When you own real estate in Oregon, accounting for it in your estate planning is crucial. Oregon law makes allowances for ways real estate can be passed according to your will and state law—and in some cases, real estate can even skip probate.
Provide for real estate in your will and outside your will
If you want your real property to pass to a spouse or any co-owner, for example, that begins outside of your estate plan. Under Oregon’s “rights of survivorship,” jointly owned assets such as bank accounts or real estate can automatically pass to a surviving spouse and/or other co-owner.
However, rights of survivorship with joint property isn’t a substitute for a will, especially in complicated family situations. For example, not accounting for the transfer of real property in your estate plan, specifically in step-parent situations, can cause turmoil in the family after the passing of the first spouse.
If you have further wishes or considerations for real property, work with your Oregon estate planning attorney to set those down in your will and other estate planning legal instruments.
Living trusts and Oregon real estate
Living trusts are another way to account for Oregon real property in your estate plan. They can also be a way to have an asset avoid probate, and your trust can spell out how you would like the property owned by the trust to be distributed or liquidated after your death.
Your Oregon estate planning lawyer can create a trust document for you. Under the terms of the living trust, you can name yourself as the trustee of the living trust and the assets owned by the trust.
You’ll also designate a successor trustee. The successor trustee is authorized to take over ownership and management of the trust and its assets upon conditions such as your death or incapacitation.
Once the trust is established, you’ll legally transfer the ownership of the real estate from you as an individual to the living trust, of which you are the trustee. Upon your death, the property owned by the trust can avoid probate, and the successor trustee can then tend to or transfer any property in the trust under the terms of the trust.
Transfer-on-Death Deeds and Joint Tenancy for Oregon real property
When it comes to jointly owned property in Oregon, two terms are crucial:
The property passes automatically, without probate, to the surviving owner or owners. This is most commonly the case between spouses (and you may also see it referred to as “tenancy by the entirety,” which in Oregon is only for married couples).
Tenancy by the Entirety
Tenancy by entirety is only available to spouses. When the first spouse passes, then his or her interest in the property is terminated, leaving only the surviving spouse. This is important to creditors, because the debt of the first spouse is no longer attached to the property.
Another option for Oregon real estate is known as a transfer-on-death deed.
Using this legal instrument, you complete, sign, and record an updated deed that transfers ownership to a new owner. However, the deed has no effect until after you die. As long as you are alive, the deed is not active.
Pluses of a transfer-on-death deed include that you can still sell the property if you want, and you can revoke or negate the deed at any time, or replace the transfer-on-death deed with a new one that has different terms.
Once you’ve passed away, the new deed takes effect, and ownership of the property transfers to the new owner without the need for probate.
Simple probate for small estates
In 2019, Oregon’s legislature approved new rules for how “small estates” are handled, and those rules took effect in 2020.
What is a small estate? In Oregon, an estate can be considered a “small estate” if:
- Total value of personal property does not exceed $75,000
- Total value of real property/real estate does not exceed $200,000
- Total fair market value (FMV) of the estate is $275,000 or less
If wished or if necessary, small estates can still go through formal probate. However, a Small Estate Affidavit can be filed instead. The affidavit serves as your request to the court that the simplified probate process be used for the small estate. After a mandatory 30-day waiting period, the court may then allow the property to be handled without full probate.
Using this simplified process can save the estate time and money, and it can mean that the property gets distributed faster and with fewer hold-ups.
The affidavit request for simplified probate must include the following details:
- Death certificate (certified copy)
- Place and date of death
- Name, age, mailing and physical address, and Social Security number of the deceased person
- Statements confirming that you have provided a copy of the will and the probate request to all beneficiaries and heirs, plus what each is entitled to and what steps you have taken to identify creditors who may have a claim on any part of the estate
- Unpaid claims and/or expenses on the estate
- Copy of the deceased’s will, including names and addresses of all beneficiaries and heirs
- Estimated fair market value and a written description of the property in the estate
- Legal description of any real estate in the estate
- Name and address of each creditor, plus a statement confirming that you will mail each creditor a copy of the simplified probate request
- Disputed claims, including the amount claimed, plus the address and name for each disputed claim
- A statement confirming that you will mail a copy of the simplified probate request to the Oregon Health Authority or the Department of Human Services
- Statement asserting that claims against the estate must be presented within four months of the request being filed, or otherwise the claims will be disallowed/barred
Once these requirements are satisfied and any waiting periods have been completed, the probate court may then accept your request for the estate to use the simplified probate to move forward with property according to the terms of the estate plan.
Accounting for Oregon real estate in your estate plan is really important
If real estate isn’t properly addressed in your estate, it can mean extra expenses, delays, and difficulties for your heirs and beneficiaries. When you account for your Oregon real property in your will, trust, and/or other estate planning instruments, you can ease and expedite transfer of your real estate under the terms you set out in your estate plan.
Are you ready to take care of your Oregon estate? Contact Megan today and start getting real talk about how to handle your Oregon real estate in your estate plan.