Every state, including the state of Oregon, has probate laws that provide a path for distributing assets to family, friends and other entities of the deceased person's choice. Assets can be anything of value, including cash, real property, such as land or buildings, or personal property. Oregon probate law covers a variety of issues, from the drafting of a will to the distribution of an estate.
The Meaning of Probate
During probate, a court oversees a deceased person's distribution of assets. It sets out to prove that their will is valid; identifies, inventories and appraises their assets; pays any debts and taxes owed from the estate; and distributes the property as the will directs. If there is no will, state law mandates the order of distribution.
Probate is a lengthy and often costly process that involves lawyers, court appearances and paperwork. The estate pays attorney and court fees, which would otherwise go to the inheritors of the property. In some circumstances, probate isn't always necessary, according to the Oregon State Bar. For example, if the decedent owned property jointly with another person, that person will automatically inherit it. Also, if the deceased left very few valuable estate assets, and their property amounts to only personal belongings or household goods, the beneficiaries can receive these items without the need for court supervision.
The Probate Process
After delivering proof of the decedent's will to the court, the court will approve the personal representative to handle the deceased's affairs. The will names this person, but if the deceased did not leave a will, the court selects a personal representative, usually a spouse, an adult child, a close relative or another entity, like a lawyer, bank or trust company, if there is no family. The personal representative publishes a notice to creditors in a local paper, letting them know they have four months in which to bring claims against the estate.
After inventorying and valuing the estate's assets and debts, creditors get paid before the heirs and beneficiaries get their shares. The personal representative prepares inheritance, gift and estate tax returns and pays federal and state taxes from the estate.
Personal representatives submit a full accounting of people named in the will to the court; if the heirs don't wish to be part of that, the personal representative instead files a "verified statement," a document asking the court to distribute the assets without a full accounting. For example, some heirs may informally talk to a personal representative about the estate, but do not want to be part of the court record. The accounting also shows the total amount of money paid out and collected by the estate and explains the actions taken in connection with the estate's probate. After the court approves the accounting and expense payments, distribution of the decedent's assets occurs.
Intestate Succession When There Is No Will
If the person died without a will, Oregon's intestate laws dictate to whom the assets of the estate go, beginning with the decedent's spouse, then to their children, grandchildren, parents, siblings, aunts and uncles, and cousins. The inheritance goes to the state if there are no surviving relatives.
Small Estate Affidavit Requirements
For small estates, Oregon law allows a shortened procedure to make it easier to transfer a deceased person's assets. Estates in this category will see a considerable reduction in distribution cost and time if the fair market value of the assets is $275,000 or less, with no more than $75,000 in personal property and no more than $200,000 in real estate. Filing a small estate affidavit cannot take place until 30 days after the decedent's death and requires:
- Decedent's name, age, physical and mailing addresses and Social Security number.
- Date and location of death.
- Certified copy of death certificate.
- Descriptions and estimated value of assets.
- Will if there is one.
- Heir and beneficiary contact information.
- Statement acknowledging that heirs and beneficiaries will get copies of the request.
- Statement detailing heir and beneficiary entitlement.
- Statement regarding determination of creditors of the estate.
- List of unpaid expenses and claims against the estate.
- Creditors' contact information and statement that they will receive a copy of the request.
- Claim contact information and amounts.
- Statement confirming that the Department of Human Services or the Oregon Health Authority will receive a copy of the request.
- Statement confirming the barring of claims against the estate unless they are within four months of the request filing.
Those who can file a small estate affidavit are one or more of the decedent's claiming successors or a person named in the decedent’s will. If the decedent received public or medical assistance or institutional care during their lifetime, the Oregon Director of Human Services, the Director of the Oregon Health Authority or an approved attorney can be named as personal representative. In some instances, a person cannot file a small estate affidavit, according to ORS Section 113.095. This includes an incapacitated or financially incapable person, a minor, a person disbarred or suspended for misconduct during that period, a licensed funeral service practitioner unless they were related to the decedent or a partner, employee or employer in the funeral service industry, or a convicted felon.
Fees and Claims Associated With Probate
The probate legal process can begin immediately after a person dies and takes at least four months. However, it can take much longer if there is property to sell or there are complex tax issues. Probate costs include:
- Court and filing fees.
- Attorney fees.
- Compensation for a personal representative, which can range from 2 percent to 7 percent of an estate's value.
- Professional fees for various entities, such as appraisers or land surveyors.
- A bond for the personal representative, unless the will declares otherwise.
After the personal representative takes possession of the decedent's assets, they can open an estate bank account and pay expenses and claims where they apply, in this order:
- Family and spousal allowance: Maximum of one-half of the estate's value with periodic payments for up to a year after death.
- Necessary and reasonable medical expenses resulting from the decedent's last illness.
- Federal taxes and debts.
- State taxes.
- 90 days of unpaid wages before the date of death.
- Child support.
- Department of Veterans' Affairs claims.
- Department of Human Services or the Oregon Health Authority claims.
- Department of Corrections claims.
Probate and Taxes in Oregon
Federal and state estate taxes, based on total assets at the time of a person's death, frequently change as Congress and the Oregon legislature determine the amounts. According to the Oregon Department of Revenue, deaths before January 1, 2012 paid inheritance tax; deaths on or after that date pay estate transfer tax. The party responsible for filing tax returns may be:
- Personal representative.
- Custodian of an estate's assets.
- Someone in actual or constructive possession of an estate's assets.
When beginning the estate planning process, Oregon residents and property owners must consider Oregon's estate tax. For deaths on or after January 1, 2012, estates with a gross value of $1 million or higher must use the Oregon Estate Transfer Tax Form. However, as the result of applicable exemptions or deductions, they may not actually owe any estate tax. The state has a graduated estate tax of between 10 and 16 percent. How much tax the estate will owe depends on the estate's worth after taking into account all exemptions.
- Oregon Department of Revenue: Estate Transfer Tax or Inheritance Tax?
- Oregon Department Of Revenue: Oregon Estate Transfer Tax
- Oregon Laws: ORS 113.095 Persons Not Qualified to Act as Personal Representatives
- Oregon Laws: ORS 114.515 Small Estate Affidavit
- Oregon Laws: ORS 114.510 Value Limitations for Small Estate
- NOLO: Probate Shortcuts in Oregon
- NOLO: What Is Probate?
- Oregon State Bar: What Is Probate?
- McCord and Hemphill: Intestate Succession in Oregon Intestate Succession in Oregon
- Belknap Law: Probate
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.