Planning for one’s death is understandably a difficult task for many of us, and something that is easy to postpone. However, taking the time to clearly spell out your wishes now is truly a gift to those you leave behind. It can help to avoid the problems and confusion that many families face after the death of a loved one, and it ensures that your wealth is distributed according to your wishes.
Your primary estate planning document will be a will or a trust. However, not all assets are distributed according to a will or trust. Many assets are distributed by right of survivorship, beneficiary designation, or another form of non-probate transfer. It is important to discuss your complete financial picture with an experienced estate planning attorney so that a plan can be crafted according to your circumstances and your goals.
Planning for incapacity with substitute decision-making tools is another important part of an estate plan. During your consultation, we will discuss the advance directive for health care, durable power of attorney, and revocable living trust, and how these documents will work in the event that you are no longer able to make medical and financial decisions for yourself.
A will is a document that is effective upon the death of the testator. The personal representative (what some states call the “executor”) is the person who will ensure that your assets are distributed according to your wishes as outlined in your will. If you have minor children, you will also name a guardian to care for your children in the event of your death. It is important to keep your will current to ensure that your assets will be distributed according to your current desires and circumstances. A will is admitted to probate, it does not avoid probate. To learn more about the probate process, click here.
A trust, living trust, or revocable living trust, is an important component of many estate plans. It is effective once drafted and properly funded. The parties to a trust are the settlor, trustee, and beneficiary. The settlor is the person who creates the trust, funds the trust, and decides how the assets are to be managed during the settlor’s lifetime and after death. The trustee is the person who manages the trust assets according to the terms of the trust. The beneficiary is the person who receives the benefit of the trust according to its terms. When you set up your trust, you will likely be all three – the settlor, trustee, and beneficiary. Upon your death or incapacity, your successor trustee will take over the trustee duties. A trust has a number of advantages. Because the successor trustee will manage the trust assets if the trustee becomes incapacitated, a trust is an important substitute decision making tool for many people, and can avoid the necessity of a conservatorship. With a trust, you have flexibility in naming beneficiaries and creating controls on distribution, such as for educational purposes. A properly funded trust also avoids the probate process, which can save both time and money, and is a feature that is attractive to many people. Upon death, ownership of your assets will be transferred outside of probate with a trust administration. To learn more about the trust administration process, click here. However, a trust is not right for everyone and it is important to discuss your specific situation with an Oregon estate planning attorney.
"Funding" the trust (re-titling property in the name of the trust) is just as important as the trust document itself. However, even if you have a trust, not all assets should be trust assets. I will explain which assets should be transferred to your trust and prepare the necessary documents in order to do so. It is important to keep your trust current, not only in terms of your desired distributions and choices for successor trustee, but also in terms of funding. Once you establish your trust, you will want to review it regularly to ensure that your assets are properly titled.
The state of Oregon is one of fifteen states with an estate tax. An estate tax is a tax imposed on the assets of a deceased person’s estate before distribution to the heirs or beneficiaries. The exemption amount in Oregon is $1 million, which means you can pass up to $1 million in assets to your beneficiaries without your estate incurring any estate tax. If you have assets in excess of $1 million, the amount in excess will be taxed between 10 and 16 percent. If you have a taxable estate, it is important to meet with an estate planning attorney to discuss the different types of tax planning strategies that may be available. Credit shelter trusts, disclaimer trusts, and charitable contributions can help to reduce or eliminate the estate tax eventually owed, thereby allowing more of your wealth to flow to your beneficiaries.
Durable Power of Attorney
A power of attorney is a document in which you as the “principal” give to a person called an “agent,” the power to make financial decisions on your behalf. You do not give up your power to make financial decisions as long as you are capable of doing so. In the event you become incapacitated, the durable power of attorney remains in effect so your agent can continue to make financial decisions for you. If you do not have a power of attorney and you become incapacitated, it is too late to sign one and in some cases, it is necessary for the court to appoint a conservator to manage your finances.
Advance Health Care Directive
An advance directive is a legal document in which you appoint a person to serve as your health care representative to make health care decisions on your behalf if you are unable to speak for yourself. You may also explain your wishes regarding end of life medical treatment. It is recommended for all competent adults, not just for the elderly or ill. Oregon has a new advance directive form that became effective January 1, 2019, which is designed to be more comprehensible than the old form. If you signed an advance directive prior to January 1, 2019, it is still valid. If you have not, now is a good time to consider signing one as part of your future planning.
Information on this website is general information and is not to be considered legal advice. It is important to discuss your specific situation with an attorney who can advise you accordingly.