Probate is the court-supervised procedure of administering a deceased individual’s property (called the estate) which begins by approving the legitimacy of the last will (if there is one), paying the deceased person’s creditors, and distributing the deceased person’s remaining assets to the parties entitled to them either under the will or prescribed by Oregon law if there is no will.
In Oregon, probate proceedings are supervised by the judge who presides over the probate department of each circuit court. The personal representative, lawyer and the probate department clerks do most of the work and the process in Oregon is quickly moving to one where all the filings can be done over the internet. But still the process takes a long time—9 months is about a minimum with all the notice periods, and it can take much longer and the assets are tied up until it is finished.
Frequently, due to beneficiary designations, tenancies with a right of survivorship and trusts, no probate is required. A significant goal of estate planning is to position assets to be transferred to your intended recipient with the minimum of fuss after your death. This is frequently called probate avoidance.
However, extensively preplanning your own estate administration to avoid probate can be expensive and time consuming. Changing laws and family circumstances mean that any estate plan has a shelf life—once done an estate plan does not last forever. So a rational approach is to size the amount of expense and effort expended according to the likelihood that you might die in the near future and the gravity of the harm that would be experienced if you died without a comprehensive estate plan. Single parents, elderly and terminally ill clients are well advised to expend more time and treasure on the effort.
If a deceased person leaves an interest in property for which a court proceeding is necessary, there are two forms available in Oregon, depending for the most part on the value of the estate.
For simple estates of modest value, an abbreviated proceeding known as a small estate affidavit is available. The fair market value of the assets can only be $275,000 or less, with no more than $75,000 attributable to personal property and no more than $200,000 attributable to real property. Often this procedure is used to clean up miscellaneous assets that weren’t taken care of by beneficiary designations, tenancies with a right of survivorship or trusts even in comprehensive estate plans. People can even find copies of the forms and file small estate affidavits themselves, but this often leads to more trouble and expense than if they hired a lawyer to help them in the first place. Probates may have to be opened years after someone died because heirs never received legal title to real estate that anyone can purchase from them with title insurance. If there are complicating facts or circumstances, one will need to initiate a full probate.
WHAT HAPPENS IN PROBATE
Probate begins by filing a Petition in the Probate Department of the appropriate county court, preferably with an original will attached. If the original will cannot be located probate is still possible but more difficult, and if the person died without a will the State of Oregon has written a will for them by statute. Many counties will not accept a petition that was not prepared by a lawyer.
The Personal Representative
A personal representative is proposed to the court in the Petition. The personal representative frequently is someone named in the will to handle the deceased person’s affairs while the Probate is going on. If a person dies without a will, the court will select or approve 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 appoint a bank, trust company or lawyer to do the job. The personal representative is paid a percentage of the estate for their services.
Limited Judgment and Letters of Administration/Letters Testamentary
The probate court issues official looking papers that act as a badge of authority for the personal representative to do their job.
If there isn’t a will containing a provision that waives bonding, the personal representative usually must file a bond with the court before they can take any official actions. A bond is expensive and is an expense that is avoided with just a few words in a will.
A notice to creditors is published in a local newspaper informing creditors that they have four months to bring a claim against the estate for any debts they might claim the deceased person owes them. The personal representative also mails written notice to all known and possible creditors.
The heirs who would take if there was no will under Oregon law and people named in the will also are notified of the probate proceeding.
The personal representative identifies and values the deceased person’s assets, prepares an inventory and files it with the court. Some assets may have to be recovered if they have been inappropriately absconded with.
Debts are paid
The personal representative pays creditors or disallows their claims. This may lead to disputes that the court must decide. Rightful creditors must be paid from the estate before the remaining estate assets can be distributed to the beneficiaries.
The personal representative has an accountant prepare state and federal income tax returns and any inheritance, gift and estate tax that are required and pays any taxes due.
The personal representative prepares and submits an account to the court and to all the people, trustees of trusts and charities named in the will and the heirs of the deceased person. 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 named in the will or, if the person died without a will, to the heirs of the deceased person. The personal representative’s duties are now done.
All of this amounts to what should be done regardless of whether a Probate is started in court or not.