A home is often a family’s most valuable asset, and a significant inheritance for family members to receive. Unfortunately, it is common for the legal process of probate to delay that inheritance by months, requiring families to absorb legal and administrative fees.
An experienced estate planning attorney often recommends creating a Transfer-on-Death deed, a practical alternative that allows property owners to pass real estate directly to their chosen heirs without probate.
A Guide to the Transfer-on-Death Deed in Oklahoma
A Transfer-on-Death deed allows the transfer of property ownership when the owner dies. It is not limited to residences, as it can apply to mineral rights, drilling rights, and land as well. By using this specialty deed, the property does not go through the probate process, as long as specific steps are taken.
Oklahoma’s Nontestamentary Transfer of Property Act allows Transfer-on-Death deeds. Requirements include:
- The owner of the property or interest must record the deed with the beneficiary named
- The new deed must be witnessed and notarized, then recorded at the appropriate land court office
The Owner Retains Control During Their Lifetime
A Transfer-on-Death deed does not impact the owner’s property rights during their lifetime. The owner may use the property, live in it, rent it, sell it, refinance it, and revoke the TOD deed if they change their mind. The beneficiary has no legal interest in the property during the owner’s lifetime.
The owner of the property is not required to give notice to the beneficiary during their lifetime. If the owner decides to, the beneficiary may be changed at any time by updating the deed or revoking the TOD.
Creating a Valid TOD Deed in Oklahoma
The correct execution of a TOD deed is critical. An error can invalidate it and force the property into probate. The deed must:
- Include the full legal description of the property
- Name the current owner
- Name the beneficiaries
- state if multiple beneficiaries will hold the property as joint tenants with right of survivorship or as tenants in common.
- signed in the presence of a notary by the owner and two disinterested witnesses.
- recorded while the owner is living, in the county where the property is located.
What Happens When the Owner Dies
Within nine months of the owner’s death, the beneficiary must provide a copy of the owner’s death certificate and accept the property by filling out a Beneficiary’s Affidavit form with the county clerk. Once the form is filed, ownership is transferred.
Limitations of TOD Deeds
A key aspect of a TOD deed is that it does not protect from estate creditors. That means the property is likely to be included in the overall estate valuation upon the owner’s death, potentially triggering federal estate taxes (Oklahoma does not have an estate tax).
In the case of Medicaid eligibility, a TOD does not help because the property does not transfer while the owner is alive, so the property remains a countable asset.
Oklahoma does not recognize contingent beneficiaries, so if the beneficiary dies before the owner of the TOD property, a new TOD deed must be drawn up with a different beneficiary. If no new deed is created, the asset will pass through probate when the owner dies.
Importantly, a TOD deed applies only to real property. Bank accounts, vehicles, and personal property may not be transferred this way.
Make Your TOD Part of a Comprehensive Estate Plan
This simple and cost effective estate planning tool is readily available to Oklahoma property owners, but proper execution of the documents is critical. An experienced attorney from Kincannon Law Firm can ensure that your estate plan covers your assets completely, including the recording of TOD deeds. Call for a consultation today.