What Happens to assets if an Estate isn't Probated in Oregon?

Probate is just the court administered transfer of property after their death.  Not all property is subject to the court process and sometimes it doesn't make sense to initiate a probate proceeding.

Non-Probate Property

Beneficiary Designations

Some property doesn't have to be admitted to probate in order to transfer.  Think about your bank, brokerage or life insurance accounts.  Often times these accounts are transferable by the beneficiary designations.  When you initially opened these accounts you were probably asked to select a beneficiary.  Because these accounts are contracts between you and the bank, brokerage or insurance company, the beneficiary designation will direct whoever holds your account to transfer it to your beneficiary after your death.

Below is a snip from the Servicemember Group Life Insurance application.

SGLI Beneficiary

If you read the language carefully it says "If you do not specifically name beneficiaries, your insurance will be paid by law."  What this often means is that if you don't designate a beneficiary the accounts will be paid to the estate and administered by the court.

While this is a quick and inexpensive way to transfer property after death it is very limited.  Like the picture above, most companies will allow you only a few options on how you want to distribute the account.  If you want to split the proceeds in a more complicated way you will need a more involved estate planning.

Keeping Beneficiary Designations up to Date

Using a beneficiary designation is only helpful if it is accurate.  I suggest that you review your accounts annually to make sure the designations are accurate and up to date.  It's not uncommon to find former husbands and wives as beneficiaries on accounts years after a divorce.   That is not a situation anyone wants to deal with your passing.

Transferable on Death Deeds

A few years Oregon adopted a Transfer on Death Deeds.  I believe most states have adopted them at this point.  Much like their name implies, these deeds transfer title in real estate on your death.   TODD are one of the most loved estate planning tools if you have an uncomplicated family.   The primary reason an estate has to be admitted to probate is real estate.  Removing real estate from the equation may let you avoid probate or allow you to settle the estate via the Small Estate process.

I've inserted a snip from ORS 93.975 that provides the form for TODD deeds.

TODD Language

If you only have one heir then a Transfer on Death Deed may make sense for you but anything more complicated and I would be leery of using it.

Abandoning Property

Often times someone will die owing more money than their estate is worth.  When this happens, heirs sometimes decide to just walk away and let the banks foreclose on the property.

If you have any questions about how probate works or what property is included, please feel free to contact me.

Oregon Probate Jurisdiction

One of the areas that initially confuses many practitioners is the limits of jurisdiction for Oregon Probate Courts. By and large, the jurisdiction of the probate court is the same as that of the Circuit Courts. ORS 111.075 Probate Jurisdiction Vested states:

Jurisdiction of all probate matters, causes and proceedings is vested in the county courts of Gilliam, Grant, Harney, Malheur, Sherman and Wheeler Counties and in the circuit court for each other county and as provided in ORS 111.115 (Transfer of estate proceeding from county court to circuit court).

The individual county courts that are vested with probate jurisdiction are the large sparsely populated counties of Eastern Oregon including the recently famous Harney County.  Although the code says these six counties are vested with the county court, all of Oregon's 36 counties' has a circuit court.  I don't know why this is.

 ORS 111.085 Probate jurisdiction described:

The jurisdiction of the probate court includes, but is not limited to:

(1)Appointment and qualification of personal representatives.

(2)Probate and contest of wills.

(3)Determination of heirship.

(4)Determination of title to and rights in property claimed by or against personal representatives, guardians and conservators.

(5)Administration, settlement and distribution of estates of decedents.

(6)Construction of wills, whether incident to the administration or distribution of an estate or as a separate proceeding.

(7)Guardianships and conservatorships, including the appointment and qualification of guardians and conservators and the administration, settlement and closing of guardianships and conservatorships.

(8)Supervision and disciplining of personal representatives, guardians and conservators.

(9)Appointment of a successor testamentary trustee where the vacancy occurs prior to, or during the pendency of, the probate proceeding. [1969 c.591 §5; 1973 c.177 §1]

Now that we have a general description of the kinds of matters that the probate court is interested in, what are the limits of the court's powers.  A phrase you might hear is that the circuit court is "sitting in probate."  ORS 11.095(1) describes those powers:

The general legal and equitable powers of a circuit court are applicable to effectuate the jurisdiction of a probate court, punish contempts and carry out its determinations, orders and judgments as a court of record with general jurisdiction, and the same validity, finality and presumption of regularity shall be accorded to its determinations, orders and judgments, including determinations of its own jurisdiction, as to those of a court of record with general jurisdiction.

What does this all mean?  In essence, the probate court is the circuit court.  There exist some different procedural rules that expedite the administration of the estate in uncontested proceedings but for the most part the powers of the two are the same.

Intestate Succession in Oregon

What happens when you die without a will

When a person dies without a Will in place, the Oregon Probate Law (Intestate Succession and Wills) determines how that person’s estate will be distributed.  The diagrams below will help you understand how the estate will be divided. This is not a complete list of scenarios but should give you a good idea of what can happen.  In real life, families can be incredibly complicated and who inherits what can be equally as complicated.

Surviving Spouse and Children

No Surviving Spouse and Surving Children

When there is no surviving spouse, the Estate is distributed evenly between the children.

Children from a Previous relationship and a surviving spouse

In this situation, the surviving spouse receives half of the estate while the Decedent’s children receive the other half distributed evenly.   Former spouse receives nothing.

Parents Share when Decedent has no children or spouse

When a Decedent passes with no Spouse or Children, the surviving Parent will inherit the estate.

No Heirs, unable to locate heirs or heirs refuse

Caveats

There are many other situations that can arise with families.  For example, parents can sometimes forfeit their share of estate because of neglect or abuse.  If the heir murdered or abused the person who died, Oregon law can prevent them from inheriting property.  There are also rules for grandparents inheriting property and for individuals inheriting property to two lines of relationships.

What appears first as simple can quickly become complicated when blended families, remarriages, not remarrying and other decisions we make throughout life get added to the mix.You can learn more about Oregon Probate on my practice area page. 

If you have any questions on how your property will be inherited after you pass, feel free to contact me.