When a person dies they often leave behind property and debts. Every state has a court-supervised process to transfer title of property from a deceased person to their heirs or beneficiaries under a valid will or “Last Will and Testament.” A court will monitor the transfer of a deceased person’s property after the payment of their debts. This court-supervised process is called probate.
If a person died with a will in place, they died “testate,” and their property will be distributed according to their wishes as stated in their will.
In Oregon, the person in charge of handling the estate is called the personal representative. In other states, this legal representative may be referred to as the executor of the estate.
An attorney who specializes in estate settlement can give you an estimate of the costs and timelines for probate. In many cases, it takes more than a year to complete the court-supervised estate settlement process. The process can be costly, with court filing fees, accountant fees, attorney fees, and other expenses of administration.
What happens during the probate process?
The attorney will prepare and file pleadings in the appropriate county asking that a personal representative be appointed and a probate court case be opened. The will must be analyzed by the court, and all heirs and devisees must be located and provided with notice that the probate process has begun. Creditors must also be notified of the probate proceedings. The decedent’s assets and property must be collected, itemized for the court, protected, and preserved throughout the entire process by the personal representative.
The probate court must also be continually informed of the progress in settling the estate, and many additional documents must be prepared and filed with the court during the administration. These documents include proof that all heirs and devisees have been noticed of the probate, an inventory of assets, an affidavit stating that all creditors were properly addressed and valid claims were paid, and one or more accountings detailing the income and expenses related to the estate.
Why do I need an attorney?
Probate in Oregon involves a good deal of legal paperwork that must be filed in a timely manner. To achieve the results you want, probate should be handled by an attorney with an understanding of the legal issues involved. Most probate courts in Oregon will not allow a person to move forward as personal representative in a full probate without an attorney because the process is too complex. A probate lawyer can assist with ensuring all creditors were dealt with properly according to Oregon law, all assets are properly consolidated into the estate and distributed to the correct beneficiaries, all income and estate tax filings are addressed, and other issues that could arise. There are many duties and requirements of the personal representative that an attorney can ensure are seamlessly met. In fact, in many counties the court requires all court-appointed fiduciaries to complete a training class after appointment to help them better understand their legal duties.
The decedent has a ton of creditors, what are my next steps?
Do not pay any creditors without speaking with an attorney. Creditors can only have a right to payment from the decedent’s assets, and you are not personally liable to pay any debts. Different creditors have different levels of priority for payment from estate assets, and must present certain information to the personal representative to be considered for payment. Probate may need to be opened when there are a substantial amount of creditors. The probate process will ensure only valid creditor claims are paid, cut off creditor claims if they are not timely presented, and resolve disputes between people who claim they are owed money. If there is not enough money to pay all creditors, Oregon Law sets out which creditors receive payment in full first, and which creditors will divide up the remaining balance.
When is probate needed?
When a person passes away owning assets in their individual name, the probate process is necessary to transfer ownership of those assets into the name of their heirs or beneficiaries. If assets are titled in the name of a revocable living trust, with a pay on death or transfer on death beneficiary designation, or owned with another individual with “right of survivorship,” then probate may not be necessary for those assets. Also, assets such as retirement accounts, annuities, and life insurance generally have a beneficiary designation that will bypass the probate process.
Sometimes probate is needed to:
- Clear title to land, stocks and bonds, or large bank or savings accounts owned solely by the deceased person, and transfer the title of these assets to the proper beneficiaries.
- Resolve creditor claims when an estate has more debt than assets.
- 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.
There is also a short-form of probate, called small estate probate. This option is available if the estate is simple with minimal value.
What happens during the probate process?
- A Petition is filed with the court, either requesting the court admit the will to probate or open an intestate estate (a probate without a will). The will is “proved” and the original copy delivered to the court. The deceased person’s will can be proved by an affidavit made under oath by the witnesses to the will. This is typically already done when the will is originally signed. If such an affidavit is unavailable, the personal presence of the witnesses will be required in probate court to testify that at the time the will was signed, the deceased person was of sound mind and aware of the circumstances.
- A personal representative is selected. A personal representative is appointed by the court to handle 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 who is typically the surviving spouse, an adult child, or another close relative. Oregon law sets out a preference for who is next in line to serve. If these people are not available or willing to be the personal representative, the court may choose a professional fiduciary.
- A notice to creditors is published in a local newspaper. This public notice to creditors gives creditors a four-month window to present claims against the estate for debts the deceased person owes them. The personal representative also gives written notice to all known and possible creditors.
- The heirs and people named in the will are notified of the probate proceedings.
- 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 difficult and time-consuming.
- Debts are determined and eventually paid. The personal representative ensures that valid creditors are paid. Creditors must be repaid from the estate before the remaining estate assets can be distributed to the beneficiaries.
The personal representative is typically required to consult with a tax professional regarding the decedent’s final income tax returns and any estate tax requirements. With the CPA’s assistance, the personal representative prepares the final tax returns on behalf of the decedent including the individual tax returns, inheritance or estate tax returns, if necessary, and pays any taxes due from estate funds.
An accounting to the court is the final step. The personal representative prepares and submits an accounting to the beneficiaries named in the will, or to the legal heirs if there is no will. The beneficiaries have an opportunity to object to the accounting, or can waive their right to object to more expeditiously complete this final task. This accounting will also be submitted to the court for review and approval. The accounting shows all money paid out from the estate and all money collected by the estate. It also contains an explanation of the important actions taken in connection with the settlement of the estate. Attorney fees and costs, tax preparation fees, the statutory personal representative fee, reimbursement for out-of-pocket expenses, and other similar outstanding expenses are approved by the court for payment for estate funds at this stage.
After court approval of the accounting and payment of all unpaid probate expenses, the deceased person’s assets are distributed to the people, charities, or trust named in the will or, if the person died without a will, to the legal heirs.
How long does probate take?
Probate can be started immediately after death and often takes between nine and 18 months. In small estate probates, there is a 30-day waiting period before paperwork can be filed with the court. A small estate probate generally takes around six to nine months to complete.
Factors that can increase the time and expense of probate are:
- Disputes among heirs or beneficiaries
- Real property that must be sold
- Individual stock or bond certificates that must be processed
- Complicated tax matters
What are the costs involved?
Under Oregon law, a personal representative is entitled to a fee for the work they take on in settling the estate. This is set in Oregon as a fixed percentage of the value of the total estate. Sometimes the court will approve additional fees for extraordinary work by the personal representative. Out-of-pocket costs paid directly by the personal representative must be approved by the court. Other costs include court filing fees, legal notice fees for publishing in the local newspaper, and any other necessary expenses, such as appraisal fees. Attorneys and their support staff generally charge an hourly rate for their services, and all attorney fees and costs must be approved by the court before payment can be made from estate funds.
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