Dying Intestate
To die intestate means to die without a valid will. The Oklahoma law of Intestate Succession is addressed in 84 Okla. Stat. § 213. Intestate succession is receiving the property of one who dies without disposing of their property before they die. And there are a lot of quirky rules with the succession laws of intestacy.
The legal process for distributing an estate is known as a probate. A probate is generally initiated to prove a will and distribute a decedent’s estate. Probate courts have jurisdiction over the proving of wills, administration of a decedent’s estate, and guardianship of minors and incapacitated persons.
Where a person dies without a will, the decedent’s property is distributed according to the intestacy laws where they were domiciled. Usually, “domicile” means where a person lives. The domicile determination can be tricky when a person has more than one home and pays state taxes in more than one state. If the decedent owned real property in other states, then a secondary or ancillary probate need to be opened in the any state(s) where the real property is located. The laws regarding intestate transfer of assets vary because the Federal laws generally leave these types of issues to the states. Determining the state of Domicile can become a heated fight for control of the estate and even for the associated tax revenues from the estate.
There are some important questions to ask when a person dies intestate. In Oklahoma, one question is whether the decedent is of Native American descent. If the decedent did not write a will and was the owner of restricted land or ownership in trust, the decedent’s interests will pass under the federal probate code or approved tribal probate code. Another question to ask is whether they were married. In Oklahoma, if the decedent leaves a surviving spouse, only if there are no surviving children, parents, or siblings, will the estate pass entirely to the spouse. You can imagine this can set up some ugly scenarios with people that have been in more than one marriage.
Consider this as well, if there are no surviving children but the decedent is survived by a parent or sibling – the spouse will inherit all the marital property acquired during the marriage and an undivided one-third (1/3) interest in the remaining estate (the spouse’s separate property). The important thing to remember about the law of intestacy is that assets are transferred based upon bloodlines and not relationships. An estranged relative could end up with a share, or all, of the estate depending on the blood relationship.
Now what if the decedent does not have a spouse or children, then the estate will go to their parents; if their parents have already passed away, then the estate will go to the siblings; if they do not have any siblings, then the estate will go to their grandparents; if their grandparents have already passed away, then the estate will go to aunts and/or uncles; if there are no aunts or uncles, then the estate may go to the State where the decedent lived or owned property.
As you can now understand, one of the first steps in the estate planning process involves gathering all the important information for the attorney. This should include personal information relating to the individual and their family, and names of individuals to act on the creator’s behalf for financial decisions as well as health care decisions. There should be alternates for these individuals in case they move, pass away, or otherwise become unable to fulfill the role.
The Last Will And Testament
The last will and testament is the last document setting forth the individual’s wishes with regard to the distribution of their estate, and contains information regarding marital status, children, trusts, interest in properties they own, and titles to real estate. When probating an estate, the order of priority is always presumed to be with the Last Will and Testament.
In their will, a person can choose to create a testamentary trust, which is funded under the oversight the probate proceeding. This is a typical scenario where there are minor children or other incapacitated beneficiaries. For a Testamentary Trust there will be annual reporting requirements to the Court until the trust is dissolved.
The creator of the will appoints an executor, which is the person who will serve as personal administrator and attend the probate hearings to ensure that the estate is distributed in accordance with the decedent’s wishes. Successor executors may be appointed to fill this role should the initial person selected become unable to act.
Because an executor is considered a fiduciary, they have an ethical duty to act in good faith to make sure the estate is distributed according to the terms of the will. Under statute, an executor is often required to post an executor’s bond in the value of the estate. This bond ensures the executor’s faithful administration of the estate. The estate can be charged for the cost of the bond, and is usually a small percentage of the estate’ total value. Often this cost is avoided by appointing a trusted executor and under the terms of the will not requiring the executor to post a bond.
One of the disadvantages of a will is that it does not necessarily allow a person to protect their assets during their life. In addition, it is limited in terms of how assets can be distributed after death. For these reasons, for more sizeable estates, a trust is generally a better option. The use of a trust(s) allows more flexibility in the management of the estate – both during life and after death.