In my estate planning practice and in my estate management practice, I am asked the same questions: “What is legalization?” and “Why does it have to take so long?”
Generally, when people tell me they want to avoid probate, they mean that they want to prevent their estate from being administered through court process, whether or not they have a will. The exact definition of succession is not that important. Essentially, the administration of a probate estate (if there is a will) or an intestate estate (if there is no will) is the legal process for assembling property from a deceased person; pay the deceased person’s creditors; and transfer any remaining assets to the individual’s heirs (if there is no will) or their currency or beneficiaries (if there is a will).
The process is more appropriately called probate management, but since people tend to think of both processes as probate, I will continue to use that term throughout this post. The succession process generally consists of three time periods: (1) beginning; (2) administration; and (3) closure. This article will cover the start and the events leading up to the start.
1. What property constitutes my estate?
Before talking about opening, it is important to determine what constitutes a probate estate. Any property that is owned by the deceased on the date of death and that is not automatically transferred to a named person will be included in his probate estate. For example, a bank account with a payable beneficiary on death will automatically go to the designated beneficiary, without probate. Additionally, property belonging to a trust created by the deceased will not be part of the decedent’s estate, as the decedent was not technically the owner of the property at the time of death.
Common probate property includes real estate, stocks and bonds, vehicles, bank and brokerage accounts, and various items of personal property.
Retirement accounts and life insurance are generally not probate property, as they generally have designated beneficiaries. However, if a beneficiary is not named, or dies before the owner / insured, then the owner / insured’s estate is usually the default beneficiary.
2. Is full-blown probate necessary?
Full-fledged probate procedures may be unnecessary if: you have a small enough estate when you die; only owns assets that are payable in the event of death or that are jointly owned with rights of survivorship; or you have transferred your property to a trust.
In Oregon, if a decedent’s estate consists of real property valued at less than $ 200,000.00 and personal property valued at less than $ 75,000.00, then small estate procedures may be used to transfer the decedent’s property to his / her heirs or beneficiaries, if has will. The process is relatively easy and much less expensive and requires more time than a full legalization. An attorney will likely be necessary to ensure compliance with the various statutes. People often ask me, “Can I use a small property affidavit if my dad’s house is valued at $ 300,000.00 but he has a $ 150,000.00 loan that compromises it?” The answer is no because the limits are based on gross values, not net values. Since the gross value of the real property exceeds $ 200,000.00, legalization is necessary.
Husbands and wives often own their homes, bank accounts, and other property as “husband and wife,” so when the first spouse dies, the surviving spouse will be the sole owner of the property. A succession is not necessary. When the wife dies, probate will likely be necessary to transfer the property to her children or other named beneficiaries.
As another example, suppose that after the death of the husband, the wife transferred her home to a revocable living trust. He maintained a brokerage account with $ 78,000.00 in his name with his children as payment to beneficiaries upon death. He also had a savings account with $ 5,000.00 that he forgot and never transferred to his trust, but that account does not have a payable beneficiary upon death.
When she dies, can her children use the small property process? The answer is yes. Although your total estate consists of personal property over $ 75,000.00, the amount subject to probate is well below that threshold, as the brokerage account is transferred directly to the named beneficiaries and your home is owned by your trust.
Small inheritance procedures will need to be used to transfer the savings account to the wife’s heirs, but full probate is avoided.
3. Succession is necessary; Whats Next?
Suppose the wife has a will and her daughter is appointed as a personal representative. She will be responsible for managing her mother’s estate. Her father passed away a few years ago and the daughter has two brothers.
At this point, you may have a vague understanding of your mother’s estate and have searched for a will, trust, and other estate planning documents. If you are lucky, your mother followed her attorney’s advice and placed the original documents in a safe or strong box.
Since probate is a complicated and confusing process, the daughter will need an attorney to help her navigate the waters of probate. You can use any attorney you feel comfortable with.
At your initial appointment with your attorney, you will bring your will, your mother’s death certificate, various documents that identify your mother’s property, and your siblings’ contact information. You can also bring information about the creditors of your mother’s inheritance (credit card companies, unpaid medical providers, etc.). Based on the information provided, the attorney will draft a petition for succession or a petition for administration of an intestate estate depending on whether or not there is a will.
Generally, the person named as the personal representative in the will asks the court to administer the estate. What if there is no will, or the personal representative does not want to serve and there is no designated successor? The court gives preference to a surviving spouse, then a child or next of kin.
If there is no surviving spouse or next of kin, then in the event that the state has provided public assistance to the deceased, the Director of Human Services or the Director of the Oregon Health Authority may appoint an attorney to act as personal representative if the decedent does not have a surviving spouse or next of kin. The Department of Veterans Affairs is next in line; followed by anyone else. It is simply about legal preferences. The individual must still qualify as a personal representative.
4. The petition is filed, what happens next?
The petition is essentially a request to the court to admit the will filed along with the probate petition and to name the person named in the petition as your personal representative. The notification of the presentation of the petition must be delivered to the different governmental rights, to the heirs of the deceased, to the beneficiaries named in the will and to other interested persons. These individuals will have the opportunity to object to the appointment of the personal representative and to request future submissions from the attorney representing the personal representative.
Moving forward, I will discuss what happens once the petition is filed and the initial steps associated with managing Oregon property.
© 03/18/2014 Kevin J. Tillson of Hunt & Associates, PC All rights reserved.
*** This article is informational only and the circumstances surrounding your case or legal matter are unique. This article does not constitute legal advice and should in no way be relied upon without consulting a licensed legal professional. ***
