The attorneys with Nay & Friedenberg explain when and why the probate process is needed.
Probate court is the court which oversees the administration of a decedent’s estate. Not every estate, however, needs to go through the probate process. Probate is required only when there is no other mechanism by which to transfer the asset to the heirs or devisees of the estate. When the decedent has taken other steps for distributing assets, a probate may not be necessary. The determination of whether or not a probate is required depends on the nature of the decedent’s assets.
Prior to death, an owner may designate a beneficiary of an account (most often, retirement accounts and life insurance policies) by completing and submitting a form to the financial institution. Beneficiary-designated accounts will go directly to the named beneficiary(ies) immediately after the owner’s death. (The beneficiary must submit a certified death certificate and complete forms in order to make the claim.) Bank accounts may also be transferred by beneficiary designation by establishing a POD (payable on death) or TOD (transfer on death) account.
Assets owned jointly with rights of survivorship are designed to avoid the probate court process. Immediately upon one owner’s death, the surviving owner automatically inherits the decedent’s share. The surviving owner does not need to take any steps to make the transfer; it happens as a matter of law. No formal documentation is required, although eventually the deceased owner’s name will be removed from the ownership documents.
Rights of survivorship are designated in the ownership documents, such as deeds to real estate and car titles. Married couples are presumed to want rights of survivorship and, therefore, no special wording is required in the ownership documents. If married couples do not want rights of survivorship, they must indicate so. It is assumed that unmarried individuals owning property together do not want rights of survivorship. If they do, they must affirmatively grant rights of survivorship in the ownership documents.
Assets owned solely in the decedent’s name, on the other hand, will most likely have to go through probate. Any Power of Attorney the decedent had signed during life becomes null and void at his death. As such, solely owned assets become “locked” at death as no one has legal authority to access them. Only an order of the probate court will “unlock” the solely owned assets, in most cases. The probate court will appoint a Personal Representative (executor) and the PR will have authority under state law to access the account and use the funds to conduct state business. Probate assets cannot be transferred to the heirs until the estate has been administered and the Judge has granted permission for the PR to make distribution. For more information on the probate process, click here.
Probate may be desirable even in cases where the decedent did not leave behind any probate assets. Since probate law allows for the final settlement of all of the decedent’s debts, creditors’ rights to state a claim against an estate terminate at the closure of the probate estate. When the decedent had creditor problems and/or was the subject of a potential lawsuit, the termination of creditors’ claims will be extremely beneficial.
Dealing with a loved one’s estate can be a difficult time for the family. An experienced probate attorney can help. Contact the Probate attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.
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