A very common scenario that married people face is when they own a house, but one spouse is not on title. What will happen with the property when the owner-spouse dies? The answer to this question assumes that there is not an estate plan in place yet.
Generally, in Oregon, without an estate plan in place, the surviving spouse inherits all of the deceased spouse's property, but not necessarily without the probate court's approval. This is not always the case, but is the general rule. (If you have a blended family, things are different.)
However, the house and any other assets owned solely by the deceased spouse would have to go through the probate process in order for the surviving spouse to become the owner. Probate is a court process that happens after a person dies. The personal representative (called "executor" in other states), with the supervision of the court, takes inventory of assets, valuates the estate, pays off creditors, and distributes what is left to whomever the heirs are. If that sounds complicated, it's because it is. The probate process can cost a lot of money and take a lot of time, and probate is all a matter of public record. The way this usually plays out is that the surviving spouse continues to pay the mortgage for several years and doesn't find out that the house needs to be probated until he or she tries to sell it. At that point, they discover that the house can't be sold until it goes through probate, so a sale is held up for several months and in some cases, years.
How Do I Fix This!?
Well, you can always just create a new deed that names both spouses. The mortgage can stay in one spouse's name. That's the easiest way to do it. When a spouse dies, the surviving spouse simply records the death certificate with the county and becomes the sole owner. But many people don't want to do that because they wish to keep their separate property separate. The only other easy way to avoid probate in this scenario would be through trust planning. Plus, the joint property scenario won't help your kids to avoid probate if both spouses die. A will is not enough. A will basically tells a probate judge what to do with your property. A trust tells the trustee what to do with the property, and the trustee can handle transferring the assets without ever opening a probate. You can even make your surviving spouse the trustee.
But guess what. You should consult with an attorney before making any of these decisions. I just want to make you aware that these issues exist, and that there are various ways to solve them. Oh, and by the way, this scenario creates other problems if you and your spouse are not legally married. Consult with a lawyer.
To your family's health & prosperity,
P.S. Want to get started on the most important planning you'll ever do for your family? Give our office a call at (503) 235-5150 to get started. You'll be glad you did.
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