Oregon Wills vs. Trusts
Navigating Oregon estate planning doesn’t have to be overwhelming. The Beaver State offers unique estate planning features including a $1 million estate tax threshold, a generous $275,000 small estate process, and flexible transfer-on-death options. With Oregon’s “clear and convincing evidence” standard for proving a testator’s intent, knowing the key differences between wills and trusts can save your family significant time, money, and stress while preserving your legacy.
Table of Contents
US Map For The Different Will and Trust Requirements by State
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Oregon Will Requirements
An Oregon Last Will and Testament should include:
- Age and Capacity: Testator must be “of sound mind” and at least 18 years old (or legally married or an emancipated minor)
- Format: Must be in writing
- Signature: Must be signed by the testator (or someone who signs at the testator’s direction while in the testator’s presence)
- Witnesses: Must be signed by two witnesses
Witness Requirements
For Oregon wills:
- Witnesses must observe the testator signing the will or hear the testator’s declaration that the testator’s signature is genuine
- Witnesses must sign the document within a reasonable time before the testator’s death
- Witnesses may alternatively attest a will by executing an affidavit contemporaneously with the execution of the will
- An Oregon will is not invalid solely because it is attested by an interested witness
Harmless Error Rule
Incorporation by Reference
Oregon law permits wills to incorporate by reference other written documents:
- The document must be in existence when the will is executed
- The will must clearly express the intent to incorporate the other document
- The incorporated document must be sufficiently described in the will to allow identification
Memorandum of Personal Property
Oregon specifically recognizes a testator’s right to incorporate by reference a document making dispositions of certain personal property items:
- The memorandum must be signed by the testator and referenced in the will
- It must describe the disposed items and beneficiaries with reasonable certainty
- Oregon’s statute expressly authorizes use of memoranda for household items, furniture, furnishings and personal effects
- Real estate, property subject to a certificate of title, or property primarily used for trade or business cannot be included
- The written document can be created before or after execution of the will
- The testator may alter a memorandum of personal property after its initial creation
Self-Proved Wills
Oregon wills do not require notarization, but a will can be made “self-proved” through execution of a compliant affidavit by witnesses:
- The self-proved affidavit provides witness attestation as to the authenticity of the testator’s signature
- It can be executed contemporaneously with or after execution of the will
- If present, the affidavit serves the same role in probate as the witnesses’ testimony regarding the authenticity of the will
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Amendment, Revision, and Revocation of Oregon Wills
Amending or Revoking an Oregon Will
Express revocation or amendment of an Oregon will can be accomplished through:
- Execution of a codicil (a separate document that amends an existing will)
- Execution of another will
In either case, the document must satisfy all legal requirements for execution of the original will.
Revocation by Physical Act
An Oregon will may also be revoked by a physical act:
- Such as by burning or tearing the will
- Must be performed by the testator (or someone else at the testator’s direction and in the testator’s presence)
- Must be done with the intent of revoking the will
Revival of Revoked Will
If an Oregon will is revoked, it can only be revived through:
- Re-execution of the will, or
- Execution of a new will that incorporates the previously revoked will by reference
Revocation by Marriage
If the testator of an Oregon will marries after executing a will—and if the spouse survives the testator—the will is deemed to have been revoked.
The implied revocation is inapplicable if:
- The will expresses an intent that it not be revoked by subsequent marriage
- The circumstances suggest that the will was created in contemplation of marriage
- The testator and spouse entered into a prenuptial agreement providing for the spouse (or stating that the spouse has no rights in the testator’s estate)
Automatic Revocation by Divorce
If, after executing an Oregon will, a testator is divorced, any provisions in the will in favor of the former spouse are considered to have been revoked, unless the will expressly provides otherwise.
Children Born After Will Execution
If a child is born to or adopted by a testator after execution of an Oregon will—and if the will does not provide for or otherwise mention the child—the after-born child inherits a share of the testator’s estate unless:
- The testator had other children when creating the will and the other children are also excluded from the will
If the testator has other children who are provided for under the will:
- The after-born child’s share is calculated based upon the devises to the other children
If the testator has no other children:
- The share is equal to what the child would have inherited had the testator died intestate
- An omitted child’s share is inapplicable if the will leaves substantially all of the estate to the child’s other parent
Holographic and Oral Wills
Holographic Wills
Oregon does not recognize holographic (or handwritten) wills. A handwritten will may still be valid, but it must comply with all other formalities (such as witnessing) required to create a valid will under Oregon law.
Oral Wills
Oral (or “nuncupative”) wills are not recognized under Oregon law.
Oregon Trust Requirements
Oregon trusts are primarily governed by the Oregon Uniform Trust Code, as enacted by the Oregon legislature at ORS §§130.040, et. seq.
Requirements for a Valid Oregon Trust
For a trust to be valid under Oregon law:
- The purpose of the trust must be lawful, possible to achieve, and not contrary to Oregon public policy
- In general, the terms of a trust and the trust itself must be for the benefit of the trust’s beneficiaries
- The settlor must express an intent to create a trust and have adequate capacity (measured under the same standard applying to wills)
- An Oregon trust is void to the extent its creation was induced through fraud, duress, or undue influence
Authorized Trust Types
Oregon’s Uniform Trust Code specifically authorizes:
- Charitable trusts created for a charitable purpose (such as the relief of poverty, advancement of education or religion, or promotion of health, governmental, or municipal purposes)
- Stewardship trusts created to hold interests in business entities
- Trusts to hold life insurance
- Pet trusts for the care of animals
Required Trust Elements
Oregon trusts must have:
- A definite beneficiary (subject to exceptions such as for charitable trusts, trusts for the care of animals, and certain trusts created for noncharitable purposes)
- A trustee with actual duties to perform
Sole Trustee/Beneficiary Rule
The sole trustee of an Oregon trust cannot also be the trust’s sole beneficiary.
Trustee Responsibilities
The trustee of an Oregon trust has a duty to administer a trust prudently, taking into account the trust’s terms, purposes, and circumstances.
Trust Creation Methods
Oregon trusts can be created through:
- Transfer of property by a settlor to a trustee (either during life or through a will or other testamentary instrument)
- A declaration by the owner of property that the property is owned as trustee
- By exercising a power of appointment in favor of a trustee
- By an agent acting under a power-of-attorney expressly authorizing creation of a trust
- Through a statute or judgment requiring administration of property in a trust
Oral Trusts
Though most trusts are evidenced by a written instrument setting forth the trust’s terms, the Oregon Uniform Trust Code allows for oral trusts if the terms can be established by clear and convincing evidence. However, certain types of trusts must be evidenced by a formal writing under Oregon law.
Revocability
Unless an Oregon trust is expressly made irrevocable, the settlor is assumed to retain the power to revoke or amend the trust.
Creditor Protection
Although creditors of a trust’s beneficiaries may generally attach a beneficiary’s interest in a trust, Oregon law protects beneficiary interests from attachment if a trust includes a “spendthrift provision” restricting beneficiaries’ right to transfer interests in the trust.
If a spendthrift provision is present:
- Most creditors of beneficiaries cannot attach trust assets until actually distributed to the relevant beneficiary
- However, spendthrift provisions do not prevent attachment for satisfaction of certain domestic support obligations, tax claims, or if the creditor provided services for protection of the beneficiary’s interest in the trust
For traditional trusts:
- Creditors of an Oregon revocable trust’s settlor can attach trust assets as long as the settlor remains living (or, upon death, through estate claims)
- In the case of irrevocable trusts, settlors’ creditors can reach the maximum amount of trust assets that could be distributed to the settlor or for the settlor’s benefit
- However, an irrevocable trust cannot be attached by a settlor’s creditors solely because the trustee is authorized to reimburse the settlor for tax payments
Trust Termination
Oregon trusts terminate upon:
- Revocation or expiration under the trust’s own terms
- When there is no purpose of the trust remaining to be achieved
- When the trust’s purposes become unlawful, contrary to public policy, or impossible to achieve
A trust may also be modified or terminated:
- By a court upon the petition of the settlor, trustee, and/or beneficiaries
- In some circumstances, upon the consent of the trustee and all beneficiaries
Upon petition, a court may also reform or modify the terms of a trust to conform to the settlor’s intent or achieve the settlor’s tax objectives.
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Special Considerations
Estate Taxes
State-Level Estate Tax
Oregon is among the relatively small minority of states that still impose a state-level estate tax:
- Estates in Oregon with a value above $1,000,000 qualify for the estate tax
- The tax is assessed on amounts over the limit at rates progressing from 10 – 16%, depending on the total estate value
- Oregon does not impose an inheritance tax
Simplified Probate
Small Estate Process
Oregon law allows for a simplified probate process for small estates, allowing administration without the full probate process:
- To qualify as a “small estate,” the estate’s total value cannot exceed $275,000
- Real estate value cannot exceed $200,000
- Personal property value cannot exceed $75,000
To apply for simplified probate:
- The inheritor of an Oregon decedent’s property must submit to probate court an affidavit including information regarding the decedent, estate, creditors, heirs, and a few other items
- Upon approval, the representative can take possession of assets, pay claims, and distribute property
Non-Probate Transfers
Transfer-on-Death Instruments
Transfer-on-Death Deeds
Oregon is among the minority of states that recognize TOD designations on real estate deeds:
- Real property subject to a TOD designation automatically transfers to the named beneficiary upon the owner’s death
- This avoids the need for probate
Vehicle Titles
Oregon does not recognize TOD designations on vehicle titles.
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Wills vs. Trusts: Comparison
| Feature | Wills | Trusts |
|---|---|---|
| When It Takes Effect | After death | Can be immediate (living trust) or after death (testamentary trust) |
| Probate Process | Requires probate | Assets in trust avoid probate |
| Privacy | Public record | Generally private |
| Challenges | Can be challenged in probate court | More difficult to challenge |
| Cost to Create | Generally less expensive | Usually more expensive |
| Ongoing Administration | None until death | May require ongoing management |
| Protection During Incapacity | None (requires separate power of attorney) | Can provide management if grantor becomes incapacitated |
| Oregon Special Feature | Harmless error rule for wills with clear intent | Special trust types for businesses (stewardship trusts) |
Conclusion
Creating a will or trust does not have to be difficult or intimidating for Oregon residents. However, certain circumstances—like second marriages, stepchildren, aging parents, special needs beneficiaries, guardianships, and business interests—can add complexity and result in unforeseen consequences.
Oregon offers unique estate planning tools like the clear and convincing evidence standard for non-conforming wills, stewardship trusts for business interests, and transfer-on-death deeds for real estate. The state’s $1 million estate tax threshold makes proper planning essential for estates of even moderate size. When any out-of-the-ordinary issues are present, it’s advisable to consult with an experienced attorney familiar with and licensed under Oregon law to ensure your estate plan takes full advantage of the state’s provisions while avoiding potential pitfalls.
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FAQs: Oregon Wills and Trusts
Q: What are the requirements for a valid will in Oregon?
A: An Oregon will must be in writing, signed by the testator (or by someone else at the testator’s direction and in their presence), and witnessed by at least two people who either observe the signing or hear the testator acknowledge their signature. The testator must be at least 18 years old (or married or emancipated) and of sound mind.
Q: Does Oregon have an estate tax?
A: Yes, Oregon is one of the few states that still imposes its own estate tax. Estates valued over $1 million are subject to the tax, with rates ranging from 10% to 16% depending on the estate’s total value. This is significantly lower than the federal estate tax threshold, making tax planning essential for many Oregon residents.
Q: What happens if my will doesn’t meet all Oregon’s formal requirements?
A: Oregon has a “harmless error” rule that allows a document to be treated as a valid will if there is clear and convincing evidence that the decedent intended it to be their will, even if it doesn’t meet all formal requirements. This provides flexibility but relies on court interpretation of the deceased’s intentions.
Q: Can I avoid probate for a small estate in Oregon?
A: Yes, Oregon offers a simplified small estate procedure for estates valued at $275,000 or less (with real property not exceeding $200,000 and personal property not exceeding $75,000). This process uses an affidavit rather than full probate, allowing faster and less expensive administration.
Q: How are surviving spouses protected under Oregon law?
A: Oregon provides surviving spouses with an elective share of the deceased spouse’s “augmented estate,” ranging from 5% to 33% based on the length of the marriage. This protects against disinheritance. In intestacy cases, a surviving spouse receives the entire estate unless the deceased had children from another relationship.
Q: Does Oregon recognize transfer-on-death deeds for real estate?
A: Yes, Oregon is among the minority of states that recognize transfer-on-death (TOD) deeds for real estate. This allows property to pass directly to named beneficiaries upon the owner’s death without going through probate, while maintaining the owner’s complete control during their lifetime.
