When a member dies without a joint owner on their accounts or a payable on death beneficiary, their assets including credit union accounts must pass through the probate process.

The following is intended to provide you with a working knowledge of the probate process in order to assist members or their survivors with questions relative to their credit union accounts.  It is NOT intended as a source of legal advice and you should not represent it as such to members.

What is probate?
Probate is a process in which the court decides who receives assets that were owned by a person who has died. Assets are anything a person owns with value, such as property, cash, etc.

What is an Estate?
A persons estate is made of the property they owned which will be distributed to the heirs of their estate.  It is also the ownership of an account holding the deceased members assets. “The estate of John Smith"

When is probate needed?
Probate is not always necessary. If the deceased person owned bank / credit union accounts or property with another person, the surviving co- owner will then own this property automatically. If a person dies leaving very few assets, such as personal belongings or household goods, these items can be distributed among the person's heirs without the supervision of the court. Sometimes probate is needed to:

• Collect debts owed to the deceased person.
• Clear title to land or stocks and bonds, or large bank or savings and loan accounts that were held in the name of the deceased person only, and put the title to these assets in the names of the heirs.
• Settle a dispute between people who claim they are entitled to what the deceased person left behind.
• Resolve any disputes about the validity of the deceased person's will.

What happens During the probate process?
1.   A personal representative is selected. A personal representative is someone who handles the deceased person's affairs. The person is either selected by the deceased person in his or her will or by a court. If a person dies without a will, the personal representative is usually the spouse, child or close relative. If none of those people are available or willing to be the personal representative, the court may choose a bank, trust company or lawyer.
2.   The will is proved and delivered to the court. The deceased
person's will is proved by a written statement made under oath by the witnesses to the will. At the time the will was created, there must have been two witnesses who signed the will in the presence of each other. Each witness must be able to testify that at the time the will was signed, the deceased person was of sound mind and knew what he or she was doing. If someone has the deceased person's will, he or she must deliver it within thirty days to the personal representative or to a court (this is required by Oregon law).
3.   An inventory of assets goes to the court. The personal representative gathers together information about the deceased person's assets and gives the inventory to the court. The personal representative may sell some assets if expenses need to be paid, and if selling the assets is not against the will.
4.   A notice to creditors is published in a local newspaper. This public notice typically gives them four months to bring any claim against the estate for debts the deceased person owes them. The personal representative also gives written notice to all known creditors and those who may be creditors.
5.   The heirs and people named in the will are notified of the probate
proceeding.
6.   The personal representative collects debts that are owed to the deceased person.
7.   The personal representative prepares state or federal tax returns and any inheritance, gift and estate tax returns and pays the taxes.
8.   The court approves the inventory of assets. After approval by the court, the deceased person's assets are distributed to the people and entities (such as charities or trusts) named in the will or to the heirs of the deceased person.

What is the role of the court?
1.   The court makes sure that creditors are notified and their claims are settled. (Clearing such claims is an important reason for court supervision.)

2.   The court examines the will and the statements of the witnesses to make sure that the will is valid.

3.   The court makes sure that proper receipts are filed for all expenses taken from the estate during probate.

4.   The court makes sure that all Oregon income taxes are paid.

5.   The court makes sure that all assets are distributed to the people who are supposed to receive them.

What is a "Small Estates" proceeding?
Oregon has a "small estates" proceeding. If an estate fits in this category, the cost and time for distributing the estate is greatly reduced. A small estate proceeding applies to your estate if:

Effective January 1, 2010

1.   Total assets are $275,000 or less;

2.   Real property is worth less than $200,000; and

3.   Personal property is less than $75,000.

Real property includes land and buildings or structures placed on land, such as houses, commercial buildings and agricultural buildings. Personal property includes all other property, such as cars, boats, clothing, stocks, bonds and personal items.

Small Estates must still be processed through the county probate court.  Specific small estate guidance provided in “Small Estate Summary”

How long does probate take?
Probate can be started immediately after death. The process will take a minimum of six to nine months. If the estate includes property that must be sold, or if there are complicated tax matters, probate can last much longer. However, a small estate proceeding will only take four to six months and can be handled informally.

Documents Required For account closure

• Original death Certificate AND
• Approved ID of Personal Representative / Administrator / Executor or claimant AND
•  One of the following
  • Letters Of Testamentary
  • Affidavit of Successor Claimant of Small Estate
  • Signature card with Payable on Death Designation
  • Affidavit to claim deceased member account

How are assets distributed if the member dies intestate?
If the decedent left no will and had the following relatives survive:

1. A spouse but no surviving children or grandchildren: everything would go to the spouse.
2. A spouse and children:
   • Everything would go to the spouse if all of the surviving children (and deceased children who left children) were also children of the spouse.
   • Half would go to the spouse and half would go to the children if any of the surviving children (or deceased children who left children) were not also the children of the spouse.
3. No spouse but three children (no deceased children):  each child would receive one-third of the estate.
4. No spouse but two surviving children and one deceased child who left two children: the two surviving children would receive one-third each and the children of the deceased child would receive one-sixth each (they share the deceased child’s share).
   
   If the decedent left a will, each person who is named to receive property would be listed, with the property to be received described next to each name under “property to be received.”
   

May we close a Membership and Issue a check without Probate court action?

• Yes by using the “Affidavit to Claim Deceased Members Account” found on the OCU intranet site but we still evaluate requests for fraud potential
• Distribution of funds must be delayed 75 days after members passing as indicated on the death certificate due to time frame in
  which various parties has to make a demand of preferred claim on the estate.

Why avoid probate?

• Avoiding probate makes good sense - In many situations because it saves the beneficiaries time, money, and frustration. The probate process is helpful in certain situations where the testator’s financial of family affairs are complicated and court involvement is beneficial
• Avoiding probate saves time- The probate process take time on purpose because it needs to provide due process for claimants and heirs to come forward to challenge the will and to get paid from the estate.
• Avoiding probate saves money- The probate process takes money in court costs, related costs such as a publication fee, and the time it takes for a lawyer to prepare all the necessary pleadings.
• Avoiding probate saves frustration- The probate process is not a straightforward process, which is not very easily understood and it causes beneficiaries extra work that most do not wish to take upon, and it causes a burden on family members.

How to avoid probate?

• Joint tenancy ownership- Joint ownership results in the immediate passing of assets to the sole ownership of the joint owner.
• Pay on death Credit Union or bank accounts- Pay on death or transfer on death accounts
• Transfer on death designation- Transfer on death designation also known as Payable on death or Trustee Beneficiary designations, are available for bank / credit union accounts as well as stocks and bonds.
• Retirement accounts- Retirement accounts have a probate avoidance benefit due to the use of named beneficiaries.
• Life Insurance- Life insurance can also have a probate avoidance benefit.
• State laws that allow passage of certain types of property- For instance, Oregon allows the transfer of a car without probate.
• Lifetime gifts- Lifetime gifts are another probate avoiding device.