Harshi M. Waters
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Probate, Wills and Estate Planning
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DEFINITION OF PROBATE
Probate refers to legal proceedings to transfer assets upon death. Probate includes both assets of people who die with a will and assets of people who die without a will. If a person dies with a will, the will controls the transfer of assets in the probate proceeding. If a person dies without a will, Oregon statutes control the transfer of assets, including which relatives will be named as heirs, in the probate proceeding. It is not true that if a person dies without a will that the State will take the person's property.
TYPES OF PROBATE ASSETS
For some assets, no probate court proceeding is necessary. For some assets, a will is not necessary. For some wills, no probate court proceeding is necessary. There are generally three types of probate assets :
Assets that transfer automatically by the terms of the account agreement or the instrument creating the property rights. These assets do not require a will or probate court proceedings. They include life insurance proceeds, bank accounts or other property owned jointly with another person with a right of survivorship.
Assets which are the only assets in a small estate, where there are only minimal personal belongings and household goods for which there is no typical kind of "title". These assets do not transfer automatically but can transfer and be divided among the heirs without a probate proceeding.
Assets that must transfer with a probate proceeding or present some special reason for seeking transfer through a probate proceeding.
TYPES OF OWNERSHIP
The title or ownership of an asset determines how the asset will be transferred upon death. Ownership can be changed at any time during the lifetime of the owners, sometimes as part of planning for an estate or a will. Ownership of an asset can be held in many different ways, including, but not limited to :
in one person's name
by joint tenants with right of survivorship
by tenants in common by tenants
by entirety by sole proprietorship
by corporation by a partnership
by a limited liability company
by estate many other ways
EVIDENCE OF TITLE
To find out who owns an asset under what type of ownership, you must look at the documents that are evidence of ownership :
Real Estate: Examine the deed.
Motor Vehicles: Look at the vehicle registration certificate.- Bank accounts: Look at the bank signature cards
and the names on the checks.
Stocks and Bonds: Look at the certificates. For brokerage accounts, examine the new account information.
For some types of personal property: Look at the bills of sale, receipts, invoices or other purchase documents; for gifts, look at any evidence of the gift or intent of the donor, etc.
For life insurance: Look at the insurance application and the beneficiary designation.
For retirement plans: Look at the new account application and the beneficiary designation.
TITLE AFTER MARRIAGE OR DIVORCE
Marriage and divorce, automatically and by themselves, do not change asset ownership. For example, if Wife owns a house in her name alone when she is single, her marriage to Husband does not change the title - even if he moves into the home. Marriage certificates do not change deeds. If the couple both want to be considered owners of the home, Wife will need to have a new deed prepared naming both Wife and Husband as owners. Until Wife prepares a new deed, Husband will not be listed as an owner of the home. Along the same lines, divorce by itself does not change ownership. To change ownership of an asset, the divorce decree must spell out how the ownership of that asset has now changed, and what steps must be taken to change the ownership. If the divorce decree does not deal with ownership of an asset in a general or specific way, the ownership could/will remain the same as before the divorce. For example, if the asset is real estate, a new deed must be prepared naming the new owner and the deed must be filed in the public records at the county recorder's office.
DEFINITION OF CHILDREN
The law does not limit "children" to children born while a couple is married. Unless stated otherwise in a will, "children" includes (1) all children born before, during, or after a marriage, (2) all children for which paternity has been established, and (3) all legally adopted children. Unless stated otherwise in a will, "children" generally does not include: (1) step children, (2) children for which paternity has not been established, (3) children in which parental rights have been relinquished or terminated, (4) foster children, or (5) children of relatives or friends who have been living with you. "Children" should be clearly defined in the will; it should state which children are included and which are excluded in a will by using first, middle, and last names of the children.
UNMARRIED PERSONS LIVING TOGETHER
Oregon does not have what is sometimes referred to as "common-law marriage." Oregon will not consider people who live together as a married couple. This is true no matter how many years the people live together. There are major legal and economic benefits extended to married couples, but not to unmarried couples. Living together will not automatically entitle the couple to the benefits which marriage confers under numerous laws, including the laws of probate. The rights to notice, protection, benefits, and inheritance under probate laws are generally not given to the surviving partner of an unmarried couple who do not have wills. This does not mean that unmarried couples have no choices. It does mean that unmarried couples must be better at planning and documenting. A will can be one way to specifically designate that the surviving partner of an unmarried couple receive property.
DO YOU NEED A WILL?
Most people do not know how much money or assets they will have at their death. For that reason alone, everyone should have a will. A death, such as by an accident, could mean that the deceased person's estate is entitled to a monetary recovery, which, depending on the circumstances of the death, could be a significant sum. There are many other reasons for having a will. Some purposes, including the ones listed below, can also be accomplished by methods other than with a will. Some purposes can be accomplished during your lifetime. For example, a gift to a charity can be made during your lifetime; you can give specific items of jewelry to a relative or friend while you are alive; gifts do not have to wait until your death.
The following issues will usually indicate to Oregon residents that a will should be seriously considered:
When you want to give specific bequests of property to specific people;
When you want to leave some property to people who are not your heirs as defined by state law;
When you want to leave some property to a charity;
When you have children;
When you have stepchildren;
When you want to name guardians and trustees for minor children;
When you want to select the personal representative for your estate;
When you own real estate with a value greater than $200,000 so that your estate does not qualify for small estate procedures;
When you own personal property with a value greater than $75,000 so that your estate does not qualify for small estate procedures;
When you own real estate and personal property with a combined value greater than $275,000 so that your estate does not qualify for small estate procedures;
When you want to control how much or in what percentages your beneficiaries will receive;
When you do not want to rely on the Oregon statutes to identify your beneficiaries, how much they will receive, or what percentages your beneficiaries will receive;
When you want to waive the need for a bond, which is required for estates in probate court in which the deceased did not have a will; and
When you want to avoid family disputes about distribution of your property. Which State Law Controls?
WHAT IS A LIVING WILL?
A Living Will (also known as an Advance Directive, Directive to Physicians, Health Care Power of Attorney, etc.) is a document containing your health care instructions and/or the name of your health care representative. Health care instructions are your advance, written instructions used when you are incapable of making and communicating decisions about your health care. These may include decisions regarding tube feeding, life support, or other crucial matters. If you do not have written instructions about your health care, and become unable to make or communicate decisions, medical providers will perform life-sustaining procedures, including tube feeding and life support. You continue to make health care decisions as long as you can make and communicate your decisions. With a Living Will, you can appoint someone to make your health care decisions when you are unable to do so. Your health care representative would make decisions for you by following your advance written instructions. Your health care representative must follow your desires as stated in your Living Will. If there is a situation in which your desires are unknown, your health care representative must try to act in your best interest.
Each state has its own probate and wills laws. These laws differ from Oregon's probate and wills laws in many ways. This is especially true with community property states (for example, California, Washington, Idaho, Nevada, Arizona, New Mexico, Texas, Louisiana, and Wisconsin). Some states, which are not considered community property states, have other types of laws that affect probate and wills matters. Community property means that all assets acquired jointly or individually by husband and wife during the marriage is generally considered to be jointly owned property. This generally means even assets that are acquired in the name of only one of the spouses will be considered the property of both spouses together unless other measures have been taken to avoid the property being considered community property. Because Oregon is not a community property state, a married person can own property in his or her name alone. This property would then NOT be considered as owned by both spouses. Because Oregon is surrounded by community property states, it is very likely that people with wills and community property from other states are moving to, and dying in, Oregon. If a person who has a will moves from one state to another, the will prepared in State 1 may not operate in State 2 as the person intended. In general, people planning wills should have them prepared in the state in which they reside. A new will should be prepared if a person moves to another state. A probate court can exercise its authority only over assets located within that state. If a person owns assets in another state, the main probate process will happen in Oregon courts. However, another probate inquiry, known as an ancillary probate proceeding, will need to be filed in the other states where property is located.
This information is not intended as legal advice and is not intended to be applied to any specific situation. If you have legal questions, you should consult an attorney.