When you create your estate plan, you normally identify several important goals and objectives you want it to accomplish. One of the most important estate planning goals is to avoid probate. Although every estate plan is unique, there are common tools and strategies you may choose to avoid probate in your own estate plan.
Why Should I Try to Avoid Probate?
Avoiding probate is a common estate planning goal for several reasons. First, if your estate goes through probate, all the terms of your Will, including the gifts you made in that Will, become publicd. By avoiding probate you keep these details regarding the distribution of your estate private. Second, probate is time-consuming. In the State of Oklahoma, creditors have two months from when the Personal Representative is appointed by the court to file claims. Consequently, probating even a modest and uncomplicated estate typically takes eight months or more, and a year to two years is not uncommon. Beneficiaries must wait until the probate is finished to receive their intended gifts. Finally, probate can be expensive. Everyone involved in the probate of an estate, including the Executor or Personal Representative, attorneys, appraisers, real estate agents, and accountants, is entitled to be paid for their services. The cost of probate can significantly diminish what is left of the estate to be distributed to loved ones.
How Can an Estate Avoid Probate?
Because probate avoidance is a popular estate planning goal, numerous tools and strategies have been developed over the years to help an estate avoid probate. These include:
- Lifetime gifting. Since only assets you own when you die are subject to probate, gifting assets while you are alive is one way to avoid probate. But you need to be aware of possible tax advantages and disadvantages of lifetime gifting that may benefit or hurt your estate.
- Using a trust to distribute estate assets. Assets held in a trust are not subject to probate and can quickly be distributed after your death. Most assets, including your home, can be held in a trust. Using a trust to distribute your estate can reduce or eliminate the size and value of your probate estate.
- Establishing Joint Tenant, POD or TOD accounts. Real property can be held as joint tenants with rights of survivorship, which means your interest in the property passes directly to your co-owner when you die without having to go through probate. Accounts can be designated as “Payable on Death (POD)” or “Transfer on Death (TOD)” accounts, which means the person you designated as your beneficiary will automatically own the accounts upon your death. Unlike a jointly held assets, however, the beneficiary of a POD or TOD account does not have any ownership interest in the accounts while you are alive.
- Taking advantage of small estate administration. For the remaining probate assets, a small estate alternative may be an option in Oklahoma. For financial accounts or personal property, such as an automobile, if the total value of the account or asset does not exceed $50,000, it may be eligible for distribution using a Small Estate Affidavit. If the account or asset is valued between $50,000 and $200,000, Oklahoma allows a similar process called summary probate or summary administration, which is a shorter and less expensive form of probate that can often be completed in 4-6 months. Most other states have similar small estate alternatives, but the eligibility requirements can vary considerably from one state to the next.
Contact Oklahoma City Probate Attorneys
For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding tools and strategies used to avoid probate in Oklahoma, contact the experienced Oklahoma City probate attorneys at Parman & Easterday by calling 405-843-6100 to schedule your appointment today.