Estate Planning & Probate FAQ
Why Do People Need a Will?
A will is a legal document that indicates a person’s wishes regarding how their estate is to be distributed after they pass away and that lists who is to be in charge of administering the estate. A will can also designate who is to be appointed as guardians for any minor children. If you don’t have a will, then the probate court will appoint an executor and distribute your estate according to state law (intestacy), without any input from you regarding your wishes.
Why Do We Have to Have Probate?
“Probate” is simply the court process of passing title to the property, both real property (your home, farm, rentals, land, etc.) and personal property (bank accounts, investments, household goods, and vehicles, and everything else that is not real property). Many of these assets require a signature in order to transfer ownership of that asset; after a person passes away, “forgery” is the word we use to describe signing someone else’s name without permission. It takes the judge and the probate court to enter an order appointing an executor to have legal authority to sign on behalf of the person who passed away.
Should I Try to Avoid Probate so I Won’t Have to Pay a Lot of “Death Taxes”?
Probate has nothing to do with death taxes; as indicated above, probate is simply the court process of passing title to the property after a person dies. Death taxes (estate taxes) are calculated on the date of death value of all property owned by the person who passed away (including life insurance, IRAs, 401(k)s, and other retirement benefits), regardless of whether those assets are part of the probate proceedings or not. The good news is that the estate tax only affects large estates. In Oregon, there is no estate tax on estates with a total value less than $1 million; in Washington, there is no estate tax on estates with a total value less than $2 million; and there is no federal estate tax until the total value of the estate is more than $5 million.