For most people, probate is a confusing process. Misunderstandings can lead to headaches, delays and even extra costs that reduce a person’s estate. Here’s how to avoid common Oregon probate mistakes.
The Oregon Probate Process
Probate is a legal process in which a court oversees payments of debts and the distribution of a deceased person’s assets. The court appoints a person to act as the personal representative or executor of the estate, and this person is responsible for gathering information about assets and debts, paying debts, and distributing assets. If there is a will, this happens under the terms of the will. Otherwise, state law dictates how assets are distributed.
The regular Oregon probate process takes at least four months. This amount of time is necessary in order to ensure that debts are settled correctly. If there are complications or disputes, the probate process can take much longer.
Mistake 1: Not Accounting for Taxes
In Oregon, estates may be subject to federal estate taxes as well as the Oregon estate tax. Depending on the location, other state or inheritance taxes may also apply. Gifts given during a person’s lifetime can also be subject to the gift tax.
Taxes can take a big bite out of a person’s estate, but proper estate planning can help to minimize the tax burden. This is especially important for larger estates.
Mistake 2: Going Through the Full Probate Process Unnecessarily
Sometimes probate is unavoidable. However, this is not always the case.
For example, small estates may be eligible for the Oregon probate shortcut. This option is available to estates if the personal property is not valued at more than $75,000 and the real property is not valued at more than $200,000.
Even when probate is required, it may be possible to keep certain assets out of the process. For example, you may be able to keep a vehicle out of probate by adding a joint owner and survivorship to the Oregon vehicle title. Life insurance benefits can also avoid probate as long as the estate is not the beneficiary. Setting up a trust is another way to keep assets out of probate.
Mistake 4: Failing to Anticipate Disputes
When heirs disagree about how an estate should be distributed, probate can get ugly.
For example, let’s say you have a vacation house that you want to leave to your three adult children. After your death, two of your children want to sell the house because it’s too expensive to maintain. The third child wants to live their but can’t afford to buy out the shares of the other two.
Disputes can also emerge over unique heirlooms, whether or not they have significant monetary value. For example, two daughters may fight over who gets to keep their mother’s wedding dress.
These disputes can often be avoided through careful estate planning. For example, splitting all assets evenly might not make the most sense, especially when real estate and other physical assets are involved or when the needs of heirs vary significantly, and this is something that should be considered carefully. In many cases, it’s helpful to discuss your plans with your family, especially when disputes are likely to occur.
Mistake 3: Not Using an Estate Attorney
One of the most common mistakes involves trying to handle estate planning without an attorney.
Let’s say you want your estate to go to your children from a previous marriage, and not your current spouse. You write this down and keep the document in a safe, confident that you’ve made your wishes clear. Unfortunately, there are many ways this could go wrong. Although some states accept handwritten wills, it’s easy for heirs to dispute the validity. It’s also possible that your will won’t be discovered. Other issues could emerge if your will contradicts state law. For example, in Oregon, surviving spouses may have the right to an elective share of the estate. Your handwritten will may also fail to account for unforeseen events, such as the death of your named beneficiaries before your own death.
All of these issues can result in a long and bitter probate process. An experienced estate planning lawyer could help you navigate these issues and create an air-tight estate plan.
Mistake 4: Not Meeting Your Fiduciary Duty
The personal representative of an estate is in charge of paying debts and distributing assets, but they don’t get to do whatever they want with the estate. They are bound by a fiduciary duty to act in the best interests of the estate and its beneficiaries. They also need to follow state law and the will (if there is a will). If you don’t do this as the personal representative, you could be sued.
Do you need help avoiding Oregon probate mistakes? Skinner Law can help. Contact us.