WHAT CAUSES PROBATE. Probate occurs because someone dies with property in their sole name. For example, a person owns their home in their name alone. When that person dies, then his or her estate is subject to administration through the probate court. If they died with a will, their will is probated by the court. If they died without a will, then their estate is subject to intestate succession. An administrator is appointed for those estates. In both cases, estates with or without a will, the property owned in the decedent’s name alone will be subject to probate. Below are eight ways, some better than others, to keep your property from ever going through probate.
1. USE A TRANSFER ON DEATH DEED. It is possible to leave real estate through a transfer on death deed. A transfer on death deed is revocable by you anytime after it is signed up until you die or become incapacitated. A transfer on death deed does not cloud your title, nor prevent you from selling or mortgaging your property. A transfer on death deed must follow the statutory form, be executed by you and by two witnesses, and notarized. Think of a transfer on death deed as a very simple will that only applied to the real property described. It leaves your real property to a named beneficiary if he or she survives you. If the beneficiary does not survive you then the beneficial designation will lapse. While a transfer on death deed is a good tool to use sometimes, it is not able to provide for all the what ifs that can occur. For example, what if this beneficiary does not survive me. What if this beneficiary is incompetent by this time. What if this beneficiary is on Medicaid. What if the beneficiary is a minor. The list of what ifs can go on and on. Only a will or trust can provide for a contingency if a what if happens. Yet, despite this limitation, it is useful sometimes. Following your death, the beneficiary must file an affidavit with the TODD maker’s death certificate, accepting the transfer of ownership of the real property within nine months of death.
2. USE JOINT TENANCY. It is possible to name another person as joint owner with you, with the right of survivorship. This is commonly used by couples thought a joint tenancy deed with right of survivorship. Bank accounts can also be established in joint tenancy with right of survivorship. Joint tenancy can be a problem sometimes. The joint owner can have marriage or creditor problems. Or, could decide to spend your money without asking first!
3. USE POD DESIGNATIONS. It is possible to use a payable on death designation for bank accounts and certificates of deposits or government bonds. You can set up these designations with the customer service representative at your bank. These designations will work but cannot because of their simplicity provide for all of the what ifs that always seem to occur.
4. USE TOD BENEFICIAL DESIGNATIONS. It is possible to use a transfer on death designation for your stock and bond investment accounts. You can establish this designation with your broker. These designations will work but cannot because of their simplicity provide for all of the what ifs that always seem to occur.
5. IRA BENEFICIAL DESIGNATIONS. Because of income tax laws it is generally not recommended making a trust a beneficiary of an IRA account. Make sure that you have named the correct individuals as beneficiaries to your IRA account.
6. NAME LIFE INSURANCE BENEFICIARIES. Make sure that you have named the correct individuals as beneficiaries to your life insurance.
7. USE A SMALL ESTATE AFFIDAVIT. If certain conditions are met, a small estate, meaning one of $50,000 or less, the heirs may use a small estate affidavit to obtain the money on deposit in an account or title to a vehicle in the name of a decedent.
8. USE A TRUST. The trust most commonly used to avoid probate is a revocable trust. It is generally very successful and can covers all of the what ifs when prepared by an experienced trust attorney. Sometimes an irrevocable trust is used. It will avoid probate also. It is necessary to actually convey your property into the trust to avoid probate. It must be owned in the name of the trust to avoid probate.
If you need an experienced attorney who knows how to avoid probate, contact Brent D. Coldiron, attorney at law, 1800 E. Memorial Road, Suite 106, Oklahoma City, OK 73131 or 2801 Parklawn Drive, Suite 503, Midwest City, OK 73110; telephone (405) 478-5655 and 737-2244. Brent has over 41 years experience handling a variety of legal matters, including probates, wills, trusts, business formation, elder law, Medicaid qualification for nursing home care, corporations, limited liability companies, and guardianships. Give Brent a call, he knows what to do!