What happens to a person’s property when they die?

I am going back to a more basic level.  I blog about Trusts, Wills, avoiding probate and estate planning.  What I realized recently was that all of these things may ignore a more basic question that underpins each of these items:

What happens to a person’s property when a person dies?  Read on to find out.

The answer to the question depends on how the property is owned.  Let me go over some of the basics.

Outright Ownership.  This category is as simple as it sounds – you own your own property.  I own my car, my computer, my watch, perhaps even my home.

Shared Ownership.  This usually falls into the category of jointly owned (most married couples own their home as “joint tenants with right of survivorship”), owned as a tenant in common or owned but with a mechanism to transfer upon death (POD bank account).

Owned by another legal entity.  This is where the Trust usually comes in.  A trust is a legal entity separate from the person who creates it.  That means I can create a revocable living trust, transfer property to it and as far as the law is concerned, the Trust is the owner of the property.

Generally . . .

If you own your property outright and pass away, the property is inherited by your heirs. However, if the property is real property or mineral interests, you will need a court-order in a probate proceeding to change title from the person who passed away to his heirs.

If your property is under shared ownership, the property usually belongs to the person you shared ownership with, upon your death. For example, when a home is owned by two as “joint tenants with right of survivorship”, the survivor is entitled to become the sole owner of the property (with a small technical-legal transfer step you can read about here).

If your property is owned by another legal entity, such as a Trust, when you pass away, the property is distributed however the trust provides, usually without probate.

Any questions?

 

Shawn Roberts

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I write about and try to answer practical Oklahoma legal questions. I tend to focus on estate planning and business issues. I make a living as an attorney working for Resolution Legal Group in Oklahoma City. I am husband to Amy and the father of Sam and David. We live exactly in the path where the "wind comes sweeping down the plains."