Estate planning can be an uncomfortable topic. Not many people like to confront their own mortality, the terminology is confusing, and it’s pointless because everyone lives forever, right? Unfortunately not. Depending on your circumstances, the implications of your intestacy can be significant. A general understanding of this area of law and its terminology will help you feel at ease and prepared the next time you have a conversation about it. The more you know, the more comfortable and better equipped you will be to discuss the implications and issues that are important to you. This knowledge can help avoid future family conflict and ease your worries knowing your assets will be distributed the way you intended them to be.

Testate Transfers & Testacy Proceedings

When a person dies with a complete and legally-executed “Last Will and Testament” (also simply known as a “will”), she is said to die “testate.” This accomplishes the primary goal of estate planning: to identify your assets and assign who those assets will go to after your death. This process eases the burden on those left behind because the deceased’s “Personal Representative” merely has to carry out the deceased’s wishes. Distribution under a will is done under court supervision in the probate court. This court process is called “testacy” or a “testate probate proceeding.”

Intestate & Intestacy

When a person dies without a legally-executed will, he is said to die “intestate.” This means you have no say in how your estate is distributed or who receives it. This will all be determined by state intestate succession laws which determine the priority for distribution of your estate.

Intestate Succession

Succession laws vary from state to state. However, generally, priority is as follows: (1) surviving spouse, (2) children, (3) parents, (4) brothers, sisters, and their lineal descendants, (5) grandparents, (6) next of kin, and finally (7) the state. Oregon’s intestate succession laws can be found in ORS Chapter 112.

Partial Intestacy

A person can also die “partially intestate” if the final will and testament only covers some of his assets but leaves some out. This can happen if part of the will is invalid or the terms of the will do not cover all of the persons assets. For example, a person may purchase property after the person created the will but failed to later add it to the will. In this case, the assets that are properly covered by the will are distributed according to the terms of the will, while the property purchased after the will was created is generally distributed to based on the will’s residuary clause, if any. If the will lacks a residuary clause, or is out of state, intestacy will generally control distribution of these outstanding assets.

Having prepared your will, you may feel like you no longer have anything to worry about. However, there are often little things that can be overlooked that can have unfavorable consequences. For example, if a disgruntled family member contests the will’s validity, the deceased’s wishes could be thrown out. If the will is thrown out, the estate may be distributed under an older will or intestacy. For this reason, it is helpful to talk to your lawyer about any family members who you know may oppose your will.

Requirements

What are the requirements to make a valid will?

  • Written Documents. In order for a will to be valid the will must be a written document in physical or electronic form.
  • The testator must willingly intend to sign his name to the will and must sign the will in the presence of witnesses or acknowledge the signature he already made.
  • At least two witnesses must see the testator sign the will AND attest the will by signing their own name to the will.
  • Legal age/capacity. While this differs state to state, the legal age is generally 18 years or older. In Oregon a person can also create a will if he is lawfully married or has been emancipated.
  • Mental capacity. “Being of sound mind and body” means you understand you are executing a will, and that you are familiar with the assets you are leaving and people you are leaving them to.
  • The entire will creation process of a valid will must be absent of fraud or duress.

 

Wills are not the only way to transfer property after someone has passed. Other options like, designating a beneficiary, creating a revocable or irrevocable trust, payable on death accounts, transfer on death deeds, and lifetime gifting are additional ways to transfer assets postmortem, all of which will be discussed in future posts.