Frequently Asked Questions About Estate Planning

What is Probate?

Probate is the court supervised process of distributing the assets of your estate to your heirs or beneficiaries. In Oregon, if you die owning assets your estate is subject to probate except those whose assets amount to less than $75,000 of personal property and/or less than $200,000 in real property can file a small estates affidavit in lieu of a formal probate proceeding.

Why do I hear so much about avoiding probate?

The simple answer is time and money. Probate is a lengthy and sometimes needlessly expensive process. The Probate process has a minimum waiting period before assets can be distributed and often probate cases take up to a year or more to resolve. Additionally, the personal representative of your estate (your executor) must be represented by an attorney. Therefore, attorney fees will be paid from your estate before your beneficiaries receive any inheritance. Its all your money, why not leave it to loved ones instead of the lawyers?

If I have a will, won’t my estate avoid probate?

No. Think of your will as your ticket to probate court. A will based estate plan will require probate when the total fair market value of your assets amount to more than $75,000 of personal property and/or more than $200,000 in real property.

How do I avoid probate?

In simple terms, if you don’t own anything at your death your estate will not be subject to probate. Most people however, do not want to give everything away while they are still alive and very few people are good at spending all of their money right down to their last minute. So, the alternative is to create what is known as a revocable living trust to hold all of your assets for your benefit while you are alive. At death, you don’t own anything, you were merely the trustee of your trust and therefore probate is not required.

Don’t you have to have a taxable estate before you need a trust?

No. Trusts do not avoid estate tax. Neither do wills. Proper planning avoids estate tax. However, assets held in trust do avoid probate. If the fair market value of your assets amount to more than $75,000 of personal property and/or more than $200,000 in real property you should consider a trust. In addition, if you own real property in more than one state you should consider a trust; without it your estate will have to go through probate in each state in which you own real property (that would included deeded time-share properties).

What happens then to the assets in my trust after my death?

When your trust no longer has you as its beneficiary, your successor trustee, whom you have appointed, will distribute the assets of your trust according to your wishes. Your successor trustee is not required to file anything with the court and does not have to get an attorney involved in the process of administering your trust.

Are there other benefits to having a trust?

Yes. Your trust can provide you with protections in the event of your incapacity, whether physical disability or mental incompetency. Without a trust, someone would have to apply to the court to be your legal guardian or conservator. This is often referred to as a living probate because it is handled through the court’s probate department and probate judges.