.

Administratrix (administrator) with the Will Annexed–A person appointed by the probate court who administers the estate of a decedent according to the will. Sometimes written administrator C.T.A. (cum testamente annexo).

Annuity–A yearly payment of a specified sum of money for life or a definite period of years.

Antenuptial–Determined or made before a marriage (prenuptial).

Bequeath–The giving of personal property by will.

Bequest–A gift of personal property by will. Bequest is either general (satisfied from the general assets of the estate) or specific (involving designated property). Such gifts may also be referred to as general or specific legacies.

Codicil–An addition or change of a will.

Conservator–A person who is appointed by a court to manage the estate of a protected person who, because of age, intellect, or health is incapable of managing his own affairs, similar to guardian.

Contemplation of Death–The expectation of death provides the primary motive to make a gift.

Corpus–Trust property, the principal sum as distinguished from interest or income.

Decedent–A deceased or dead person.

Deed–The legal instrument used to transfer title in real property from one person to another.

Descendant–One who has descended or is the offspring of another.

Devisee–One designated to receive real property by will.

Donee–The person to whom a gift is made, the recipient.

Donor–The person who makes a gift, the giver.

Estate–The total value of the interest a person has in all property, real and personal, the property itself.

Executor–A male person appointed by a will to carry out the directions and requests and disposition of the decedent’s property in accordance with the will.

Executrix–A female appointed by will to perform duties of Executor.

Fiduciary–Any person in a position of answering for actions arising from a relation of trust and confidence. Also used as an adjective denoting a character of trust and confidence. Includes personal representative, guardian, conservator, or trustee.

Fiduciary Obligation–A duty or obligation performed by one person in a relation of trust and confidence for the benefit of another party.

Gift–A voluntary, gratuitous transfer of property from one person to another.

Grantor–The person who makes a grant or transfer of real property to another.

Guardian–A person legally empowered and charged with the duty of taking care of another person and/or his property, appointed by a will or by the Court.

Heir–A person who inherits property upon the death of another as provided by statute of inheritance.

Income in Respect of Decedent–Income that is uncollected at death and is subjected to income taxation (when realized by the estate, heir, or beneficiary) in the same manner as would have been imposed upon the decedent if he or she had survived.

Intangible Property–Property that has no intrinsic value but is merely the evidence of value such as certificates of stock, bonds, promissory notes and franchises.

Intestate–A person who dies without making a valid will.

Inter Vivos–During the life-time, used in reference to transfers of and trusts from one living person to another living person.

Irrevocable Trust–A trust arrangement that generally cannot be cancelled, rescinded, or repealed by the maker (trustor or settlor).

Joint Tenancy–Co-ownership of property by two or more individuals, each with the right of survivorship.

Laws of Descent–The state statutes that specify how a deceased’s property is to be divided among his heirs if he does not have a valid will. (Also, Laws of Inheritance, Laws of Succession.) Legatee–The beneficiary to whom personal property is willed.

Life Estate–A property interest that is limited in duration to the life of the individual holding the interest; the holder of this type of interest is called a life tenant.

Lineal–Proceeding in a direct or unbroken line from a common source; hereditary as from father to child, includes ascending or descending heirs.

Litigation–A lawsuit; a judicial contest to enforce a law or right.

Marital Deduction–The deduction(s) that can be taken in the determination of gift and estate tax liabilities because of the existence of a marriage or marital relationship.

Mortgage–A lien or encumbrance on real property to secure the payment of a debt.

Personal Property–Property that is not permanently in place but is temporary or movable; in general, all property that is not real property.

Personal Representative–Executor or executrix, administrator, or administratrix.

Private Annuity–A means of transferring property from one owner to another by “selling” it for an unsecured promise to pay the original owner a periodic income for his lifetime. The sale price is based on fair market value at the time of sale. Each annuity payment is apportioned into return of capital, capital gain, and ordinary income and taxability is determined accordingly.

Probate–The judicial act or process of establishing the validity of a will and administering or settling an estate.

Real Property–Land and all immovable fixtures erected, growing, or affixed to land.

Remainder–An interest in property that takes effect in the future at a specified time or after the occurrence of some event such as death of a life tenant.

Remainderman–A person who inherits property when someone passes away that has executed a life estate.

Retained Life Estate–A property transfer whereby the transferor retains for life the right to the use of the property’s income for the enjoyment of himself or anyone he designates.

Revocable Trust–A trust agreement that can be cancelled, rescinded, or repealed by the maker (grantor).

Right of Survivorship–The ownership rights that result in the acquisition of title to property by reason of having survived other co-owners; usually refers to the rights that exist in property held as joint tenants or tenants by the entirety.

Tangible Property–Property (real or personal) that can be felt or touched and having a material existence.

Tenancy by the Entirety–Co-ownership of property between husband and wife with the right of survivorship.

Tenancy in Common–Co-ownership of property by two or more individuals where at death the interest owned by each co-owner passes to heirs under a will or by inheritance.

Testate–An adverb describing the act of leaving a will at death. A person who has made a will.

Testator–A male person who leaves a last will and testament.

Testatrix–A female person who leaves a last will and testament.

Trust–The legal relationship created by virtue of one party holding legal title to property, whether real or personal, for the benefit of another or others who would enjoy the equitable title.

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