Life Estates Are a Great Part of Estate Planning in Oklahoma
We all want to pass on our assets to our loved ones without the burdens of taxes and the complications of probate if we can. Luckily, Oklahoma law provides us with tools to accomplish these goals as part of our estate plan. Choosing the right tools to match our goals is an important part of the job of a qualified Oklahoma estate planning attorney. One such tool is the life estate. Here is what you want to know about the life estate and how it can help you.
The Life Estate is a Legal Tool
A life estate is a form of property ownership or interest. It grants the life tenant the right to use, occupy, and benefit from a property for the duration of their life. Upon the death of the life tenant, the property then passes to another individual or entity, known as the remainderman. The remainderman holds a future interest in the property. This arrangement allows for the transfer of property upon the life tenant’s death without the need for probate.
Key Characteristics of a Life Estate
Oklahoma law governs the laws related to real and personal property, including provisions on life estates, future interests, and the rights and duties of life tenants and remaindermen in Title 60 of its Code. The Oklahoma Trust Act includes provisions relevant to the creation and management of life estates, especially when they are part of a trust arrangement.
An Oklahoma life estate can be created through a deed, will, or other legal instrument. The document must clearly specify the terms of the life estate, including the duration of the life tenant’s interest and the identity of the remainderman.
A life estate lasts for the lifetime of the life tenant. It cannot be sold or passed through a will by the life tenant, though the life tenant can often sell their life interest or agree to terminate it early under certain conditions. The life tenant has the right to use and benefit from the property but must also maintain the property, pay property taxes, and not do anything to significantly reduce the property’s value for the remainderman.
A life estate typically terminates upon the death of the life tenant, at which point ownership of the property transfers to the remainderman. However, the life estate can also be terminated earlier if the life tenant chooses to surrender their interest, if both parties agree to terminate the arrangement, or if certain conditions specified in the legal instrument occur.
Purposes of Using a Life Estate in Estate Planning
Life estates can be used in estate planning in Oklahoma for various purposes. Chief among these is to avoid probate. By transferring property into a life estate, the property can pass to the remainderman outside of the probate process upon the death of the life tenant. This can help streamline the transfer of assets and reduce administrative costs. It is important to understand your goals and whether a life estate is a good fit for you.
A life estate can also be used for asset protection. Life estates can be used as a strategy to protect your property from creditors or legal claims. Since the property technically belongs to the remainderman upon the death of the life tenant, it may be shielded from certain types of creditors’ claims against you as the life tenant.
In Oklahoma, property held in a life estate is typically not counted as a countable asset for Medicaid eligibility purposes after a certain period of time has passed. This can be necessary for you if you may need long-term care and want to protect your property from being counted as an asset for Medicaid qualification.
Life estates can also be used as part of a comprehensive estate plan to minimize estate taxes. By transferring property into a life estate, the value of the property may be excluded from your estate for tax purposes, potentially reducing the overall estate tax liability.
Finally, a life estate can be used to allow you to maintain control over the distribution of your property even after your death. For example, you may use a life estate to provide for your surviving spouse while ensuring that the property ultimately passes to your children or other beneficiaries.
Overall, life estates can be a valuable tool in estate planning in Oklahoma, offering flexibility, asset protection, and tax advantages for individuals looking to effectively manage their assets and provide for their loved ones. However, it’s essential to consult with an estate planning attorney in Oklahoma to determine whether a life estate is appropriate for your specific circumstances and goals.
Consult With an Experienced Tulsa Life Estate Attorney
Bring us your questions and let’s see what we can do to help you reach your goals. We are here for you at Oklahoma Will & Trust. To make an appointment for your consultation call (918) 876-4500. A skilled and sympathetic estate planning attorney can help you take care of your loved ones and reach your estate planning goals.