Riseling & Rhodes topright.jpg - 1731 Bytes
Estate Planning

STEP 1:
UNDERSTANDING BASIC PROPERTY LAW

    Understanding basic property law means understanding:

  • The five (5) general ways of owning property,
  • How ownership dictates how property is inherited, and
  • Who is in control of the property if you become incapacitated.
    The five (5) ways property may be owned and the most important aspects of each are as follows:
  1. Joint Tenancy with Right of Survivorship –
    • Owned equally by more than one person.
    • Upon the death of a joint tenant, the deceased joint tenant’s interest passes equally to the surviving joint tenants.
    • Upon the death of the second from last (i.e. one survivor left), the property becomes owned individually without a beneficiary designation.
    • No probate until last tenant dies.
    • Creditor of any joint tenant may seize to pay judgment.
    • Upon a joint tenant’s incapacitation, Guardianship required unless he or she has a Durable Power of Attorney ("DPOA").
    • Fails to take advantage of estate tax laws.
       

  2. Individually with a Beneficiary Designation –
    • Life Insurance Policy
    • Individual Retirement Account
    • Retirement or Pension Benefit (e.g. 401(k) and 403(b) benefit)
    • Annuities
    • POD ("Payable on Death") bank accounts
    • TOD ("Transferable on Death") securities account
    • Real Estate (Land) in Oklahoma can be owned this way as of November 1, 2008, provided the owner of the Real Estate has executed and recorded a Transfer on Death Deed before death
    • Vehicles, however, cannot be owned this way
    • Upon death of owner, property passes directly to the named beneficiary without probate.
    • Upon incapacitation, Guardianship required unless owner has a DPOA.
       

  3. Individually without a Beneficiary Designation-
    • Subject to probate administration.
    • Joint tenancy property, particularly real estate, automatically becomes this form of ownership.
    • Upon death, probate estate passes pursuant to the deceased owner’s Last Will and Testament or applicable State Law.
    • Upon incapacitation, Guardianship required unless owner has a DPOA.
       

  4. Revocable Trust-
    • Not subject to probate.
    • Upon Grantor’s (owner’s) death, property passes pursuant to Grantor’s Revocable Trust Agreement.
    • Upon incapacitation, No Guardianship or DPOA needed because Trustee has title to the property.
       
  5. Transfer with a Retained Life Estate-
    • Transfer of real estate to another (i.e., “gift”).
    • Gift subject to transferor’s (i.e., life estate holder) right to use, enjoy, and profit from the real estate during the transferor’s lifetime (i.e., “life estate”).
    • Only available for real estate.
    • Transferor loses control – cannot mortgage or sell without consent from all owners.
    • May trigger mortgage to become due in full.
    • Upon transferor’s death not subject to probate.
    • Upon incapacitation, guardianship required unless transferor has a DPOA.

    Your "estate" includes all five (5) methods of ownership, not just your probate estate.

    The term "estate" is confusing because it is often misused. For example, there is a "probate estate", "trust estate", "gross estate" and just simply "estate". The first is used to describe what goes through probate, the second term describes what is subject to a trust agreement, the next "gross estate" is a tax term, and the last term is used to describe all of your property.

Click here for STEP 2