A well-maintained 1967 Ford Mustang. A blazing fast Ferrari SF90 XX Stradale. A reliable Subaru Forester. Whether you’re talking about a luxury sports car or a practical family car, inheriting a vehicle can be a big deal. Although vehicles sometimes need to go through probate, there are three ways you might be able to avoid Oregon vehicle probate.
Why Would You Want to Avoid Probate?
Probate is the legal process in which a deceased person’s debts and taxes are settled and the remaining assets are distributed to the heirs. There’s nothing inherently wrong with this. Probate serves an important purpose, ensuring that obligations are met and assets go where they’re supposed to. However, it can be a long and tedious process.
In Oregon, creditors have four months to file a claim, so the probate process has to last at least that long. Often it takes longer, sometimes much longer, depending on the size and complexity of the estate in question.
Due to the time and work involved, many people want to bypass probate when possible. This may be possible with the appropriate strategy, but each strategy has its pros and cons that should be considered carefully.
Strategy #1: Joint Ownership with Survivorship
When you fill out the application for an Oregon car title, some of the questions relate to joint ownership and survivorship.
- A joint owner is a co-owner. This person shares ownership of the vehicle with the primary title holder.
- Survivorship is the right of a joint owner to assume full ownership of the vehicle after the death of the other joint owner.
If you name a person as a joint owner with survivorship rights, that person will be able to claim full ownership of vehicle simply by providing the death certificate or other accepted proof of death for the deceased owner, without the vehicle passing through probate.
While this seems simple, there are potential downsides. Perhaps most notably, the joint owner is considered an owner of the vehicle, with all the legal and financial responsibility that entails. This could become an issue under certain circumstances, such as if the joint owner goes through bankruptcy, or if there’s a legal problem involving the vehicle.
Strategy #2: The Small Estate Procedure
In Oregon, small estates can bypass the full probate process and go through a faster, more streamlined process instead. To qualify for the Oregon small estate procedure, the estate must have a fair market value of $275,000 or less, with no more than $200,000 in the form of real property and no more than $75,000 in the form of personal property. (This is subject to change; check the current threshold if you are considering applying for the small estate procedure.)
This threshold is fairly low, and most estates that include real estate will surpass it. However, some estates qualify, including some estates with vehicles, and this can be an attractive option in those cases.
Strategy #3: A Trust
A trust is an important estate planning tool that allows a person to transfer assets into the trust, which is managed by a trustee on behalf of the beneficiary. People use trusts for a number of reasons, such as minimizing tax burdens and exercising greater control over the assets. It is possible to keep assets in a trust out of probate.
However, trusts can be complex. There are different types of trusts, including revocable and irrevocable trusts, with differing rules. For example, once you place assets into an irrevocable trust, you may lose direct control, which could be a big problem if you still wanted to use the vehicle, or if you changed your mind later and want to sell it.
Do You Need Help Navigating Oregon Vehicle Probate?
Although there are many ways a vehicle can pass to an heir in Oregon, it’s important to follow the legal procedure carefully to avoid issues. Even if a vehicle is not subject to probate, you will likely still need to complete some official paperwork, such as providing a death certificate or completing the DMV Inheritance Affidavit to get the title.
If the car needs to go through probate, the process will take a few months at minimum while the executor of the estate notifies creditors, takes an inventory of the estate, settles any debts or taxes, and distributes the assets. If you inherit a probated vehicle, you can present the Oregon DMV with a copy of the court-issued Decree of Final Distribution showing that you have been awarded the vehicle.
Before you begin using an inherited vehicle, verify that necessary processes have been completed, and that the correct title, registration and car insurance are in place. If you need any assistance navigating Oregon probate for cars, reach out to Skinner Law for assistance.