Frequently Asked Questions
A person does not have to be wealthy or elderly to do some serious thinking regarding an estate plan. Your estate consists of everything you own at the time of death. If you own a home or a car or have a checking/savings account, you have estate. Often a person with a small or modest estate is most in need of a plan to provide for the proper transfer of that property at death.
A will is a written instrument by which you provide for the disposition of your property after your death. In Oklahoma, if you are of sound mind and 18 years or older, you may dispose of your property by will. A properly executed will expedites the probate process.
A revocable or living trust is a written document providing for the management of your property which becomes effective while you are living, unlike a will which takes effect after your death. A trust appoints a trustee to manage your property for your benefit during your lifetime or in the event of your incapacity. Ordinarily you serve as the initial trustee until you die or become incapacitated. After your death, the trust document will provide for your successor trustee or distribute any remaining property to those persons or entities you have chosen (just as in a will) or provide for the continued management of your property by that successor trustee for many years, with the ultimate distribution as you direct. The primary advantage of a revocable trust over a will is that upon your death, the administration of your property is governed by your trust outside of the probate court system.
This normally results in a quicker and less costly distribution of your property to the people you have selected. In addition, a revocable trust is a private document which is not recorded at the courthouse and available to the public.
There are several reasons to have a will or a trust. Most importantly, having a will or trust allows you to decide who will receive your property rather than leaving that choice to state law and feuding relatives.
Having a will allows you to choose your personal representative. Without a will, the court may appoint a personal representative that is someone other than a person of your choice.
Having a trust allows you to avoid the probate court system altogether if your trust is created and funded properly.
Equally important, if you have minor children you can name their guardian in your will or trust. Your selection of a guardian is not binding on the court, but the court will give strong consideration to your selection. Without a will or trust, the court may appoint a guardian other than the person you would have chosen.
Oklahoma provides several methods of transferring property upon your death. A “Transfer on Death” deed provides for the transfer of real property to a named beneficiary upon the death of the owner, with the owner retaining full ownership during his or her lifetime. Oklahoma also provides a TOD – “Transfer on Death” or a POD – “Payable on Death” designations for other types of property, including bank accounts, corporate stock, and other types of personal property.
Joint tenancy is a particular type of property ownership by which two or more persons may own real estate or personal property together. It differs from other types of co-ownership in several respects, the most commonly known is that upon the death of one joint tenant, his or her interest automatically passes to the surviving joint tenant, who becomes sole owner.
No. A properly drawn will disposes of all a person’s property according to the person’s plan at death. A joint tenancy only affects the particular property described in the instrument creating it. Therefore, a will is needed to dispose of any property not held in joint tenancy.
Joint tenancy is a useful estate planning tool, but to rely solely on joint tenancy ownership for estate planning is generally a poor idea. Often real estates and bank accounts are owned by married couples as joint tenants. Upon the death of the first joint tenant, the property passes to the survivor by law. The survivor becomes the sole owner of the property and should then make additional planning provisions for distribution upon his or her death. If real property is held in joint tenancy, an affidavit and a death certificate must be filed at the courthouse in order to terminate the joint tenancy.
There are significant creditor hazards and tax hazards in holding property in joint tenancy as well as other possible complications and expenses.
Joint tenancy is simply not an adequate substitute for a will or a trust in most cases. Furthermore, if both joint tenants die simultaneously, both of their estates will require probate.
In some cases, yes. However, they are rarely the best method of holding property. Only a lawyer is qualified to advise you on the best method of holding title property and your case will differ from every other case.
Upon the death of a property owner, Oklahoma law provides for the court ordered process to determine the assets of the deceased, assess value, and distribute the estate to creditors and heirs. This procedure takes place in the district court of the county where the deceased property owner lived. If there is property of deceased located in another state, additional proceedings called “ancillary administration” will be necessary in that state.
Oklahoma law provides for the probating of estates to protect all parties who have any interest in the estate.
An estate is probated for the following reasons:
- To identify and collect the property and assets of the estate
- To protect the property of the estate
- To pay debts and taxes
- To determine who is entitled to share in the estate and distribute the property to the proper parties
- In the case of real estate and other record ownership property, probate provides a method to secure the legal transfer of such record ownership and thereby maintain a clear chain of title to the property.
If a person dies without a will, state law determines how that person’s estate will be distributed at death, called the law of descent and distribution. The law of descent and distribution will be subject to any prenuptial marriage contract. Assuming there is no prenuptial contract, if the deceased leaves a spouse and children of their marriage, the surviving spouse receives one-half of all property of the deceased, whether acquired by the joint industry of the husband and wife during the marriage or otherwise. The remaining one-half of the estate passes in equal shares to the surviving children. When a person dies leaving a spouse and children, one or more of whom are children from a prior marriage, the surviving spouse receives one-half of the property acquired by the joint industry of the husband and wife during the marriage and the children share the other half equally.
Some property may not be included in the probate estate, such as life insurance, pension and/or profit sharing benefits, trust property and property held in joint tenancy; however, proper transfer of these assets may require considerable effort on your part or the part of your attorney.
A prenuptial agreement, also called an “antenuptial agreement” or a “premarital agreement” is a contract between two individuals contemplating marriage which outlines the rights of each future spouse. It must be in writing and signed by both parties prior to the marriage.
Premarital agreements are becoming more common and are used to protect each spouse’s right to his/her separate property, the inheritance rights of children from prior marriages, and ownership and management of family businesses. A prenuptial agreement may offer the parties security in the marriage and may prevent unnecessary disagreements about finances during the course of the marriage. A prenuptial agreement may control the division of assets, debts, and alimony payments in the event of divorce.
An Advance Directive for Health Care, often referred to as a “Living Will” is a written legal document which allows you to instruct your attending physician(s) whether or not you wish to be given life-sustaining treatments and artificially administered nutrition (food) and hydration (water), and to give other medical directions that impact the end of life, including the right to decline medical treatment. This document may include the appointment of a health care proxy and directions for organ donation.
*Information provided in part by the Oklahoma Bar Association