Oklahoma’s Nontestamentary Transfer of Property Act
Oklahoma is among a growing minority of states that have enacted a transfer-on-death deed act. Oklahoma’s version, the Nontestamentary Transfer of Property Act (the “NTPA”), is a mouthful; however, it provides a useful tool for landowners to transfer ownership of their land at death to another person without the transfer being subject to expensive and public probate procedures, gift taxes and other legal requirements that have historically been imposed on testamentary land transfers.
Prior to the enactment of the NTPA, landowners had limited options for transferring ownership of their land at death, such as a will, which is subject to the public procedures of probate, or the creation of a trust that can be expensive, and many times more appropriate for complex estate planning. The NTPA provides an alternative to these methods of transferring land at death by allowing landowners to execute and record a transfer-on-death deed (“TOD”) that designates a “grantee beneficiary” who will take title upon the owner’s death. Some aspects of a TOD are:
- The transfer takes place upon the death of the owner, not when the TOD is recorded.
- No monetary exchange is required, and no signature, consent, agreement or notification is required to be provided to the designated grantee beneficiary.
- At any time during the owner’s life, the owner may revoke or change the designated grantee beneficiary.
- The designated grantee beneficiary takes title to the land exactly as it was held by the owner at the time of the owner’s death and is, therefore, subject to all conveyances, assignments, contracts, mortgages, liens and security pledges made by the owner, including any leases, etc.
- The owner shall remain the equitable and legal owner until death and considered absolute owner with respect to creditors and purchasers.
- TheTOD is not considered a completed gift; therefore, it is not subject to gift taxes.
- The TOD will become public record once filed; however, the beneficiary is not required to receive notification. Therefore, the process is relatively private and can be a valued alternative to probating a will.
While not a replacement for important estate and tax planning, the NTPA can be a useful tool for farmers and ranchers. Everyone is probably aware of a circumstance when a landowner made it known how he wanted to leave his land after death, but failed to take the necessary steps to create a valid will and the landowner’s wishes ultimately were not honored. In other cases, the landowner may have taken the step to put one child on the deed only to realize later that the action could not be unilaterally unwound or modified to include other children. The NTPA gives landowners a simple, cost-efficient and revocable method for transferring ownership in land upon the landowner’s death that will not burden the beneficiary with the costs and expenses of probate, gift taxes and other legal requirements that have historically been imposed on testamentary and non-testamentary real estate transfers.