Estate Planning 101

Transfer on Death in Oklahoma: How it Works and What You Need to Know | Snug

January 11, 2024

Are you an executor or trustee?

Snug can help you get organized by providing one place to store and analyze Wills, Trusts, and other essential documents. You can inventory finances, personal property, digital assets, insurance, and more.
Get started for free

Want to get organized?

Snug can help you organize all of life's details by providing one place to store and analyze Wills, Trusts, and other essential documents. You can inventory finances, personal property, digital assets, insurance, and more.
Get started for free

Want to offer estate planning?

Snug is a complete estate planning solution built for Financial Advisors who want to save time and offer their clients more. Whether you have an UHNW client who needs their documents analyzed or a mass affluent client getting their first Trust, we can help.
Get started for free

Need a Will or Trust?

Snug makes it easy to create a Will or Trust in under 20 minutes. Powers of Attorney and Health Care Directives are included for free with any Will or Trust, as is a year of free updates.
Get started for free

Estate planning involves several tools to ensure a smooth transition of assets upon death. One of these tools is the "Transfer on Death" (TOD) provision. This guide will provide a comprehensive look at TOD provisions under Oklahoma law and how they operate.

Understanding Transfer on Death

A Transfer on Death (TOD) provision is a legal tool used in estate planning that allows the owner of an asset to name a beneficiary who will inherit the asset upon the owner's death. This mechanism bypasses the probate process, making the transfer more efficient. The beneficiary has no legal rights to the asset until the owner's death.

Transfer on Death vs. Joint Ownership

In Oklahoma, both TOD provisions and joint ownership are recognized methods of transferring assets. Joint ownership involves two or more individuals having an equal ownership interest in an asset. Upon the death of one owner, the surviving owner(s) inherit the deceased's portion, avoiding probate. TOD provisions, on the other hand, allow an asset owner to name a beneficiary who will receive the asset upon the owner's death, also avoiding probate. However, the beneficiary does not have any ownership interest in the asset until the owner's death.

Creditor Protections from Transfer on Death

In Oklahoma, TOD provisions provide some protection from creditors. When an individual dies with unpaid debts, creditors usually have a designated period to claim against the deceased's estate. Assets transferred via TOD provisions are generally inaccessible to creditors, unless the transfer was fraudulent.

Conflicts Between Your Will and TOD Provisions

In Oklahoma, if a will and a TOD provision contradict each other, the TOD provision typically takes precedence. This means if your will stipulates an asset should transfer to a certain person, but the TOD provision on the asset names a different individual, the asset will go to the person identified in the TOD provision.

Tax and Debt Implications of TOD

In Oklahoma, assets transferred via TOD are subject to the same federal estate tax rules as assets transferred through other means. Oklahoma does not impose a state estate tax. Regarding debts, assets transferred via TOD provisions are typically protected from the deceased's debts unless a fraudulent transfer can be established.

Real Estate and TOD in Oklahoma

In Oklahoma, real estate can be transferred via a TOD deed, also known as a beneficiary deed. This deed allows a property owner to designate a beneficiary who will automatically inherit the property upon the owner's death, avoiding probate. This tool is particularly helpful for homeowners in Oklahoma, offering a way to ensure a seamless transition of their property without the time and costs associated with the probate process.

The Validity of Lady Bird Deeds in Oklahoma

A Lady Bird deed, also known as an enhanced life estate deed, is a legal document that allows an individual to pass property to beneficiaries while retaining a life estate in the property. However, Oklahoma does not recognize Lady Bird deeds. Similar outcomes can often be achieved through the use of a revocable living trust or a TOD deed.

How to Establish a TOD Provision in Oklahoma

Establishing a TOD provision in Oklahoma often involves filling out a form provided by the financial institution that holds your assets. For real estate, a TOD deed must be filled out and recorded with the county recorder's office. It's crucial to follow all pertinent rules and requirements to avoid potential complications or disputes.

The Limitations of TOD Provisions

Despite the advantages TOD provisions offer, they are not without limitations. They do not allow for complex asset dispositions or provide detailed instructions, as a will or trust might do. Also, if the beneficiary predeceases the owner, the asset will typically go through probate unless a contingent beneficiary is named.

Revoking a TOD Provision

In Oklahoma, TOD provisions can be revoked or changed at any time during the owner's life, as long as the owner is mentally competent. This usually involves completing a form provided by the financial institution, or for real estate, recording a revocation form with the county recorder's office.

In conclusion, understanding the laws governing TOD provisions in Oklahoma is crucial for effective estate planning. Consulting with an experienced estate planning attorney is advisable to ensure your assets will be distributed according to your wishes.