03/22/2018
TO PROBATE OR NOT?
The word “probate” might bring up hazy thoughts of complicated court procedures or a home sitting vacant for years after its owners have passed away. What is probate? Is it something to be avoided? And if so, how? To answer these questions, lets look at a typical situation.
Husband and Wife have two adult Children and own their home and bank accounts equally, in joint tenancy with right of survivorship. Husband passes away, and his one-half interest in those assets passes automatically to Wife. But when she passes and the Children try to access the bank accounts and want to sell the home as soon possible, they are told that they can’t unless Wife’s estate is “probated.” That means Children must hire a lawyer and go through a court process which can be somewhat expensive and lengthy (several months, in some cases years) to obtain a decree from the probate Court that they are, indeed, the sole owners of the Home and Wife’s financial resources.
If Wife had not made a Will prior to her death the probate process is designed to obtain a Court Order decreeing that Children were her only “heirs” and, therefore, the only persons who became the owners of Wife’s assets at her death. A Buyer wanting to purchase the home is entitled to rely on that Court Decree and is safe in taking a deed from Children. The Decree also grants Children access to Wife’s bank accounts, CDs, money market accounts, and the like.
What if Wife left a Will which provides that if she survives Husband all of her assets pass to Children? Does the Will permit Children to bypass the probate process? Sadly, no. Mom’s Will, while a good thing, still must be proven in court to be the last Will she made before her death (she could have made several, successive Wills) and that it was prepared and signed in accordance with Oklahoma law. The probate process begins by getting the Court to approve the Will and ends with an Order of the Court decreeing who, under the Will, became the owners of Wife’s assets at her death—in this case, her Children. Once this Court Order is filed in the county deed records, Buyer is safe in taking title to the Home from Children, who, in turn, are empowered to divide the financial resources equally.
Essentially, if a person passes away owning certain types of assets in his or her name, only, and without designating a beneficiary, a probate of that person’s estate or Will has to occur to pass good title to the decedent’s heirs (if no will) or to the persons designated in the Will. What types of assets trigger the need for probate if owned solely by the decedent? Land, mineral interests, cash, CDs, money market accounts, stocks and bonds are good examples.
How can probate be prevented? Setting up a Trust during Husband and Wife’s lifetimes into which the Home and financial assets are transferred is one way. Designating the Children as beneficiaries on the bank accounts also works. The use of a Transfer on Death deed to pass the Home on Wife’s death to the Children is another. However, each of these methods has pros and cons and should be thoroughly discussed with your attorney, tax professional and investment advisor.
