This is the next article in our series on probate law and process in Oklahoma.  The last article delves into the steps to determine whether probate is required.  In this post, we will answer a narrow question: How to avoid probate in Oklahoma?

What is probate?

Simply put, probate is a court-supervised process where a decedent’s assets are inventoried, debts & taxes paid, and the remainder of assets distributed to the heirs.  Think of it as settling the decedent’s business and “closing out the book” of their affairs.  Contrary to what many believe, probate may be required regardless of whether there is a will.  Having a last will and testament does not avoid the probate process.  Probate law is codified under Title 58 of Oklahoma Statutes.

Can probate be avoided?

The short answer is yes, probate can be avoided.  Not all assets must go through the probate process.  Typically, assets passing through a will or the laws of intestacy are required to be probated.  Properties without beneficiary designation and that are owned by the decedent in their name fall under this category.  These are called probate properties.

Conversely, assets with a beneficiary designation or co-owned by the decedent, for example, are non-probate assets and therefore avoid probate.  In some instances, total avoidance of probate may not be possible.  Even a skillfully crafted estate plan where the majority of the estate passes outside of the probate process may have some “leftover” assets.  This includes properties purchased after the execution of estate planning documents or assets that are inadvertently left out.   

Ways to avoid probate

Probate can be lengthy and costly.  A contested probate can prolong for months or years, thereby draining the assets and leaving very little to the heirs.  Even a straightforward non-contested probate may cost several thousand dollars and tie up the asset for months, or even years.  Bypassing the process avoids the delays and expenses of probate. 

Some of the estate planning tools and legal instruments that help avoid probate include:

Living trusts

A living trust is an estate planning tool that is created by the settlor (you) during your lifetime.  Elements of a living trust include the settlor (you), the initial trustee (in most cases, also you), beneficiaries, and trust assets.  Upon the death of the settlor, the successor trustee will distribute the trust assets according to the trust terms.  The entire process is accomplished outside of the probate process.

Make sure to fund the trust. You do this by transferring assets you wish to be distributed under the trust terms into the trust.  Failure to transfer a home that is currently in your name into the trust, for example, may end up requiring probate.

Joint ownership

Property owned by two or more people as joint tenants passes on to the surviving tenants upon the death of one of the owners.  This applies to all properties, real or personalowned under joint tenancy with the right of survivorship.  For instance, a home owned by a mother and a daughter as joint tenants will go to the daughter when a mother dies.  All that is required by the daughter is that she files an affidavit of the surviving tenant.  This puts the world on notice that she is now the new sole owner.

This process is called a transfer by the operation of law and happens entirely outside the probate process.  As opposed to a trust asset (that transfer upon the owner’s death), joint-tenancy interest vests immediately in the grantee (joint tenant).

Transfer on death deeds

Transfer on death deeds (TODD) can be an effective estate planning tool for probate avoidance.  Unlike a joint ownership title that gives interest to a co-tenant immediately, the TODD delays that process until the death of the owner.  This is particularly attractive for parents who want to give certain property to a child who is currently in the midst of a legal process or owes money to creditors.

A TODD offers flexibility in that you (the grantor) may revoke the transfer at any time before your death.  Upon your death, the grantee will simply file a beneficiary affidavit with the county clerk. The entire process takes place outside of the probate court.

Beneficiary designation

Some assets transfer directly to the named beneficiary (or beneficiaries) after the passing of the owner.  Certain types of bank accounts and insurance policies are common examples.  Upon the death of the owner, the asset passes automatically to the named beneficiary.  For instance, an insurance company will transfer the proceeds of a life insurance policy to the person who is designated as a beneficiary of the policy.

The designated beneficiary gets the assets even if the decedent lists a different person in their will.  It’s an efficient probate avoidance tool.  Determine whom you want to receive the asset and name that person as a beneficiary.  It’s important to update this designation as new life events occur, such as marriage or divorce, to reflect your current preferences.

You can designate beneficiaries for a wide range of assets.  Some of them include:

  • Certificate of Deposit (CD) accounts
  • Individual Retirement Accounts (IRA)
  • Investment Accounts
  • Life Insurance Policy
  • 401(k) plans

Payable on death accounts

Beneficiary designation typically allows the owner to name a person who is to get the asset upon their death.  This is usually applicable to insurance policies, retirement accounts, or investment accounts.  Conversely, a payable-on-death (POD) designation is more commonly used for regular bank accounts.  Nonetheless, the ultimate result concerning probate is the same.  Both of these tools will transfer assets to a named person upon the owner’s death.  This happens entirely outside of the probate process thereby avoiding the cost and delay.

OKC Probate and Estate Planning Lawyer

Whether you are seeking to avoid probate, execute property deeds, or put an estate plan in place, we are here to help.  Nobody wants to leave a mess for their loved ones to clean up.  Take action now and secure peace of mind knowing your loved ones are taken care ofContact us online or by telephone to get in touch with an estate planning law firm and speak to an OKC probate lawyer.