If you were to use a Last Will and Testament to serve as your primary asset transfer vehicle, you would name an executor to handle the administration tasks after you are gone. The executor would not be allowed to act independently without any type of government oversight.
Under Oklahoma State laws, the will would be admitted to probate. The court would supervise the administration of the estate. And the executor would notify creditors and establish an estate bank account.
Final debts are paid from the estate bank account by the executor. This person is also responsible for identifying and inventorying the assets that comprise your estate. Next, your assets will be prepared for distribution, which can involve appraisals and liquidation of property.
There is a proving of the will during probate. The court will determine if the document is valid, and estate challenges can be presented while this process is underway.
When everything is in order to the court’s satisfaction, the assets will be distributed to the beneficiaries.
This sounds harmless enough, but in fact, many people engage estate planning attorneys to implement probate avoidance strategies. Let’s look at the reasons why you may want to create a plan that will facilitate asset transfers outside of probate.
You probably want your loved ones to receive their inheritances shortly after your passing. This will not happen if you use a will. Depending on the circumstances, it will usually take between six and 18 months for probate to run its course.
Since final taxes must be paid, an accountant will sometimes be engaged. The executor may also bring in a probate attorney. There are appraisal and liquidation costs and a filing fee. In addition, your estate will need to compensate your executor for their time and effort.
The value of your estate is reduced by the costs that are incurred during probate. This will subsequently cut into the inheritances that will eventually be received by the heirs.
Do you want anyone and everyone to be able to find out how your assets were distributed? This is how it works when an estate passes through probate because the records are available to the public.
There are some types of transfers that take place outside of probate even if you are not intentionally trying to avoid it. Life insurance proceeds fall into this category, along with the transfer of an individual retirement account to a beneficiary.
You can establish a payable on death account with your beneficiary at a bank or a brokerage. In Oklahoma, you can choose a payable on death option when you are registering your vehicle. Payable on death transfers are not subject to the process of probate.
If you own property, you can create a joint tenancy. This is the condition of co-ownership of the property. A surviving joint tenant would inherit the deceased joint tenant’s interest in the property, and this would be a probate-free asset transfer.
The downside is the fact that the joint tenant would own half of the property as soon as you establish a joint tenancy. As a result, their portion of the property would be in play if they are sued for some reason. Plus, you would need their cooperation to sell the property.
Revocable Living Trust
You can proactively avoid probate through the utilization of a revocable living trust. As the grantor, you can also act as the trustee, so you would have total access to the assets at all times.
After your death, the trustee that you named to succeed you would distribute assets to the beneficiary or beneficiaries. The probate court would not be involved, so the drawbacks that we have described would be avoided. This is one of the benefits, but there are others.
Don’t Delay – Call Us Today!
A lot of people that do not have estate plans know that they should take action. Unfortunately, they keep putting it on the back burner. If you are one of them, it is time to put the procrastination behind you.
Some people do not act because they are reluctant to discuss personal matters with someone they have just met. This is understandable, but when you choose our firm, you can rest assured that you will feel comfortable from the start.
You can schedule a consultation at our Oklahoma City estate planning office if you call us at 405-843-6100, and you can use our contact form to send us a message.