Probate is a legal process that will enter the picture if you use a simple will to state your final wishes. The probate court also presides over intestacy cases. This is the situation that arises when someone passes away without a will or any other estate planning documents.
Creditors are given an opportunity to come forward seeking payment during probate. The court examines the will to determine its validity. If anyone wanted to contest the will, they could come forward during probate to make a case.
Expenses accumulate during probate. The expenses can include a filing fee, the executor’s fee, attorney and accounting charges, appraisal and liquidation expenses, and incidentals. These expenditures reduce the value of the estate before it is transferred to the heirs.
As you can see, probate is somewhat problematic, leading some people to take proactive steps to avoid it. There are also some types of asset transfers that are simply not subject to probate. We will discuss those asset transfers below.
Payable on Death Accounts
When you open an account at a bank or brokerage, you can add a beneficiary to the account. This is called a payable on death or transfer on death account.
The beneficiary would have no access to the funds while you are alive. After your passing, the beneficiary would present a death certificate to the institution, and they would release the remainder to the beneficiary. The probate court would not be involved.
If you own property, you can add a co-owner to the title or deed. Doing so, creates a joint tenancy, and it comes with a right of survivorship.
The surviving joint tenant would become the sole owner of the property after the death of one joint tenant, and the transfer would not be subject to probate.
Life Insurance and Inherited Individual Retirement Accounts
Life insurance proceeds are distributed to beneficiaries in a probate free manner. If you have an individual retirement account and you name a beneficiary, the transfer will take place outside of probate unless your estate is the beneficiary.
Oklahoma Probate Shortcuts
There are a couple of different ways that transfers that would ordinarily be subject to probate can take place in a more time efficient manner.
Estates valued at $50,000 or less can use a small estate affidavit to transfer inherited property. For example, you inherit a bank account. You would present the affidavit and the death certificate to the institution, and they would release the funds to you.
It is also possible to petition the court to allow for a simplified probate procedure if the value of the estate does not exceed $200,000 in value.
Living Trust Asset Transfers
A living trust is an estate planning device that provides a great deal of flexibility. When you use a living trust, you can act as the trustee and the beneficiary while you are alive, so there is no loss of control of the assets.
After your passing, the successor trustee that you name in the trust declaration would distribute assets to the beneficiaries in accordance with your wishes. Probate would not be a factor, avoiding the drawbacks. This is just one of the many benefits that living trusts provide. We will take a look at the rest of them in a future post.
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If you would like to learn more about the estate planning process, attend one of our upcoming events. There is no charge to attend these sessions, but we ask that you register in advance so we can reserve your spot. You can see the dates and obtain more detailed information if you visit our educational events page.
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At some point, you come to the realization that you have done enough research and it is time to put a plan in place. If that time is now, we are here to help.
Call us at 405-843-6100 to schedule your consultation with an Oklahoma City estate planning lawyer right now. If you would prefer tosend us a message, you can do so by completing our contact form.
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