A. "Survivorship" Property Is Property That Passes to Another upon the Death of One of the Owners by Operation of Law Without the Need of Probate or Other Process.
1. Survivorship real property is most commonly found among husbands and wives who own property as tenants by the entirety (as husband and wife). Other arrangements may include certain types of joint tenancies which also have provisions for survivorship. When one party dies, the other automatically owns the property.
2. Contractual property, i.e., personal property which has a beneficiary designation. Examples of contractual property are:
(a) Insurance policies;
(b) Retirement accounts;
(c) Joint stock accounts;
(d) Joint bank accounts; and
(e) Automobiles held jointly.
B. Property Held in Trust. Property held in a Living Trust may be distributed to the beneficiaries upon the death of the grantor of the trust without the need of any formal process other than executing required transfer documents.
C. Probate. Probate is a legal process that requires court oversight for the distribution of the assets left by a deceased person’s Will, or if there is no Will, in accordance with the law of intestate succession, which provides specific rules of distribution based upon the degree of kinship of those heirs who survive the decedent. In a formal probate proceeding, a personal representative, sometimes called an executor, is appointed by the court to administer the estate.
The personal representative’s primary duties are to:
1. Discover, preserve and collect all of the estate assets;
2. Identify all interested persons in the estate including heirs, devisees, and creditors;
3. Pay all obligations and taxes of the decedent and the estate; and
4. Distribute the assets to the devisees under the Will or in accordance with the law of intestate succession.
In Oregon, the probate process takes approximately 6 months to a year and may involve considerable expense in terms of attorney’s fees, fiduciary fees and other costs of administration. The personal representative is held to a high standard of care called a “fiduciary duty” and can be held personally responsible for any negligence or malfeasance in the conduct of the affairs of the estate. Even in simple estates, the personal representative or executor has many tasks. The trustee of a Living Trust has essentially the same duties as a personal representative and is also a fiduciary, but generally is not overseen by the court and is not limited by court deadlines. The cost of administering a decedent’s estate pursuant to a Living Trust can be significantly less expensive than the same estate being administered through a probate; however, this varies with the complexity of the estate.
D. Small Estate. Oregon law has a simplified probate process called a small estate. The small estate process may be used when not more than $75,000 of the fair market value of the estate is attributable personal property and not more than $200,000 of the fair market value of the estate is attributable to real property. The small estate process is accomplished by the filing of a detailed affidavit and notification of any known creditors. It is significantly less expensive than a formal probate proceeding and is completed in a shorter time frame, usually about five months.
E. Will. A Will is a set of legal instructions that explains how to give away your property after your death. If you have minor children, your Will can also designate who you want to be their Guardians. To be effective, your Will must be in writing and it must be signed by you. At least two witnesses must sign it. These witnesses must have seen you sign the Will, or they must have heard you say that it is your signature. It is important that these formalities be carefully observed. A Living Trust, as mentioned above, is a Will substitute and generally does not require a probate.
F. Payment of Creditors. The payment of creditors of the estate of a decedent is of paramount importance to the personal representative and/or a trustee. This is because, the personal representative or trustee can be made personally responsible for those obligations if he or she fails to carry out the instructions in the trust, observe the requirements of the court or otherwise neglect his or her duties as trustee. Therefore, identifying creditors is an extremely important part of the trustee’s or personal representative’s duties that needs to be completed before distribution of any assets from the probate or trust estate.
Article Written By: Carl F. Jepsen, Warren Allen LLP
DISCLAIMER: The information contained herein is based on Oregon law and is subject to change. It should be used for general purposes only and should not be construed as specific legal advice by Warren Allen, LLP or its attorneys. Neither this website nor use of its information creates an attorney - client relationship. If you have specific legal questions, consult with your own attorney or call us for an appointment.