Can a Will Avoid Probate?

No. A will only provides instructions to your loved ones about how to distribute your property after your death. Without a will, your property will transfer subject to the intestate laws of Oregon. This means, the state decides how your property will pass to your heirs.

We wrote an article in 2016 about What happens when you die without a Will. The charts in that article will show you what happens to your property in most situations.

While a will is not a tool to avoid probate, a will can ensure that your assets are distributed as you choose. Without a will, Oregon intestate laws determine how your assets are passed. If you wish to avoid probate, please refer to the previous article How to Avoid Probate in Oregon.

How Do You Avoid Probate in Oregon?

Many people wish to avoid probate because it is a tedious and lengthy process. Benefits of avoiding probate include loved ones receiving inheritances sooner and no court oversight. Different methods for avoiding probate are illustrated below.

Revocable Trusts (Living Trusts)

Many people set up an inter vivos trust, also known as a Living Revocable Trust. To set up a trust, the grantor, the creator of the trust, must first name a trustee. The trustee is the person who will carry out the specific terms of the trust. Generally, the grantor appoints themselves as the trustee during their lifetime and will appoint a successor trustee to take over once they pass away or become incapacitated. Next, the grantor names the beneficiaries. These are the people, or entities, that will inherit the trust property after the grantor dies. Lastly, and importantly, the grantor must transfer ownership of their property to the trust, through the trustee. For example, if you wish to place your home into the trust, you must convey title to the trust through the trustee via a deed.

  It is important to keep your trust documents in a safe location so that your loved ones can find the trust document after you pass away. Without the trust document, it can be difficult to determine the beneficiaries of the trust property and will likely cause complications.

  Even with a trust, it is still recommended to draft a "pour-over" will. A pour-over will is a simple will that transfers any overlooked property into your trust.

Joint Ownership

 Joint tenancy creates a "right of survivorship" with the surviving owner and is a popular method individuals use to avoid probate. Each owner must hold an equal share of the property to create a joint tenancy. When one owner dies, their share is transferred to the surviving owner(s) immediately at their death. Individuals can hold most assets in joint tenancy, such as bank accounts, real estate property, vehicles, etc. Often, specific language is needed to create a joint tenancy, such as joint ownership in real estate between non-married individuals.

 Joint ownership of real estate property between married individuals is termed a tenancy by the entirety and also hold right of survivorship as described above.

 Joint ownership between parents and adult children, may not be advantageous in many situations. In the instance of bank accounts, the adult child will have full access to all the assets in the account, as may their potential creditors and soon-to-be ex-spouses. Additionally, it is not advisable to add your children to your deed. This can prevent your children from receiving a favorable step-up in basis tax treatment when they inherit the real estate property.

Payable on Death or Transfer of Death Designations

Payable on Death (POD) and Transfer on Death (TOD) accounts are designed to avoid probate. These accounts transfer ownership directly to the named beneficiaries upon the account holder's death. POD accounts are associated with bank accounts, such as checking accounts and savings accounts, as well as certificates of deposits (CDs), and life insurance policies.  TOD accounts are generally brokerage accounts, stocks, bonds, and other investments. Lastly, individuals can create a Transfer on Death Deed, to transfer real estate property upon their death.

To create a TOD or POD, the account holder must designate beneficiaries to the account, which will transfer ownership of the account immediately upon the account holder's death. Beneficiaries can be an individual, an organization, or a trust. The account holder retains sole control and ownership of the account throughout their lifetime. The beneficiary has no right or access to the account until the account holder dies.

Some pitfalls can occur, when people designate one of their children as the designated beneficiary of the account, but later drafts a will or trust that states that their children shall receive equal shares. The TOD/POD beneficiary designation will generally override the will or trust's provisions, which can lead to unintentionally creating unequal shares between their children.

Additionally, people must consider payment of any estate taxes. If a person's estate consists entirely of TOD or POD accounts, there will be little to no money reserved to pay the estate's taxes. In this scenario, it can cause confusion regarding who should pay the estate’s taxes, and how much.

Summary

Avoiding probate allows assets to be transferred to beneficiaries in a more private and efficient manner. People who wish to avoid probate have many options. Speaking with an attorney can help you determine your best choices.

Must an Estate Go Through Probate in Oregon?

Probate is a legal process in which the decedent’s debts are settled, and their remaining assets are distributed to the appropriate heirs or devisees. In legal jargon, the “decedent” is the person who passed away. The probate process allows the court to monitor the distribution of the decedent’s assets in accordance with the decedent’s last will and testament. However, if the decedent passed away without a will, the decedent is deemed to have died “intestate”, and the court must follow the state’s intestate laws to determine the proper distribution of the decedent’s assets. 

Why create a Last Will and Testament?

There are many benefits in preparing a will before you pass away, however, the existence of will does not determine whether a decedent’s estate passes through the court’s probate process. The type of property and the value of the property is more indicative of whether the decedent’s estate will require probate. The decedent’s estate is comprised of the property they owned at the time of their death.

Generally, probate is necessary when titled assets were owned exclusively by the decedent, such as real estate, vehicles, or stocks and bonds. Additionally, debts owed by or owed to the estate may require probate to pay and collect on those debts. Lastly, if conflict arises between heirs or the beneficiaries of a will, resolution of those matters may require the probate process.  

What assets don’t go through probate?

Certain types of assets do not require probate. A decedent’s estate can have a mix of assets; some which require probate and others that do not. Some assets that are jointly owned may avoid probate. A common example is a married couple who jointly purchased and owned their home will often have a right of survivorship. This means that the surviving spouse inherits the decedent’s share of the home automatically upon death. Because the transfer is automatic upon death, it does not require probate. Another type of property that avoids probate are accounts or policies with beneficiary designations. This can include retirement accounts or life insurance policies that name a beneficiary that transfers the asset automatically at the time of the decedent’s death. These are just some examples of the types of assets that transfer ownership rights automatically at death and can avoid probate.

Affidavit of Claiming Successor (Small Estates)

The value of the estate can also determine whether probate will be required. Oregon allows small estates to file a Small Estate Affidavit if the estate is valued at less than $275,000; no more than $200,000 for real property and no more than $75,000 from personal property. The value of the property is based on their fair market value at the time of the decedent’s death and should not be reduced by debts or liens. Only assets subject to the probate process need to be calculated in the $275,000 limit. As exampled above, if a surviving spouse inherits assets automatically without probate, it is not included in the calculation of the estate to determine if you fall beneath the $275,000 limit.

Ultimately, probate is not always required and can be avoided with the proper estate planning methods. A will can make the probate process more seamless for your loved ones and is generally a good idea. Having an estate plan can ease stress for yourself and your family.

How much does an estate have to be worth to go to probate in Oregon?

Two basic kinds of Probate in Oregon

In Oregon, you are able to settle a loved one’s estate in two ways depending on the size of the estate.

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Small Estate Probate

Oregon has a simplified process for administering estates that have limited valuations.  These estates can be settled with an Affidavit of Claiming Successor, also called a Small Estate Affidavit.  In order to qualify, the assets must be:

• Less than $200,000 worth in real estate

• Less than $75,000 worth in personal property (including bank accounts and vehicles)

• Less than $275,000 worth in total value

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Normal Probate

For estates with the more than $200,000 in real estate or $75,000 in personal property, Oregon has a more formal probate process.  This probate process is overseen by the court and can take 4 months to several years to complete. 

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Other types of Estate Administrations in Oregon

There are additional types of administrations for estates that have no regular assets. These probates are generally used for wrongful death claims but there are other reasons you may want to open a no asset estate.

If you have any questions, please feel free to contact us.

We are closed for Labor Day.

I hope everyone enjoys the long weekend and the end of summer.

We are closed on September 6. 2021 for Labor Day.

How Long Does Probate Take in Oregon? (Updated for COVID)

In the Covid Era, estates are taking longer to administer than they were a few years ago. The administration of a probate estate takes a minimum of 4 Months in Oregon.  The typical amount of time is closer to 7 to 10 months depending on the nature of the assets and the backlog at the court house.  

 I have written about the Probate Process in Oregon and created an Oregon Personal Representative Checklist to help my clients better understand the proceedings.  You can also find more information by searching the blog on the right.   

How does probate work without a will in Oregon.

In Oregon, the process of probating an estate is very similar to process to the process of administering an estate with a will. Someone will petition the court to appoint them as the administrator of the estate.

Key differences between probating with a will and without a will are:

• Depending on the county and on the assets, you will likely need to post a surety bond before you are able to administer the estate.

• The Oregon statutes will determine who has priority to be the personal representative instead of the person who is appointed by the will.

• The distribution of the assets is controlled by statute. See our post on intestate succession.

If you want to know more, visit our page How does Probate Work in Oregon?

2018 Oregon Estate Tax Rates

The State of Oregon levies a tax on taxable estates that have a value of more than $1 Million.  Estates of less than $1 Million are exempt from the Oregon Estate Tax.  This is a separate from the Federal Estate Tax.  In 2018, individuals with less $11.2 Million and couples with less than $22.4 Million are exempt from the Federal Estate tax.  The top Federal Estate tax rate is 40%.  More information on determining the Federal Estate Tax rates can be found at IRS.gov.

Taxable Estate Equal to or more than:	Taxable Estate less than:	Tax rate on Taxable Estate amount more than column 1
$1,000,000	$1,500,000	$0 + 10%
1,500,000	2,500,000	50,000 + 10.25%
2,500,000	3,500,000	152,500 + 10.5%
3,500,000	4,500,000	267,500 + 11%
4,500,000	5,500,000	367,500 + 11.5%
5,500,000	6,500,000	482,500 + 12%
6,500,000	7,500,000	602,500 + 13%
7,500,000	8,500,000	732,500 + 14%
8,500,000	9,500,000	872,500 + 15%
9,500,000		1,022,500 + 16%

Is a Handwritten Will Valid in Oregon?

Is a Handwritten Will Valid in Oregon?

The short answer is no.  Wills that are handwritten and not witnessed are not recognized as valid in Oregon.  A handwritten will that is witnessed by two individuals will be considered valid.  

I have written more about about the basics of estate planning in the following articles:

1. Basics of an Oregon Estate Plan (Part 1)

2. Basics of an Oregon Estate Plan (Part 2)

3. Basics of an Oregon Estate Plan (Part 3)