The real property that you own may have a value higher than any other assets in your portfolio. Land where you have long grazed cattle or where you have oil and gas leases can offer not just financial value but also a source of revenue.
It is common for those who have made their living off of the land to want to pass those opportunities to the next generation when they retire or die. When it comes to transferring land ownership to someone else, there are many issues that could arise to complicate the process.
Creating the right estate plan now will make it easier for you to pass your ranch land or property subject to an oil-and-gas lease on to your children or grandchildren to provide for them later.
Many people hold their real property in a trust
Trusts are powerful legal entities that help preserve your privacy and prevent creditors and plaintiffs in civil lawsuits from coming after your most valuable asset. It is a common tactic for property owners in Oklahoma to utilize a land trust to hold the title for their ranches or their oil and gas properties.
When the trust becomes the owner of record for the property, that makes it harder for creditors and those filing a lawsuit to lay claim to the property. Trusts also protect the property by helping it bypass probate when someone dies. Holding the property in a trust could help you avoid estate taxes if the land is particularly valuable.
Finally, trusts can reduce the likelihood of an estate challenge, as they are harder for people to contest in probate court than wills.
Are there downsides to using a trust for your land?
If the property in question is technically part of your homestead, then there may be some tax consequences when you transfer the property into a trust. It may be subject to a higher property tax rate than it would be if you continue to own it in your own name. There could also be challenges when you want to refinance and transfer the property, but such issues are easy to address with the right support.
Thinking about what happens to your most valuable property when you die will help you utilize the best tools available in your estate plan.