Probate isn’t always needed in Oregon. Probate is merely a way to transfer assets and clear title. Through advance planning, titling of assets through a trust or with survivorship rights can avoid probate by creating “non-probate property”. Additionally, with the right circumstances and the right types of assets, property that would normally be subject to probate proceedings can be transferred outside of probate.
RISKS OF NON-PROBATE TRANSFERS. The primary purpose of transferring probate property through alternate methods is to balance valid title transfers with efficiency. We want to speed up the process of transferring title, but we also want to make sure that the folks that matter (read: banks, title companies, transfer agents, subsequent purchasers, etc.) will honor the transfer. Because if they don’t, then the title isn’t very useful.
UNTITLED ASSETS. This means personal property, like cash, home furniture, jewelry, sole proprietor equipment, and other personal effects that one acquires throughout life. Untitled property of this nature doesn’t show up on a DMV title search, or in a real property search of the county. A receipt documenting and acknowledging delivery and possession is sufficient to effect a transfer of title. One caveat about sole proprietor equipment, though: it’s worthwhile to do UCC search before transferring just in case it is encumbered by business security interests. If it is, track down the secured party to obtain a release of the lien.
AFFIDAVIT OF HEIRSHIP. An affidavit of heirship is a simple, verified statement of the facts pertaining to a proposed distribution that can be used to prove the right to receive property and create a chain of title. The information required is similar to a small-estate affidavit. Insurance companies, banks and other financial institutions typically supply their own forms and will most likely require you to sign an indemnification agreement.
SETTLEMENT AGREEMENTS. Sometimes disputes arise amongst potential heirs. Assuming the property in question may be transferred through non-probate means, documenting the proposed asset transfer through a settlement agreement may be sufficient to document title. Obviously, this is effective only amongst the parties to the agreement (as opposed to third party creditors), but it would be sufficient to insulate the recipient from claims by other heirs who are parties to the agreement.
CLOSELY HELD BUSINESSES. We’re not talking about publicly traded securities here. Non-public, closely held businesses can effectively transfer ownership interests with minimal documentation. If the business is a partnership that holds partnership property with title records (such as real estate) then the business documentation will need to be accompanied by record title transfer.
TRANSFER ON DEATH DEEDS. Assuming the deed was properly executed and recorded prior to death, this is a way to transfer real property outside of probate. Oregon’s transfer on death statute, however, leaves an eighteen month cloud on title. Unlike a trust or joint property, the transfer on death deed creates no legal interest in the real property until death.
DISCLAIMER WILLS. Often done for tax planning purposes, the disclaimer will provides that all of the decedent’s property passes to his or her surviving spouse, except to the extent that the surviving spouse disclaims any property. Any disclaimed property passes to a credit-shelter trust for which the surviving spouse is named the beneficiary.
VEHICLES. ORS 803.094 allows a motor vehicle transfer when there is no probate estate. The DMV forms are available online here http://www.oregon.gov/ODOT/DMV/pages/form/forms.aspx
BANK ACCOUNTS. Banks may, may being the operative word, distribute accounts held by the deceased up to $25,000 so long as the claimant provides the affidavit required by ORS 708A.430(2). There is an aggregate ceiling on all Oregon accounts, meaning this option is only available if the total of all of decedent’s bank accounts in Oregon are $25,000 or less. Some pitfalls to this approach include: 1) claimant must promise to pay all debts of decedent’s up to the amount of the funds released and disburse such funds to those so entitled; 2) the claimant must account for the funds in the event a probate is opened and a personal representative appointed; and all but the surveying spouse must wait seventy-five days to receive the funds. There is an order of priority beginning with a surveying spouse, then the Oregon Health Authority or Department of Human Services, then surviving children over the age of eighteen, then surviving parents, then surviving siblings who are over eighteen.
WAGES. If $10,000 or less, the decedent’s wages may be paid to the surviving spouse or children if there is no surviving spouse.
SMALL ESTATE AFFIDAVIT. And of course sometimes probate is unavoidable. If you absolutely must probate a decedent’s estate, a small-estate affidavit under ORS 114.505–114.560 might be an option. To qualify for a small-estate affidavit procedure, the probate estate must have $75,000 or less of personal property, no more than $200,000 of real property, and no more than $275,000 total. Oregon’s small estate procedure is usually faster and cheaper, but not entirely painless.