Probate

Here is the problem.  Title in many assets does not automatically pass to the relatives without a court order.

Troublesome assets include:

  • Real Estate
  • Oil, Gas, Royalty and Mineral Interests
  • Vehicles
  • Bank Accounts

Often children or even a spouse may find that they are unable to sell, mortgage or transfer the property because “title” is in the name of the deceased person.  There may be royalties for oil and gas placed in “suspense”.  This means that the company responsible for paying the royalties won’t do so until it is satisfied that you are entitled to receive it.

What if there isn’t a Will?

If there is not Will, property passes according to the state “intestacy” statute.  A Will is not needed for a probate.

The solution:

Oklahoma has many probate procedures that can be used:

Small Estate Affidavit:

If an estate consists of personal property (bank accounts, insurance proceeds, etc) a small estate affidavit may be a method to gain access to cash or title to vehicles.

Summary probate:

Summary probates are often available and a good choice when:

  • small estates under $200,000; or
  • estates for those who died more than 5 years ago; or
  • estates for someone who died while living outside of Oklahoma

A summary probate can be completed in a few months assuming that there are no major issues.  It usually works best when there is no need to sell assets and creditors claims do not exceed cash on hand.

Ancillary Probate:

An ancillary probate is available if there has already been a probate in the decedent’s home state.  This can be effective if the parties are just looking to get assets into the names of the heirs.  This can be completed in a few months.

Heirship Quiet Title:

Often there are several generations of un-probated estates.   Rather than completing several probates, title to real estate or minerals can be cleaned up with a heirship quite title action.

Standard Probate:

Sometimes and estate not eligible for is too complex for the above mentioned procedures.  A standard probate may be the only way.

 

 

The Summary Administration is designed to quickly resolve title problems for these estates.

These issues often arise in the following situations:

  •  Oil and Gas Title Problems
  • Real Estate Title Problems
  • Stocks, bonds, IRAs or other retirement accounts without beneficiary designations
  • Bank accounts
  • Other property issues.

The Court appoints a Special Administrator is appointed by the court. Notices are sent to creditors, heirs and legatees. A hearing is set at least 45 days later. If there are no objections or contested creditors’ claims, the Special Administrator files a final account. If the court, is satisfied a final account is entered that conveys property according to the Will or if there was no will according to the Descent and Distribution (Intestacy)[3] statute.

This procedure can be used whether or not the decedent had a Will or Trust.[4]

This procedure, while not without cost, can provide a relatively quick way to resolve various title problems.

Feel free to contact me about this or similar problems.

 


 

[1] Probate is a court proceeding overseen by a judge to insure that creditors, heirs and legatees are receive their rightful share of a decedent’s estate.

[2] Title 12 Okla. Stat. Section 245 (12 O.S. § 245).

[3] Intestacy is a statutory plan of inheritance for property subject to probate. (Property without a beneficiary designation, joint tenancy, transfer on death or provided for in a Trust.) 84 O.S. § 213.

[4] If property was not titled in a trust a probate is necessary.

 

 

Joint Tenancy is one of many ways two or more people can hold title to property. Most married couples hold title to their homes as Joint Tenants. It is one of the simplest ways to hold property. Here is how it works most of the time:

John and Mary are a married couple and purchase a home together. The deed says that they are “Joint Tenants.” John dies. Mary files an “Affidavit of Surviving Joint Tenant.” She is now the sole owner of the home. The property is not subject to probate or claims of John’s estate. When Mary dies, the property is part of her estate.

Common Mistake: Mary thought that it worked pretty well when her husband died and thinks that this would be a great way to pass on property to her children. However, there are dangers in doing so.

Ownership: Each person who owns an interest is a “Joint Tenant. Each “Joint Tenant” has the right to occupy the whole of the property but not to the exclusion of the other Joint Tenant. In other words, every “Joint Tenant” can use the entire property but cannot excluded the other Joint Tenants from the property.

Some people attempt to use Joint Tenancy as an estate planning tool to pass property to their children. This can have disastrous consequences because the deed will give children an immediate property interest and rights. There are several issue that can arise when dealing with property held in Joint Tenancy. Common issues include:

  • Tax liens of co-tenants;
  • Bankruptcies of co-tenants;
  • Divorce actions of co-tenants;
  • Judgment liens of co-tenants;
  • Partition action by greedy co-tenants; and
  • Occupancy rights of co-tenants.

 

Examples:  Mary owns property and wants her children Doug and Sue to inherit it. She also wants to avoid the expense of probate. She deeds the property to herself and her children as Joint Tenants expecting them to “inherit” the property when she dies. Then one of the following occur:

  • Sue dies before Mary. Mary would have wanted the property to pass to Sue’s children. This will not occur unless Doug executes a deed with Mary adding Sue’s children as Joint Tenants. Doug is reluctant to execute the deed because in the event that he dies next Mary and Sue’s children would have to execute a new deed which add Doug’s children as Joint Tenants.
  • Doug is sued (car accident, debts etc.), filed bankruptcy or gets divorced. If the property is Mary’s home, it will be protected as a homestead that will prevent execution. If the property is not homestead, the creditors or bankrupt trustee will likely seek to attach the property. In any event, there will title problems that may prevent the property from being sold or mortgaged. Doug will not inherit the property an intended.
  • Sue becomes estranged from the family. She could bring a partition action to have the property sold and proceeds divided. She could also sell the property to a third-party who can take the same action.

Joint Tenancy is usually the worst choice for an estate plan.

Better Solutions:

Trusts: A better way is to hold the property in a revocable trust. The trust can provide for the intended distribution if a child dies before you. A trust can protect an inheritance from almost all creditors. The trust can be amended as circumstances change. In short, it provides the owner with control and prevents unintended outcomes described above.

Wills:  While Wills do not avoid probate they can provide for contingent beneficiaries or for heirs those who predecease you.  They are changeable and do not give those named therein a current ownership interest in the property.

Trusts are relatively inexpensive to establish and are a bargain when compared to the expense, time and frustration of dealing with probate court. Trusts require no reports or tax returns during its creator’s lifetime.

Transfer on Death Deeds: Oklahoma adopted a Transfer on Death Deed statute.  There are pros and cons to this approach.  For example the beneficiary is required to file an “acceptance” within 9 months.  Read more.

Rick Winblad,

102 E. Thatcher St. Edmond, Oklahoma 73034
405-340-6554

 

 

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