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What is a Probate, and When do I use one?

I frequently get questions about what a probate is, and when a probate is required.

A probate is how ownership of property passes from a person who has died, to their heirs. A probate can be used when there is a will, or when there is no will. The probate organizes the last affairs of the person that passed away. When those affairs are completed, the assets are passed to the next in line. A probate is supervised by a judge. I like probates; they do a lot of good things, and judicial supervision means that you are rarely going to get caught in a mistake. By comparison, living trusts have no judicial supervision. Mistakes can be made, and there is no protection against claims of creditors.

Probates in Curry County are not expensive, if you find an attorney who will help you process the probate by the hour. Attorneys who charge a fixed percentage of the estate as their fee should be avoided.

A probate begins by filing a petition to the court. A probate is “testate” if there is a will. A probate is “intestate” if there is no will. If there is no will, the judge will require the purchase of a bond, which is kind of an insurance policy to insure good behavior. Where there is a will, most wills waive the bonding requirement.

The petition for probate is filed with the court, along with the will if it is a testate probate. Both testate and intestate petitions require a copy of the death certificate.

After the petition is filed, the judge appoints a representative to administer the estate. In most states, the representative is called an executor. In Oregon, we call the representative a Personal Representative.

Once the judge has approved a personal representative, letters testamentary are issued by the court clerk. This is just a document that says to the world that the personal representative has authority to act for the estate.

One mistake that people make is to try to take control of estate assets before they are appointed personal representative. The will may name a personal representative, but the will creates no legal authority for that person to act. It is the process of filing a petition and being appointed by the court that allows you to act for the estate.

The personal representative is usually a person who is familiar with where things were kept by the person who passed away. The personal representative collects documents, and insures the safety of personal property during the probate. The personal representative identifies the creditors of the person who passed away (“the decedent”). The PR usually does this by monitoring the mail of the decedent.

The personal representative creates an inventory of the assets of the decedent.This is usually pieced together through tax returns, file documents, and mail. The personal representative files the inventory with the court. The inventory sets forth the assets of the estate.

The personal representative sends a copy of the petition for probate, the will, and other relevant documents to the heirs of the decedent. The personal representative also sends a notice to people known to be creditors of the decedent. The creditors must make a claim within 4 months of the date of the notice, or their claims are barred. This is in contrast to living trusts, where there is no probate bar to claims and they can be made any time down the road.

The personal representative files tax returns for the income received by the decedent for the prior tax year. I usually refer the personal representative to a CPA. I prefer to have a tax expert in charge of the tax returns. A notice is published in the newspaper of the death of the decedent, and it tells who the personal representative is and where a creditor can make claims.

Once the identity of creditors is made, the assets are gathered together, creditors and taxes are paid, and the personal representative files an accounting and a petition for distribution of the remaining assets. The accounting says what money came into the estate during the probate process, and what money left the estate or was spent. Heirs have a period of time to object to the accounting and the proposed distribution.

From my point of view, one of the nice things about a probate is you can usually file a request for instructions with the court, and get an answer within 30 days. Approval by the court may insulate the personal representative from claims of wrongdoing or poor judgment. We can get approval by the court for the sale price of a house, and instructions for matters we don’t know quite how to handle. I especially like the probate process where there is a blended family, with children who have different parents. In blended families, particularly, there are more likely to be disputes. These can be quickly resolved by the court, and the personal representative may then be protected from claims by the disputing parties.

Once the accounting is approved, the court orders a distribution of the estate. The way the distribution is made is controlled by the will. The mechanics will vary depending upon the nature of the asset.

This is a short course on probate. It does not detail every item that needs to be done. Most people find it necessary to hire an attorney to guide and advise them and to file the necessary documents within the necessary time period.

Probate procedure and living trust administration are very much alike. Most of the steps are the same. The same tax planning can be done in a will as through a living trust. I have a tendency to lean in favor of wills because of the protection available to the personal representative, and the guidance available by the court. There are some occasions when a living trust is more useful, and I will discuss them in another blog.

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