5 Strategic Ways to Avoid a Probate Case

by Ball Morse Lowe on February 26, 2019

5 Strategic Ways to Avoid a Probate Case

Many have heard that it’s wise to avoid probate, but few know the reasons why. Probate is the legal process of proving a will, determining heirs and distributing the property of a decedent.

In order for property to be distributed according to a will, the will must go through probate, but the specific process varies by jurisdiction. The two major reasons people try to avoid it comes down to the time and privacy. The process can tie up property for months, or even longer if the will or any provisions are contested.

The second reason pertains to privacy. Probate is a public process, meaning all proceedings become a part of public record. Anyone can go, search and uncover information on the distribution of the estate’s assets (including its value and beneficiaries).

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While avoiding probate is preferable, the only way to do so is having assets pass directly to heirs. The easiest way to accomplish this is by creating a living trust, but you have some other options as well. In today’s blog, we’ll be sharing five strategic ways you can avoid a probate case.

 

An Overview of Probate

In Oklahoma, the process of probate is highly complex and court appearances are required. And because probate varies by location, it’s always wise to enlist the help of an attorney. In most cases, there aren’t conflicts or reasons for further court proceedings. However, even uncontested probate can be expensive due to procedural steps set forth in the state’s statute that must be followed.

A probate attorney can forecast potential issues before they arise, preparing all the forms, keeping track of critical deadlines and ensuring procedural technicalities are being followed to a tee. If assets are owned across multiple states, multiple probates will be required.

For their services, both executor and lawyer will be entitled to fees from the estates. It’s common for the executor to waive the fee (typically if they inherit a substantial amount of the property). The court must approve attorney fees if they’re paid using estate assets, and determine that they’re reasonable. Other costs associated with probate include court fees and appraisals.

 

How to Avoid a Probate Case

As mentioned, the only way to avoid probate is having assets pass directly to heirs. The best strategy to accomplish this is through a living trust. However, there are other effective ways to ensure all (or some) of your property passes without going through probate. Here are some strategies to consider.

 

  1. Pay-on-Death Accounts

You can avoid probate by converting existing bank and retirement accounts to payable-on-death accounts. This is done by filling out a form and naming a beneficiary. With this option, when you die, the money will go directly to them without going through probate. In certain states, the same can be done for security and vehicle registrations. Some even allow transfer-on-death real estate deeds, allowing you to transfer property using a deed.

It’s important to make sure all your pay-on-death accounts and beneficiaries are current and up-to-date. If a beneficiary dies before you do and you haven’t updated your designation, probate will still be required.

Keep in mind, every case differs and it’s important to enlist the help of an attorney. For instance, if you have minor children or beneficiaries with special needs, a pay-on-death designation may not be the best plan because the court would still be involved.

 

  1. Joint Ownership of Property

Another strategy to consider is through various forms of joint ownership. To obtain title with someone else in a way that avoids probate, you’ll need to state on the paper showing your ownership (like a real estate deed) how you desire to hold the title. When one of the owners dies, the property will pass to the joint-owner via right of survivorship.

If you want to provide for minor children or beneficiaries with special needs, joint ownership wouldn’t be ideal. There are various consequences that could arise so it’s best to consult with an attorney before pursuing this option.

 

  1. Gifting

Gifting property while you’re alive is another way to avoid probate. Most gifts aren’t subject to federal gift tax, but the filing of a gift tax return may still be required so it’s best to consult with your attorney or accountant. Keep in mind that with larger assets like real estate, you lose control of the property once you give it away. If you want to retain its ownership, we’d recommend using a living trust.

 

  1. Small Estate Shortcuts

Almost every state offers some form of a shortcut through probate for smaller estates. In Oklahoma, there are two ways to speed up the process.

 

Claiming property with a small estate affidavit.

This is where an inheritor prepares a document stating they’re entitled to a certain asset. From there the document is signed under oath as an affidavit. When a person or institution holding the property receives the affidavit and copy of the death certificate, it releases the assets. This process can also be used to transfer assets to heirs if the total estate is under $50,000. The small estate affidavit cannot transfer title to real property or mineral interests. If the decedent owed debts or taxes, the affidavit cannot be used unless those have been paid.

 

Simplified probate procedures

Oklahoma uses a simplified probate procedure called Summary Administration. If appropriate, the court can authorize the executor to distribute the assets without having to go through the traditional process. This is used if an estate’s value is less than $200,000, if the decedent resided in another state at the time or death or if the decedent had been deceased for more than five years. However, this procedure doesn’t work well when real property is involved, if there are creditors of the estate or if there’s a potential dispute.

 

  1. Revocable Living Trust

A living trust is one of the best ways to avoid probate. The benefit of holding property in a trust is that the property is not part of your probate estate after your death. (However, it is counted as a part of your estate for federal estate tax purposes.)

An individual, known as the trustee, is designated the owner of the trust property. Upon death, the trustee can easily and quickly transfer the trust property without probate. A trust works well for both small and large estates, and similar to a will – outlines family, friends and other beneficiaries.

 

In Summary

The most straightforward and effective way of avoiding probate is creating a living trust. It ensures your assets are passed to heirs promptly and privately. To learn more about probate and living trusts, we invite you to reach out to us today at (405) 701-6376.

 

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Topics: Probate