After someone dies, a court process known as probate may be required to ensure debts and taxes are paid and remaining assets are transferred to the rightful recipients. The probate process includes having a personal representative appointed by a judge, identifying and inventorying the property belonging to the deceased person, possibly having the property appraised, proving that the deceased person’s will is valid, paying final expenses, debts, and taxes, and distributing the remaining property according to the deceased person will, or according to state law if the deceased person did not leave a will.
Not everyone will need a probate when they die. The probate process only controls assets that do not have a valid beneficiary designation or are not owned jointly with a right of survivorship. If the deceased person only owned life insurance policies, retirement accounts, annuities, and/or bank accounts that had current beneficiary designations, no probate would be required for the named beneficiaries to receive the interest in the deceased person property. Real property owned with another person or spouse that includes a right of survivorship would not go through probate either. Spouses generally own assets jointly and name each other as the primary beneficiary on beneficiary driven assets. This means at the first spouse’ death a probate is often not required. The situation changes, however, at the surviving spouse’ death when a probate may be necessary.
There are three main reasons to avoid probate: (1) time, (2) cost, and (3) privacy.
The probate process can take months or even years to complete, depending on the complexity of the assets, etc., involved. An average probate in Oregon can cost six thousand dollars. The more time the probate attorney has to spend advising the personal representative and/or managing complicated situations the larger the fees will be. Finally, because probate is a matter of public record, most court filings become part of that record and anyone can search and find information about the distribution of an estate’s assets and beneficiaries.
However, a probate may be a good process to go through if the decedent had a private practice/business. The mandatory four month notice to creditor period cuts off all creditor claims once it has run. This can protect the beneficiaries from any creditor’s claim and give them peace of mind that their inheritance is protected.
As outlined above, there are some ways to avoid probate. You can:
- Own all your assets jointly with someone else with a right of survivorship or with a spouse as tenants by the entirety.
- Use beneficiary designations on all your assets, including bank accounts, and ensure the designations are kept up to date.
- Sign and record a transfer on death deed conveying your home and other real property to your intended beneficiaries at your death.
- Use a revocable living trust as your main estate planning instrument and ensure that it is properly funded.
If avoiding probate is one of your goals, speaking with an experienced Estate Planning attorney is important. The attorney can explain your options and help you decide which option will work for you and your unique family and financial situations. Contact the Law Offices of Nay & Friedenberg LLC in Portland, Oregon at (503) 245-0894 to set an appointment.