Is Probate Needed?
Q: What is meant by probating an estate?
A: Upon the death of a property owner, Oklahoma law provides for a legal process to determine the deceased owner’s probate assets, assess their value and distribute them to creditors and heirs. Such procedures take place in the district court of the county where the deceased property owner lived. If there is probate property of the deceased located in another state, additional proceedings called “ancillary administration” will be necessary in that state.
Q: Why is probate necessary?
A: An estate is probated for the following reasons:
- to identify and collect the probate property of the estate,
- to protect the property of the estate,
- to pay debts and taxes,
- to determine who is entitled to share in the estate and distribute the property to the proper parties and
- in the case of real estate and other record ownership property, probate provides a method to secure the legal transfer of such record ownership and thereby maintain a clear chain of title to the property.
Someone is required to step into the shoes of the deceased person, so to speak, and carry out the business of the estate and pay the debts, taxes and expenses, and, in the end, see that the property is distributed to the rightful parties in interest. That someone is called the personal representative of the estate. All of these functions are carried out under the supervision of the district court.
Q: What property must go through probate court?
A: When a person dies, that person’s property can be classified as either 1) probate property or 2) nonprobate property. Probate property generally includes any property owned by the deceased person in his/her name alone that does not have a named beneficiary (i.e. solely owned bank accounts, security accounts and real property). Probate property must go through probate court.
Nowadays, many people own much of their property in nonprobate property types of ownership. Nonprobate property includes property held in a trust, retirement accounts such as 401(k)s and IRAs, life insurance, pay-on-death (POD) bank accounts, transfer-on-death (TOD) security accounts and property held in joint tenancy. Nonprobate property does not go through probate court.
Q: Can a small estate avoid probate?
A: Yes. If the cumulative value of a deceased person’s probate property (not including real estate) that would otherwise go through probate court is less than $20,000, that property can be obtained by the deceased person’s successors by the use of a Small Estates Affidavit.
Q: What determines who receives the probate property?
A: If the deceased person had a will, the person’s will determines who receives the probate property. If the deceased person did not have a will, the laws of Descent and Distribution determine who receives the probate property.
Q: What are the laws of Descent and Distribution?
A: If a person dies without a will, Oklahoma law determines how that person’s probate property will be distributed. The law of Descent and Distribution will be subject to any prenuptial marriage contract. Assuming there is no prenuptial contract, if the deceased leaves a spouse and children of their marriage, the surviving spouse receives one-half of all the probate property of the deceased, whether acquired by the joint industry of the husband and wife during marriage or otherwise. The remaining one-half of the probate property passes in equal shares to the surviving children. When a person dies leaving a spouse and children, one or more of whom are children from a prior marriage, the surviving spouse receives one-half of the property acquired by the joint industry of the husband and wife during the marriage and the children share the other half equally. All remaining property of the deceased person is shared equally by the surviving spouse and children of the deceased. Additionally, where a person’s child has predeceased them, if that deceased child is survived by children (the deceased person’s grandchildren), those grandchildren will receive in equal shares the portion of the estate that their parent would have received if living. If the deceased person has no spouse or descendants (i.e. children, grandchildren, etc.) the entire estate goes to the deceased person’s parents. If both parents are deceased, the entire estate goes to the deceased person’s brothers and sisters and the children of any deceased brothers and sisters.
Q: Do I need a will or a trust?
A: Whether or not you make a will or create a trust is up to you. A major factor in deciding whether to use a will or a trust is the fact that wills must be probated to accomplish the transfer of probate property while trusts can accomplish the transfer of property without going through the probate court. See the Oklahoma Bar Association brochure titled “Do You Need a Will or Trust?” for additional information on this topic. Regardless of whether you choose a will or a trust, experience has proven the wisdom of one who carefully considers the provisions of these estate planning documents. Having your will or trust timely and properly drawn will assure you and your loved ones that upon your death the disposition of your property will be as you intended.
After you have made your will or trust, it is important that you periodically review it with your attorney to keep it up to date, taking into consideration current individual circumstances and tax laws.
Q: What does probate involve?
A: Probating an estate requires that a responsible party, called the personal representative, be appointed by a judge of the district court at a hearing to carry out the duties outlined below. The personal representative may be an individual such as the deceased person’s spouse or adult child or it may be a bank or trust company. If the deceased names a personal representative in a will, that party is usually appointed by the district court. If the deceased does not have a will, the district court will usually appoint the closest relative as the personal representative. The functions and duties of the personal representative are:
- to identify, take possession, protect and conserve all of the real and personal property of the estate,
- to receive and collect all rents, payments and debts due the estate, including interest, dividends, claims and notes,
- to determine the names, ages, residence and degree of relationship of all possible heirs,
- to determine and pay any outstanding debts including taxes and
- to carry out the orders of the district court in all matters before the court and to distribute the property to the proper parties.
These steps and proceedings require preparing and filing numerous legal documents, publishing certain notices in a newspaper, holding district court hearings, securing appraisals of property, preparing interim and final income tax returns and any required gift and estate tax returns, providing an accounting of funds, making actual distribution of the property and receiving the final discharge of the personal representative by the district court.
Supervision by the District Court
All of these proceedings are under the jurisdiction and supervision of the judge of the district court. Every action taken by the personal representative is subject to the scrutiny and approval of the judge. All determinations are made by the judge, without a jury, including the payments of debts, payment of attorney and personal representative fees and the final distribution of the estate assets.
Q: How long does probate take?
A: It is difficult to predict how long it will take to administer any estate because each one is different. Creditors must be given two months in which to submit claims following publication of a notice to creditors in a newspaper. The personal representative must file an inventory of the assets of the estate within two months after appointment, unless the inventory is waived by the court.
The personal representative must file an accounting of the handling of the estate funds at the conclusion of the probate and a minimum of 20 days notice must be given for a hearing on the accounting.
The minimum time required to administer a simple estate is six to 12 months. Complex estates with property to be sold usually take longer. In the increasingly rare case where an estate is subject to federal estate tax, a tax release from the Internal Revenue Service must be filed with the court before the judge will issue a final decree distributing the estate property.
Special procedures are available for administering small estates and estates passing completely to a surviving spouse. In these cases, the time required may be considerably shorter.
Fees, Costs and Estate Taxes
Three sources of expenses that arise in connection with the administration of the estate, other than property management expenses, are court costs, estate taxes and attorney and personal representative fees.
Court costs are based on a schedule of charges made for each matter handled by the district court.
Federal estate taxes are assessed against estates where the total value of the probate property and nonprobate property exceeds the exemption amount for the year in which the person died, as set forth below:
Oklahoma no longer has an estate tax for persons who died after Jan. 1, 2010. Depending on the size of the estate, there may still be Oklahoma estate tax due for persons who died before that date.
Attorney fees are based upon reasonable charges necessary to provide appropriate compensation to the attorney, considering the scope and extent of services rendered and responsibilities assumed. The personal representative is allowed a fee, fixed by law, of approximately 2.5 percent of the probated estate. Fees for attorneys and personal representatives are subject to the approval of the district court.
(Revised August 2015)
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