The Oklahoma Bar Journal February 2024

instant topic is the use of promis sory notes. In Lemmons v. Lake, the plaintiff sold her farm (as well as an Edward Jones account) to her son in exchange for a promissory note. 16 Twelve days later, the plain tiff applied for Medicaid benefits – which OKDHS denied. Finding for the plaintiff, the United States District Court held that a promis sory note was neither a countable resource for Medicaid eligibility nor a violation of the rules pertain ing to uncompensated transfers so long as the note: 1) has an actu arially sound repayment term, 2) provides for equal payments with no balloon or deferral payments and 3) prohibits cancellation of the note upon the death of the lender. While Oklahoma case law supports certain crisis planning tools, such as promissory notes, the limitation of this strategy is significant. For one thing, the client’s children often lack the financial means to make continu ing payments on the note. Worse yet, the client loses control of the assets transferred pursuant to the note. If established in advance of incapacity, an irrevocable trust and family limited liability avoid these outcomes. Among the hardest conver sations are those in which we confront our own mortality. By shifting the discussion to legacy, we illustrate to our clients how planning can be an opportunity and not a burden. And using the right tools, we can help our clients honor their values, their life’s work and the land that we all love. PLANNING AHEAD TO PRESERVE A LEGACY

ABOUT THE AUTHOR

Tyler R. Barrett is the founder and attorney at The Law Office of Tyler R. Barrett PLLC in Norman. Mr. Barrett’s

practice focuses on estate planning and asset protection, elder law and probate and trust administration. He is a 2011 graduate of the OU College of Law, where he served as an articles editor for the Oklahoma Law Review . 1. U.S. Department of Health and Human Services, “What is the Lifetime Risk of Needing and Receiving Long-Term Services and Support,” available at https://bit.ly/3TH3JoK. 2. Genworth 2021 Cost of Care Survey, available at https://bit.ly/3tFBewX. 3. Oklahoma Department of Agriculture, “Agribusiness Quick Facts,” https://bit.ly/48CR9Lp. 4. Oklahoma Farm Bureau, “Family Farms,” available at https://bit.ly/3U6ULBg. 5. United States Department of Agriculture, U.S. Farm Production Expenditures 2022, available at https://bit.ly/47lSoxC. 6. OAC 317:35-5-41.6(5)(c)(ii). 7. OAC 317:35-5-41.6(5)(c)(ii) (emphasis added). 8. 2009 OK CIV APP 107, 228 P.3d 1199. 9. Id. 10. 18 O.S. §2034. 11. Id. Some commentators have suggested that charging order protection is illusory as to single-member LLCs. See Steven P. Cole, “ Charging Order Protection for a Single Member LLC May Still be Illusory ,” OBJ Vol. 81, No. 7 (2010). However, if that sole member is an irrevocable trust – itself also protected from creditors – the author believes these concerns are mitigated. 12. The irrevocable trust should contain provisions permitting it to own closely held business interests. 13. When drafting the right of occupancy, the attorney must exercise great care so that it is not deemed to be a life estate, which are a countable resource under Oklahoma’s Medicaid rules. See OKDHS 10-1-5(d)(1), available at https://bit.ly/41Q60jl. 14. As of the date of this article, a single applicant must have less $2,000 in countable assets and $6,833 in monthly income. See OKDHS Appendix C-1, available at https://bit.ly/48KkwLX. 15. See OAC 317:35-19-20(5). 16. Case No. CIV-12-1075-C (W.D. Okla. March 21, 2013). ENDNOTES

Statements or opinions expressed in the Oklahoma Bar Journal are those of the authors and do not necessarily reflect those of the Oklahoma Bar Association, its officers, Board of Governors, Board of Editors or staff.

26 | FEBRUARY 2024

THE OKLAHOMA BAR JOURNAL