Oklahoma Probate

What happens after someone passes away and they leave real property that doesn’t transfer automatically? That is where Oklahoma probate comes in to provide a way to transfer the title to person’s heirs. Oklahoma probate is about getting property into the hands of the people who are supposed to have it, as efficiently as possible.

Do you know what an Oklahoma estate is?

You would be correct if you pointed to Investopedia’s definition of an estate:

An estate is everything comprising the net worth of an individual, including all land and real estate, possessions, financial securities, cash, and other assets that the individual owns or has a controlling interest in.

Each person has an estate during their life and following their death.  The difference between a person’s estate during life and death is that after death the estate technically becomes a separate legal entity.  Consider the Internal Revenue Service’s definition of an estate:

  • An estate (or decedent estate) is a legal entity created as a result of
    a person’s death.
  • The estate consists of the real and/or personal property of the deceased person.
  • The estate pays any debts owed by the decedent and distributes the
    balance of the estate’s assets to the beneficiaries of the estate.
  • An estate arises on a person’s death whether the person died with or without a will.

It is also worth pointing out that since you have an “estate” you need to make an “estate plan”, a topic that is discussed several places on this Blog: Here, Here and Here to mention a few.

 

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate

What types of property require an Oklahoma probate?

In this blog post, I talked about what types of property are Oklahoma probate property.  Below are some scenarios in which you might need to do Oklahoma probate:
 

->Mineral Interests.
A person dies owning an Oklahoma mineral interest, but the interest is not held in a trust, and the title is solely in the name of the person who dies.  Many times, the operator of the oil and gas well will not continue to pay royalties without an order from the Oklahoma probate court specifying who the heirs are.  For example, a person lives in Texas but inherited a mineral interest from a parent in Garvin County, Oklahoma.  The title to that mineral interest will need to be changed from the person’s parent to the person.

–>Life insurance
A person dies leaving a life insurance policy with beneficiaries who are no longer living;

—>Not transferred to Trust.
Consider, a person who *has* a living trust dies, but that person never transferred their property to the trust.  For example, the person owned their home but did not change the title to the home to make the trust the owner of the home.  That failure to change the title to the home likely means the person’s heirs will need to do an Oklahoma probate to change the title to the home.  The process of transferring legal title to your property to your Oklahoma living trust is known “funding”, funding is critical and you can more about it here;

—->Accounts with no beneficiary
Typically, with retirement accounts, investment accounts and many times on bank accounts, there is the opportunity to name a beneficiary.  The beneficiary is the person or people who automatically receive the proceeds of the account (with proof of death of the owner and proof of beneficiary identify of course).  If a person does not name at least one beneficiary on an account such as this, that usually means the account is going to probate.  Without probate, the company holding the account will not release it (there are two small exceptions to the general rule: Oklahoma small estate affidavit and Oklahoma affidavit of delivery of personal property); and

—–>Real Property
An unmarried person dies owning a house and title to the house is solely in the deceased person’s name; although other states provide a process where title to real property can be transferred by affidavit, I am not aware of any similar process in the state of Oklahoma. I believe that the only way to transfer title to real property, where the person who died is the sole owner of the real property, is to get an order from a judge transferring title, out of a probate case.

Posted by Shawn Roberts in Blogposts, Oklahoma Probate

What is Oklahoma probate property?

In 20 years of practicing law, I have seen general confusion about probate property and non-probate property. 

My goal in this Post is to make the distinction between Oklahoma probate and non-probate property clearer.  And to add another [hopefully] helpful layer to this question, not all probate property requires that a probate case be filed.  More on that consideration below and in this post, When [and why] you might need to do an Oklahoma probate.

Probate Property
Probate property is any property (real, personal or otherwise) owned by someone who dies that is not set up to transfer automatically upon death.  Some examples are helpful:

  • Real Property.
    An unmarried person dies owning a house and title to the house is solely in the deceased person’s name; although other states provide a process where title to real property can be transferred by affidavit, I am not aware of any similar process in the state of Oklahoma. I believe that the only way to transfer title to real property, where the person who died is the sole owner of the real property, is to get an order from a judge transferring title, out of a probate case.

  • Life insurance.
    A person dies leaving a life insurance policy with beneficiaries who are no longer living;

  • Not transferred to Trust.
    A person who has a living trust dies, but has a property that was never transferred to the trust such as real property or investment accounts;

  • Accounts with no beneficiary.
    Typically, with retirement accounts, investment accounts and many times on bank accounts, there is the opportunity to name a beneficiary.  The beneficiary is the person or people who automatically receive the proceeds of the account (with proof of death of the owner and proof of beneficiary identify of course).  If a person does not name at least one beneficiary on an account such as this, that usually means the account is going to probate.  Without probate, the company holding the account will not release it; and

  • Mineral Interests.
    A person dies owning an Oklahoma mineral interest, but the interest is not held in a trust, and the title is solely in the name of the person who dies.  Many times, the operator of the Well will not continue to pay royalties without an order from the Oklahoma probate court specifying who the heirs are.

No probate case required?
It is important to note that not all “probate property” requires a probate case.  Large-scale items such as real property and mineral interests require probate to change the title.  However, personal property with no title such as furniture, a gun collection or jewelry usually does not require a probate case.  That is, personal property is usually passed without a problem outside of a probate case. You can read more about whether a probate case is required in this Post.

Non-Probate Property
Non-probate property is any property owned by someone who dies that is set up to pass to someone else through a system or contract.  That means, there is a mechanism in place where the title to the property is transferred.  Again, some examples will be helpful:

  • Joint Tenancy Property
    This is real property (such as your house), where there are at least two owners that own the property as “joint tenants with right of survivorship.”  When one owner dies, the surviving owner becomes the owner of the property, without the need to do a probate case but with the need to do a couple of other legal formalities you can read about here.

  • Life Insurance
    An insurance policy is a contract between you and the insurance company. As part of the contract, you are entitled to choose who the policy proceeds go to after you pass away.  If you make at least one choice (i.e., designate a beneficiary), the person you choose will receive the policy proceeds without the need for a probate case.

  • Bank Accounts
    This is converse of the “accounts with no beneficiary” label above in this Post.  If you name a beneficiary on the account, then ownership of the account (or depending on the type of account, the account proceeds) should pass to the person you name, upon your death, no probate case required.

 

Posted by Shawn Roberts in Blogposts, Oklahoma Probate

Consider the cost/benefit analysis in determining whether to do an Oklahoma probate

One of the primary questions that needs to be answered is whether a probate case is necessary? As we discussed, my goal is always to try to find a way to avoid doing a probate case if possible and still allow my client to access the assets.

Whether you do an Oklahoma probate is a cost/benefit analysis:  The cost of doing the probate (attorney fees, court costs, etc.. .) versus the benefit you hope to receive from the process (control over property, inheritance of property you would not otherwise get).  To be able to perform a reliable cost/benefit analysis, you need to understand why probate happens.  The answer is that while probate happens for many reasons, the primary reason is when there is property to inherit, but it can’t be inherited unless you do probate.

Although a lot of effort is put into avoiding Oklahoma probate, there are times when it is simply the only option to change the title to a piece of property or free up funds held in a bank account. The result of a probate proceeding is usually a Judge signing an order that transfers title to the property.

Why probate happens

Below are some scenarios in which you might need to do Oklahoma probate:
  • Real Property.

An unmarried person dies owning a house and title to the house is solely in the deceased person’s name; although other states provide a process where title to real property can be transferred by affidavit, I am not aware of any similar process in the state of Oklahoma. I believe that the only way to transfer title to real property, where the person who died is the sole owner of the real property, is to get an order from a judge transferring title, out of a probate case.
  • Life insurance.

A person dies leaving a life insurance policy with beneficiaries who are no longer living;
  • Not transferred to Trust.

A person who has a living trust dies, but has property that was never transferred to the trust such as real property or investment accounts;
  • Accounts with no beneficiary.

Typically, with retirement accounts, investment accounts and many times on bank accounts, there is the opportunity to name a beneficiary.  The beneficiary is the person or people who automatically receive the proceeds of the account (with proof of death of the owner and proof of beneficiary identify of course).  If a person does not name at least one beneficiary on an account such as this, that usually means the account is going to probate.  Without probate, the company holding the account will not release it (there are two small exceptions to the general rule: Oklahoma small estate affidavit and Oklahoma affidavit of delivery of personal property); and
  • Mineral Interests.

A person dies owning an Oklahoma mineral interest, but the interest is not held in a trust, and the title is solely in the name of the person who dies.  Many times, the operator of the Well will not continue to pay royalties without an order from the Oklahoma probate court specifying who the heirs are.
As you might expect, this means that sometimes the question of whether to do probate or not is difficult when the value of the assets in the estate are small because that value must be weighed against the cost of doing the probate.

Who would end up with the property in probate?

The other question is assuming the person who passed away did not have a last will and testament, who would end up owning the property?  His property would pass under Oklahoma law of intestate succession, which is found at Title 84 O.S. sec. 213.  Section 213 is a difficult statute to interpret, but generally, the order of inheritance would go as follows:  spouse, children, grandchildren, the parents of the decedent, children of parents in equal shares (your uncle’s siblings), grandparents of the decedent; children of the decedent’s grandparents.

Summary Probate

Sometimes the question of whether to do a probate or not is difficult when the value of the assets in the estate are small because that value must be weighed against the cost of doing the probate.
 
The Estate may qualify for the summary probate process. This is an abbreviated version of a full probate, with the emphasis being on speed and reducing some of the cost of the normal probate process. That being said, there are still cost. In my experience, this type of probate cost 3,000.00-$3500.00, plus out-of-pocket cost.  You can read more about the summary probate process here.
 
 
 
 
Posted by Shawn Roberts in Blogposts, Oklahoma Probate

Should your automobiles be transferred to your Oklahoma revocable living trust?

It is a good question.

The short answer is “yes,“ automobiles should be transferred to a person’s Oklahoma revocable trust, to receive the full benefits of Oklahoma estate planning. Below is a bit longer explanation:

Purpose of Estate Planning with a Revocable Trust

One of the purposes of doing estate planning with a revocable living trust is allowing a person’s family to avoid Oklahoma probate when the person passes away. The trust helps a person avoid probate because assets that typically force a probate case are owned by the trust when a person passes away (more on that here).

 
For example, if an individual owns real property at the time of his death, titled solely in his name, with no mechanism to pass the title to the property (such as a transfer-on-death deed), the real property is going to have to be probated to change the title to the heirs.
Contrasting that scenario with the revocable trust scenario, upon a person’s death where his revocable trust owns real property, the trust can continue as the owner and eventually transfer title to the property to the beneficiaries. Since a change in title is accomplished by the trust, there is no need to do a probate case based on the real property.

Automobiles and Revocable Trust

Automobiles come up a little bit short in terms of forcing an estate to be probated. There are scenarios where one can change the title to an automobile following a person’s death, by taking the original title to a tag agent and demonstrating that they are the beneficiaries entitled to receive the automobile. This showing of beneficiary status is usually accomplished with a last will and testament. This method is inconsistent and sometimes varies from tag agent to tag agent, so I do not recommend this method to my clients.

Instead, I recommend that my clients transfer title to their automobiles to their revocable living trust by signing the back of the original title at the tag agent. It’s a relatively simple process and allows people to get the full benefit of the revocable living trust.

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate

Can you sell property that is in an Oklahoma probate case?

Most people have either heard stories about your experience firsthand and estate going through the probate process. Often those experiences are not positive ones.

One of the questions that often comes up is “can I sell this item that is part of the probate case? “

The answer is yes but the process is different depending on what type of item it is. Below is a brief overview of how property can be sold out of probate depending on what type of property it is.

1.  Real property

Real property includes items such as houses, land with nothing build on it and mineral interest. For items such as these, you almost always have to get the written approval of the judge and the probate case before making a sale.

2.  High-value personal property

High-value personal property includes things such as automobiles, jewelry, it’s in recreational vehicles and usually any item that has a paper title issued by the government.  As with real property, and written approval is typically required from the court prior to selling this type of property. However, there may be a few exceptions that fall into the category for below.

3.  Lower value personal property

This category includes items that have no paper title issued by the government such as household furnishings, tools, any other odds and ends that a person may have collected throughout their life.

4.  Personal property that must be sold quickly to protect its value

As with most things in the law, there are a few more details and I can share in a blog list. For that reason, if you encounter the issue of selling something out of probate be certain to talk to an attorney about it before you take any kind of action.

 

If you want to know more about the Oklahoma probate, consider checking out these posts:

Will the Oklahoma summary probate process help you?        When you might need to do an Oklahoma probate             

Five Questions and Answers about Oklahoma probate

Posted by Shawn Roberts in Blogposts, Oklahoma Probate

The Oklahoma transfer-on-death deed: Smart Probate Avoidance

What happens to a person’s property when they die in Oklahoma?

There is a detailed answer in this post, What happens to a person’s property when they die?

The shorter answer is that it goes to your relatives, the people you chose in your last will and testament or Oklahoma revocable trust. If you own real property outright and pass away you will need a court order in an Oklahoma probate case to change the title from the person who passed away to his heirs.  There are several ways to avoid this results.  One way is the Oklahoma transfer-on-death deed.

Oklahoma Transfer-on-Death Deed

The Oklahoma TOD allows you to set up your real property to pass to another person after you die.  You sign and record the Deed with the Oklahoma county clerk in the county where the property is located. The person you giving the property to does not become the owner until you pass.  But, when you pass away, . . .

Transfer of the Property after death

The property passes almost automatically, with the person inheriting the property only need to file an affidavit stating that person died, whether the person was married and a legal description of the property.

 

If this is something that interests you or you like to talk about Oklahoma estate planning, please contact me.

 

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate

Two ways to change title to a car without Oklahoma probate

Image provided by Flickr user Keith Ellwood

Image provided by Flickr user Keith Ellwood

Would you like to know two ways you can change the title to a car owned by a person who died, without going through an Oklahoma probate?

If your answer is “yes”, you have found the right post. 🙂

I have written volumes on this blog about Oklahoma estate planning and a lesser amount about addressing the situation where someone died without doing estate planning.  I would like to provide a few cleanup tools that can be used to avoid probate even after someone didn’t do Oklahoma estate planning.

There are two options that may apply for changing the title to a car owned by someone who died with going through Oklahoma probate.

  1. Oklahoma No Administrator Affidavit.

My experience has been that most tag agents will transfer title to the vehicle following a person’s death when the No Administrator Affidavit is provided.  I wrote about this Affidavit on this blog post.  This document will generally allow the title to a car to be transferred if:

  • A properly completed No Administrator Affidavit is provided;
  • A certified copy of the death certificate is provided; and
  • The facts are such where the person asking for the change in title (ostensibly to themselves) has a clear right to receive the vehicle.
  1. Oklahoma Small Estate Affidavit.

The other option is the Oklahoma Tax Commission’s Small Estate Affidavit.  This document is used to transfer the ownership of a vehicle when:

  • The car is given to someone in a last will and testament,
  • The total value of the estate is not greater than $50,000.00, and
  • The person who is given the car in the last will and testament must sign the Oklahoma Small Estate Affidavit.

 

There are no guarantees of course; even when you think you have done everything correctly, the transfer of title still doesn’t happen.  If you run into this type of issue, give me a call or an email.

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate

When do I have to file a tax return for a gift I make?

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Gifting into a tax return

While it is not a subject that most people consider often, there are circumstances where a person can make a gift and be required to file a tax return covering the gift and potentially paying tax on the gift. Most people are aware that if you die owning a large enough estate you may have to pay the IRS tax. Many people are also aware that there is an exemption, this year in the amount of $5.3 million, under which you are not required to file a return or pay taxes to the IRS.  What a lot of people don’t think about is that the exemption can be whittled down based on gifts a person makes during their lifetime.

The Annual Exclusion

One way to avoid reducing the lifetime exemption is to take advantage of the annual exclusion.  Each person is entitled to make an unlimited number of gifts each year without any tax consequences provided that the gifts do not exceed the annual exclusion, which in 2014 is $14,000.00. Gifts above the $14,000 number require that the person making the gift file a gift tax return.

What the IRS say about gifts

As the IRS states:

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

 The key points

So, here is a summary of how it breaks down:

  • You can gift up to $14,000.00 to just about any person without  return required or tax being owed;
  • You can gift more than $14,000.00 each year to your spouse without a return required or tax being owed;
  • If you gift over $14,000.00 to a person this year, you will need to file a federal gift tax return, IRS Form 709.  The IRS Form 709 is due on or before April 15 of the year following the year that you have made taxable gifts.

 

Remember however that the rules on gift taxes like many other taxes are complicated. You should consult a tax professional before making any final decisions including the decision whether you need to file a return or not

Posted by Shawn Roberts in Blogposts, Oklahoma Estate Planning, Oklahoma Probate

What is the difference between joint tenants and tenants in common in Oklahoma?

 

The difference between joint tenants and tenants in common is often perplexing but critically important for understanding property ownership rights, particularly when there are Oklahoma probate issues. Let me try to explain how it works under Oklahoma’s real property law.

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The definitions – Joint Tenants – Tenants in Common

Joint Tenancy with a right of survivorship is where two or more individuals own real estate together and each has exactly the same rights in the property as the other owners or co-tenants. Upon the death of a joint tenant, the survivor has legal title and, unless fraud or a trust is established, the survivor will also acquire equitable title.

Tenancy in common is where all the owners have the legal right of possession of the real estate but each owner has a separate and distinct title. Subject to the rights of the co-tenant(s), each tenant in common is equally entitled to the use, benefit, and possession of common property. A tenant in common may convey her interest in the real without the other tenants in common joining in the conveyance (unless it is homestead property, in which event her spouse must join). Tenancy in common is the default manner of taking the title – if there is no evidence that the real estate was supposed to be conveyed as a joint tenancy, then title is held as a tenancy in common.

The similarities

  • Both Joint Tenancy and Tenancy in Common are ways of holding title to real estate.
  • Someone would use one of these methods when they own real estate with at least one other person.
  • Under both types, you purchase only a portion of the property, cooperating with other owners who purchase the remaining amount.

 

The differences

Major differences between holding the title as a joint tenant and holding the title as a tenant in common:

  • Upon the death of one joint tenant, his or her interest automatically passes to the surviving joint tenant, who becomes the sole owner. This does not happen with a tenancy in common.
  • A tenant in common can freely sell her interest while a joint tenant can convey her interest in the real during her lifetime, but the joint tenancy interest cannot be devised and will not descend except possibly in the event of the simultaneous death of all the joint tenants.
  • Tenants in common may have different ownership interests. For instance, Tenant A and Tenant B may each own 40 percent of the real estate, while Tenant C owns 20 percent. However, joint tenants obtain equal shares of the property with the same deed, at the same time.

 

Example

An example of where joint tenancy with right of survivorship is commonly use is for homestead property owned by a married couple. The title will typically be held as “joint tenants with right of survivorship.”

Posted by Shawn Roberts in Blogposts, Oklahoma Probate