In my estate planning practice and in my estate management practice I am asked the same questions: “What is probate?” and “Why does it have to take so long?”

Usually, when people tell me they want to avoid probate, they mean they want to avoid having their estate administered through a court process, whether or not the person has a will. The exact definition of legalization is not that important. Essentially, probate (if there is a will) or intestate (if there is no will) estate administration is the legal process of gathering a deceased person’s property; pay the deceased person’s creditors; and pass the remaining assets to the person’s heirs (if there is no will) or to the currency or beneficiaries of the person (if there is a will).

The process is more appropriately called estate administration, but since people tend to think of both processes as probate, I’ll continue to use that term throughout this post. The probate process generally consists of three time periods: (1) start; (2) administration; and, (3) closure. This article will cover the start and the events leading up to the start.

1. What property is my probate estate?

Before discussing the beginning, it is important to determine what constitutes a sequence. Any property owned by the decedent on the date of his death that is not automatically transferred to a named person will be included in his estate. For example, a bank account with a beneficiary payable on death will automatically pass to the designated beneficiary, without probate. In addition, property in a trust created by the decedent will not be part of the decedent’s estate since the decedent did not technically own the property at the time of the decedent’s death.

Common probate property includes real estate, stocks and bonds, vehicles, bank and brokerage accounts, and various items of personal property.

Retirement accounts and life insurance are generally not probate property as they typically have designated beneficiaries. However, if no beneficiary is named or dies before the owner/insured, the owner/insured’s estate is usually the default beneficiary.

2. Is a complete probate necessary?

Full probate proceedings may be unnecessary if: you have a small enough estate when you die; you only own assets that have payable-on-death designations or are jointly owned with rights of survivorship; or have transferred your property to a trust.

In Oregon, if a decedent’s estate consists of real property valued at less than $200,000.00 and personal property valued at less than $75,000.00, then small estate procedures can be used to transfer the decedent’s property to his or her heirs or beneficiaries, if you have a will . The process is relatively easy and much less expensive and time consuming than a full probate. An attorney will probably be necessary to ensure that the various statutes are followed. People often ask me, “Can I use a small estate affidavit if my dad’s house is valued at $300,000.00 but he has a $150,000.00 loan encumbering it?” The answer is no because the limits are based on gross values, not net values. Since the gross value of the real estate exceeds $200,000.00, probate is necessary.

Husbands and wives often own their homes, bank accounts, and other property as “husband and wife,” so when the first spouse dies, the surviving spouse will be the sole owner of the property. A will is not necessary. When the wife dies, probate will probably be necessary to transfer the property to her children or other designated beneficiaries.

As another example, suppose that after the death of the husband, the wife transferred their home to a revocable living trust. She maintained a brokerage account with $78,000.00 in her name with her children as beneficiaries payable on death. She also had a savings account with $5,000.00 that she forgot and never transferred to her trust but that account does not have a beneficiary payable on death.

When I die, can my children use the small inheritance process? The answer is yes. Although your total estate consists of personal property of more than $75,000.00, the amount subject to probate is well below that threshold since the brokerage account is transferred directly to the designated beneficiaries and your home is owned by your trust.

Small estate procedures will be needed to transfer the savings account to the wife’s heirs, but a full succession is avoided.

3. The succession is necessary; Whats Next?

Suppose the wife has made a will and her daughter is named personal representative. She will be responsible for managing her mother’s estate. Her father passed away a few years ago and her daughter has two brothers.

At this point, you may have a vague knowledge of your mother’s estate and have searched for a will, trust, and other estate planning documents. If she’s lucky, her mother took the advice of her lawyer and placed the original documents in a safe or safe.

Since probate is a complicated and confusing process, your daughter will need a lawyer to help her navigate the probate waters. She can use any lawyer she feels comfortable with.

At your initial appointment with your attorney, you will bring your will, your mother’s death certificate, various documents identifying your mother’s property, and your siblings’ contact information. He may also bring information about the creditors of her mother’s estate (credit card companies, unpaid medical providers, etc.). Based on the information provided, the attorney will draft a probate application or an intestate administration application depending on whether or not a will exists.

Generally, the person named as the personal representative in the will petitions the court to administer the estate. What if there is no will, or the personal representative does not want to serve and there is no designated successor? The court gives preference to a surviving spouse, then to a child or next of kin.

If there is no surviving spouse or next of kin, then, in the event the decedent has been provided public assistance by the state, the Director of Human Services or the Director of the Oregon Health Authority may appoint an attorney to act as representative personal if the decedent does not have a surviving spouse or next of kin. The Department of Veterans Affairs is next in line; followed by anyone else. These are simply legal preferences. The individual still needs to qualify as a personal representative.

4. The petition is filed, what happens next?

The petition is essentially a request to the court to admit the will filed with the probate petition and to designate the person named in the petition as personal representative. Notice of the filing of the petition must be given to various government titles, the decedent’s heirs, beneficiaries named in the will, and other interested persons. These individuals will have the opportunity to object to the appointment of the personal representative and request further arguments from the attorney representing the personal representative.

In the future, I will talk about what happens once the petition is filed and the initial steps associated with managing Oregon properties.

© 03/18/2014 Kevin J. Tillson of Hunt & Associates, PC All rights reserved.

***This article is informational only and the circumstances surrounding your case or legal matter are unique. This article does not constitute legal advice and should in no way be relied upon without consulting a licensed legal professional.***