Many have heard that it’s wise to avoid a probate case in Oklahoma, but few know the reasons why they should do what they can to avoid it. Probate is the legal process of proving a will, determining heirs, and distributing the property of a decedent.
In order to distribute the assets, the will must go through the probate court, but the specific process varies by jurisdiction. The two major reasons people try to avoid probate comes down to the time and privacy Oklahoma probate takes. The process can tie up distributing the property for months, or even longer if the will or any provisions are contested.
The second reason pertains to privacy. Oklahoma 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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How to Avoid Probate in Oklahoma
This is why learning how to avoid probate in Oklahoma is so important. The only way to avoid probate is having the estate assets pass directly to heirs - otherwise, probate will be required. Unless your estate qualifies by state law as a small estate, 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.
Payable on Death Accounts
One of the easiest estate planning methods that can help you avoid probate is 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 your named beneficiary without going through the probate court. 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 real estate using a deed. As of November 1, 2008, Oklahoma began to allow transfer on death deeds to avoid probate.
It’s important to make sure all your payable 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. Additionally, “transfer on death” real estate can be very beneficial to avoid probate, but Oklahoma probate laws can be very complex. To ensure that the deed is properly transferred, seek legal advice from an experienced estate planning law firm.
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.
Joint Ownership of Real Estate or Real Property
Another strategy to consider is through various forms of joint ownership or joint tenancy. To obtain a title with someone else in a way that avoids Oklahoma 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 the right of survivorship, thus keeping the property out of probate court.
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 or law firm before pursuing this option.
Gifting Estate Assets
Gifting estate assets while you’re alive is another way to avoid probate. Most gifts aren’t subject to the 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 recommend creating a living trust.
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 a small estate 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 of 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.
Revocable Living Trust
Creating a revocable living trust is one of the best ways to avoid probate in Oklahoma. The benefit of holding property in a revocable living 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.
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 877-508-4265 or schedule your free consultation.