ESTATEESTATE PLANNINGPLANNING A Simplified Guide for Oklahoma Farm and Ranch Families Circular E-726 Oklahoma Cooperative Extension Service Division of Agriculture Sciences and Natural Resources Oklahoma State University Revised June 2019 Estate Planning Problems ............................................................................................................................................ 4 Estate Planning Objectives .......................................................................................................................................... 5 How Property Is Owned ............................................................................................................................................... 5 Kinds of Property .......................................................................................................................................... 5 Ways of Owning Real Property ..................................................................................................................... 5 Fee Simple Ownership .................................................................................................................... 5 Life Estate ....................................................................................................................................... 5 Fee Simple Determinable ................................................................................................................ 6 Fee Simple Estates Subject to Condition Subsequent ..................................................................... 6 Co-ownership ................................................................................................................................................ 6 Tenancy-in-Common ....................................................................................................................... 6 Joint Tenancy ................................................................................................................................... 6 Tenancy by the Entirety .................................................................................................................. 7 The Deed as Evidence of Ownership ............................................................................................................ 7 Warranty Deeds ............................................................................................................................... 7 Quitclaim Deed ............................................................................................................................... 7 Purpose of Recording a Deed .......................................................................................................... 7 Importance of Delivery ................................................................................................................... 7 Estate and Gift Taxes ................................................................................................................................................... 8 Federal Estate Taxes ...................................................................................................................................... 8 Federal Gross Estate ........................................................................................................................ 8 Taxing Joint Tenancy Property ........................................................................................................ 9 Current Use Value ........................................................................................................................... 9 Computing “Current Use” Value ...................................................................................... 9 Recapture of “Current Use” Benefits .............................................................................. 10 Increase in Basis of Property on Which a Recapture Tax is Paid ................................... 10 Computation of the Taxable Estate .............................................................................................................. 10 Marital Deductions ........................................................................................................................ 11 Portability of Deceased Spouse’s Unused Exemption .....................................................................11 Federal Estate Tax Rates .............................................................................................................................. 11 Determining Taxes for Spouses ................................................................................................................... 11 Credits Against Federal Estate Tax .............................................................................................................. 11 Federal Estate and Gift Tax Credit ................................................................................................ 11 Deduction for State Death Taxes ................................................................................................... 11 Installment Payment for Estate Taxes ........................................................................................... 11 Federal Gift Taxes ........................................................................................................................................ 12 Marital Gift Taxes ......................................................................................................................... 13 Gift Tax Computations .................................................................................................................. 13 Example of Gift Tax Computations ................................................................................ 13 Taxable Gifts and Decedent’s Final Estate Taxes ......................................................................... 13 Other Gift Items ............................................................................................................................ 13 Basis of Property Received Within One Year of Death ................................................................ 13 Annual Payment of Gift Tax ......................................................................................................... 14 Oklahoma Gift Taxes .................................................................................................................... 14 Oklahoma Estate Tax .................................................................................................................... 14 2 Transferring Ownership .............................................................................................................................................. 14 Transfer by Contract .................................................................................................................................... 14 Outright Sale, with Mortgage Back .............................................................................................. 15 Land Contract (Purchase Contract) ............................................................................................... 15 Reserving a Life Estate ................................................................................................................. 15 Transfer by Gift ........................................................................................................................................... 16 Transfer by Combined Sale and Gift ........................................................................................................... 16 Transfer by Co-ownership ........................................................................................................................... 17 Joint Tenancy ................................................................................................................................. 17 Tenancy-in-Common ..................................................................................................................... 18 Partnership ..................................................................................................................................... 18 Transfer by Will ........................................................................................................................................... 18 General Provisions Applying to All Wills ..................................................................................... 19 Types of Wills ............................................................................................................................... 19 Simultaneous Death ...................................................................................................................... 20 Changing or Correcting a Will ...................................................................................................... 20 Importance of Legal Assistance ................................................................................................................... 20 Transfer by Law of Descent ........................................................................................................................ 20 Survivor’s Homestead Rights ...................................................................................................................... 21 Qualified Disclaimers .................................................................................................................................. 21 POD or TOD Registration