Contrary to the widely held popular opinion, if a person dies owning property in his or her name, and that person executed a last will and testament, that property will go through probate (with few exceptions).
WHAT IS PROBATE?
Probate is a legal process whereby the Court oversees the distribution of assets left by a deceased person.
If the deceased person had a will, the will is “proved” and delivered to the court. The deceased person’s will can be proved by an affidavit made under oath by the witnesses to the will. If the deceased person dies without a will, the probate process is similar, but the State decides who gets your assets, not you.
The probate court appoints a Personal Representative (executor) and oversees the administration of the estate. The Personal Representative must file numerous forms, follow an extensive and somewhat complicated process, and pay attention to deadlines and criteria throughout the entire process.
Most people find this to be exhausting, confusing, and a hassle.
An estate cannot be distributed without final approval of the probate judge. Creditors, heirs, and devisees are given opportunity to bring matters to the probate judge for final determination. Once the probate is closed, then creditors are prohibited from bringing additional claims against the decedent.
Probate is a lawsuit you file against yourself, with your own money, on behalf of your creditors.
WHAT DOES PROBATE COST?
Possibly the biggest drawback to probate is the expense. The probate estate is subject to probate fees that are payable to both the executor and the attorney for the estate.
Probate Administrative Costs
In 2017, the cost of filing for probate is $531 for the majority of estates (If the value of the estate is $50,000 or more, but less than $1 million.) The court also charges an accounting fee and that is determined by the value of the estate. The public notice in the local paper runs between $100 and $500 depending on what part of Oregon you are filing in. If the person died without a Will, the court will normally require a bond. There may also be costs associated with selling property.
Personal Representative Fees
In Oregon, the personal representative of a probate estate is entitled to compensations for the services provided to the estate. By statute, the compensation is based on the value of the estate. In Oregon, the base executor fee is roughly 2% of the value of assets passing under the will, and roughly 1% of assets passing outside the will. See Oregon Revised Statute 116.173. For example, if the decedent owned a $350,000 home (which passes under the will) and $300,000 of IRAs and life insurance (which pass outside the will), the fee would be roughly $10,000.
Attorneys' fees in Oregon are based on the number of hours billed and the lawyer's hourly rate. For the simplest of probates, the fees can be around $2000. In general, probate legal fees will run between $4,000 and $7,000. If the estate is large, complex or has unusual assets, the costs can be much higher. If the heirs and beneficiaries are fighting or if there is outside litigation involved, the costs can be much higher.
HOW LONG DOES PROBATE TAKE?
Generally, the probate process takes about 6 to 9 months. If the estate includes property that takes a while to sell, or if there are complicated tax or other matters, probate can last much longer.
PROBATE AND YOUR PRIVACY?
The proceedings of the probate courts are a matter of public record. Anyone with the time and inclination can go to the courthouse and find out exactly how much you left to each heir and to whom you owed money.
Do not think of this as a trifling matter, just because you may not be wealthy or famous – a spurned ex, reporters, dubious investment advisors, or real estate investors could all get this information and cause you and your family problems. Probate court leaves your heirs with little or no privacy.
So, imagine that you have a young child. You (mom and dad) both pass away and your estate goes through probate. The estate is put into a conservatorship estate for the benefit of your child and it will be paid outright to your child when he/she turns 18. The entire thing is public record. Not only is your child getting the entire amount estate, but there could be untrustworthy people who also know what amount he/she is getting because have access to the public probate files. Whose to say they won’t take advantage of that opportunity?
We encourage you to call our office at (541) 632-4313 to set up a free Family Wealth Assessment Planning Session so that we can assist you in the planning necessary to keep your loved ones from having to deal with the probate process. You can also reach out to us here and we can send you information to get organized prior to us meeting.