Understanding the Probate Process in Oregon: A Comprehensive Guide

In this article, you will learn about what probate is, whether probate is needed, and what the probate process is in the state of Oregon.

One of the first questions following someone's death is whether or not there will be a probate proceeding. Probate is the court supervised process that results in a court validating someone's will or determining that someone without one.

This article will explain how the probate process works in Oregon and when probate is needed.

Probate's Purpose

In probate, the court will appoint someone called the Personal Representative to all aspects of the your estate. During probate, your assets are located and inventoried, taxes and debts are paid, and the remaining assets of the estate is distributed.

When is probate needed?

Unless you have properly planned to avoid probate, your estate will generally need to go through the probate process. If you do not have a will or trust, the following are generally subject to probate:

• Property titled only in your name

• Property owned as "tenants in common" or property owned without survivorship provisions

• Shares of a business

• Non-titled property including household items, jewelry, furniture, clothing, and other general items
  

What does not need to go through Probate?

Certain assets and property do not have to go through probate if prior planning was completed. You can avoid probate for the following with proper planning.

• Assets owned jointly or with survivorship provisions. Property titled jointly with the right of survivorship automatically go to the surviving party at your passing. In Oregon, real property jointly by a married couple is presumed to be held with survivorship rights and the real property automatically goes to the surviving spouse. This type of ownershp is also known as "tenants in the entirety".

• Assets that permit beneficiary desigations. Naming a beneficiary on permissible assets can allow your loved one to avoid probate. Examples include life insurance policies, certain bank accounts and investment accounts.

• Assets owned by a Living Trust. Since the trust owns the assets inside the trust, anything in your can pass to your beneficiares without probate.

• Transfer on Death (TOD) or Payable on Death (POD). You may title certain assets such as bank accounts, certain real estate, financial accounts,vehicles etc as POD or TOD to bypass probate and transfer the asset directly to your beneficiary.

What is the Probate Process?

Selection of Personal Representative

If probate is required, a personal representative for the deceased's assets must first be named. If there is a will, someone was named to serve this role. Although named as personal representative, no one is forced to serve, and the person may decline the job. If no will is found, the nearest relative or relatives have the first right to serve or select someone else to perform the duties.

Court Appointment

Probate is begun by filing a petition in the circuit court in the county where the deceased person lived at the time of his or her death or owned property in at the time of death. There is a probate filing fee that is based on the estimated value of the estate and ranges from $278-$1176. This amount can be reimbursable to the payor from the estate. Once the petition is filed and the order accepted, Letters Testamentary or Letter of Administration will be issued by the Court appointing the personal representatives.

Purchase on Bond

Unless waived by the will, a surety bond must be posted by the personal representative. This bond is simply an insurance policy that insures the estate against loss from theft or other improper activity by the executor or administrator. The bond's premium is typically paid from the estate.

Asset Collection/Inventory

The personal representative must take possession of all the assets that are subject to the probate process soon after being appointed. This collection will not include assets held in joint tenancy, in a living trust, or those subject to beneficiary designation since those are not part of the probate process. The personal representative is obligated to marshall the assets of the estate,which includes collecting financial statements to all stocks and bonds, brokerage accounts, mutual funds, bank and credit union accounts, and noting physical assets and titles to such as real property, motor vehicles, boats, and planes. An inventory of the assets needs to be completed once they are all collected.

Bill and Debt Payment

Bills can be paid from the estate once the executor or administrator is assigned by the court and obtains access to the funds. The payment of utility, credit card, and other bills can be paid without any special legal formality, as can funeral expenses. Do not make any payments until after you have consulted with your attorney for priority of payment and to review the legitmacy of the bills. Contact your attorney if you have any questions regarding mail.

Settling Claims

Notice to Interested Parties must be provided to known parties and published in a local newspaper and the timeline to bring a claim begins. All claims have to be submitted within four months of the appointment of the date of notice or publication, whichever is later. The only exception is when the creditor was unaware of the death, and if that happens, then the creditor can petition the court up to a year after the appointment of the executor or administrator. A creditor's claim may be rejected by the executor or administrator. If this occurs, the creditor may follow up with additional filings.

Liquidating Estate Assets

For reasons of practicality or necessity, some or all of the assets in the estate may have to be sold. Reasons for this may include the payment of estate taxes or the repayments of debts, or the asset may be a vacant home the children do not wish to inherit. In these cases, or any other, the assets are sold during the probate process. Some assets may be restricted from the sale or transfer of the estate except by prior authorization from the Court. Be sure to confirm with your attorney prior to selling or disposing of any assets.

Tax Payments

It's the responsibility of the personal representative to see that all Oregon and federal taxes due are paid. While he or she is not usually personally liable, the assets under probate are. If assets are distributed, however, and either the Internal Revenue Service or the state of Oregon assesses a deficiency, the personal representative is liable for the value of the distributed assets.

Consult with a qualified tax preparer or CPA include, in part, the final income tax return, federal estate tax, fiduciary or estate income taxes. There is much detailed work involved in handling all the tax work. While this can be done by the personal representative if he or she is sufficiently skilled in tax law, most often taxes are done by the same person who handled the tax matters of the deceased or a qualified tax preparer who regularly handles these returns.

The executor or administrator is liable for any taxes that are later found to be due if the assets included in the estate have already been distributed. To prepare for this, the personal representative can make a request to retain some estate funds as a reserve against this possible future tax liability. The funds in this reserve are typically held for two to three years before being distributed to the estate beneficiaries without further court orders.

Wrapping up Probate

The following steps must have been performed before the assets contained in the estate can be fully distributed and the estate closed:

1. All estate assets have been inventoried.

2. The period for creditor claims has expired and all claims submitted have been paid or otherwise resolved.

3. Any assets selected by choice or necessity have been sold.

4. All necessary tax returns have been filed and any taxes due have been paid.

5. The court must be petitioned, and a court order obtained, to make the distributions that will conclude the estate. This can be done via a full and thorough accounting that lists all receipts and disbursements from the estate, or through a verified statement with a consent/waiver of the full accounting from all of the estate's beneficiaries.

6. If no objections are raised, the court will issue an order that concludes the estate by ordering the assets to be distributed and the fees paid.

7. Assets are distributed to the estate's beneficiaries. A a receipt showing transfer of the assets is obtained from every recipient and filed with the court.

8. A final judgment to close the estate is filed, and upon acceptance, the probate is closed.

Final thoughts

The probate process can be lengthy and complicated, especially during a time of grieving. In general, probates may take a year or more before completion. During this time, there are many deadlines and required filings. Consider seeking help from probate experts to help guide you through this process.