What is probate?
Probate is a legal process whereby a court oversees the distribution of assets left by a deceased person. Assets are anything a person owns with value, such as real and personal property and cash, for instance.
When is probate needed?
Probate is not always necessary. If the deceased person owned bank accounts or property with another person, the surviving co-owner often will then own that property automatically. If a person dies leaving very few assets, such as personal belongings or household goods, these items can be distributed among the rightful beneficiaries without the supervision of the court.
Sometimes probate is needed to:
Clear title to land, stocks and bonds, or large bank or savings and loan accounts that were held in the name of the deceased person only, and put the title to these assets in the names of the rightful beneficiaries.
Collect debts owed to the deceased person.
Settle a dispute between people who claim they are entitled to assets of the deceased person.
Resolve any disputes about the validity of the deceased person’s will.
What happens during the probate process?
If the deceased person had a will, the will is “proved” and delivered to the court. The deceased person’s will can be proved by an affidavit made under oath by the witnesses to the will. If such an affidavit is unavailable, the personal presence of the witnesses may be required in court to testify that at the time the will was signed, the deceased person was of sound mind and knew what he or she was doing.
A personal representative is selected. A personal representative is someone who handles the deceased person’s affairs. A will generally names a personal representative who, if willing to serve and otherwise qualified, will be approved by the court. If a person dies without a will, the court will select the personal representative, usually the spouse, an adult child or another close relative. If none of those people are available or willing to be the personal representative, the court may choose a bank, trust company or a lawyer.
A notice to creditors is published in a local newspaper. This public notice to creditors tells the creditors that they have four months to bring any claim against the estate for debts the deceased person owes them. The personal representative also gives written notice to all known creditors.
The heirs and people named in the will are notified of the probate proceeding.
Assets are identified and an inventory is prepared and filed with the court. The personal representative works to identify and value the deceased person’s assets. Depending upon the type of assets and the kind of records left by the deceased person, this step can be quite straightforward — or more difficult and time consuming.
Debts are paid. The personal representative ensures that creditors are paid. Creditors must be repaid from the estate before the remaining estate assets can be distributed to the rightful beneficiaries.
The personal representative prepares state and/or federal tax returns and any inheritance, gift and estate tax returns and pays any taxes due.
The personal representative prepares and submits an account to the people named in the will, the heirs of the deceased person and the court. Or if the heirs and people named in the will choose to waive that accounting, a “verified statement” in lieu of that account can be filed with the court for approval.
The account shows all money paid out from the estate and all money collected by the estate. It also contains a narrative explaining the important actions taken in connection with the probate of the estate.
After court approval of the account and payment of all unpaid probate expenses, the deceased person’s assets are distributed to the people and entities (such as charities or trusts) named in the will or, if the person died without a will, to the heirs of the deceased person.
What is a “small estate” proceeding?
Oregon allows an abbreviated procedure for handling small estates that would otherwise require a full probate. If an estate fits in this category, the cost and time for distributing the estate assets may be greatly reduced. The procedure involves filing a document called an “affidavit of claiming successor.” This abbreviated procedure can be used if the estate’s personal property is valued at no more than $75,000 and real property is valued at no more than $200,000, for a total aggregate estate value of no more than $275,000. (These rates are accurate as of April 2018, but can be changed by the state legislature. Please see an attorney or advisor to ensure that they are still accurate.) Real property includes land and buildings or structures placed on land, such as houses, commercial buildings and agricultural buildings. Personal property includes all other property, such as cars, boats, clothing, stocks, bonds and personal items.
How long does probate take?
Probate can be started immediately after death and takes a minimum of four months. If the estate includes property that takes a while to sell, or if there are complicated tax or other matters, probate can last much longer. A small estate proceeding cannot be filed until 30 days after death and is complete upon filing.
What are the costs involved?
Under Oregon law, a personal representative is entitled to a fixed percentage of the value of the total estate. Extra costs may be approved by the court for the personal representative and a lawyer, if the estate is complicated. Other costs include court filing fees, legal notices published in the local newspaper and any other necessary expenses. Lawyers generally charge an hourly rate for their services.
Does probate mean more taxes?
No. Probate does not affect taxes that must be paid. These amounts are based on the total assets that you own at the time of your death. There are federal estate taxes as well as taxes due to Oregon. These amounts change frequently as Congress and our state legislature determine the amounts. Check with your attorney or advisor for details.
Do I need a lawyer?
Probate in Oregon involves a good deal of paperwork that must be filed in a timely manner. To achieve the results you want, probate should be handled with an understanding of the legal principles involved. A probate lawyer can help you avoid the many possible tax traps and other problems that could arise. Also, a lawyer can help you prepare and file the legal documents and prepare you for hearings in court.
Legal Editor: Don Johnson, April 2018