Estate Planning

A good estate plan can make things easier for your loved ones when you pass away, and also will include some planning for the later part of your life, when you may be unable to manage your affairs. It is important to start your estate planning early, and update your plan from time to time to make sure it keeps up with changes in your life and your goals.

The basic feature of your estate plan is the transfer of your assets to those people who should get them when you pass away. You may also need to leave directions for someone to care for minor children or disabled adult children.

Different approaches are available, and may be appropriate depending on your goals and your assets. For most people, a Will is the estate planning document that fits their needs. Others may choose a Revocable Living Trust. Relatively few people should base their estate plan on joint ownership of property and accounts.

Wills

A Will, or Last Will and Testament, is a document which specifies how the property you own will be distributed after your death. It names one individual your “personal representative,” (who used to be called the “executor”) who will guide your estate through probate, which is a court-supervised process in which your Will is submitted to the court, your debts are determined and paid, and the remaining assets are distributed to those people you designate in your Will.

You may also recommend, in your Will, who should take care of your minor children or a disabled child. You may give directions on the disposition of your remains, but these instructions should also be given to the important people in your life outside of the Will, as these decisions will usually have to be made before your Will is read.

Many people are confused about probate, and may have read materials from other states which characterize probate as lengthy and expensive. However, probate creates a controlled process within which your debts may be paid and the directions in your will carried out, and provides a forum for disputes to be worked out. In general, Oregon probates are not expensive or lengthy. A Will is therefore a practical, efficient and straightforward basic document for your estate plan.

Revocable Living Trusts

A Revocable Living Trust is a popular alternative to a Will. The trust is created during your lifetime, and most of your assets are made subject to the trust. You continue to be the owner of all these assets for tax purposes and for most other purposes, but, when you pass away, the assets in the trust get distributed pursuant to the directions in the trust, without the need for probate.

In addition, a Revocable Living Trust can make provisions for your care during a period when you are alive, but unable to manage your own affairs. While you are the trustee of the trust at the beginning, you also name a successor trustee, who will take over management of the trust when you are unable. You can direct your successor trustee to make certain provisions for your long-term care, in cooperation with your Health Care Representative.

Many people prefer to use the Revocable Living Trust for their estate plan because it is private, avoiding the need for probate. The key to a successful trust is to name a successor trustee who is honest and businesslike, who can be counted on to administer your estate with absolute honesty and with rigorous attention to detail, so that all of the issues which must be addressed to finalize the estate are addressed in a timely fashion.

Joint Ownership and Beneficiary Designations

For some people, whose assets are not substantial and whose affairs are simple, it may be possible to devise an estate plan based on joint ownership of property, with right of survivorship, and beneficiary designations on bank and brokerage accounts. Sometimes called the “Poor Man’s Will,” this approach avoids the need for probate without the cost of creating a trust. However, this approach must still be carefully thought out, as part of a deliberate estate plan. There are serious drawbacks to joint ownership of real property, and many opportunities for mistakes and misunderstandings that may result in an unfair and unintended distribution of your estate. Although this approach is often chosen out of a misapprehension that it will be simpler than probating a Will, it sometimes results in unnecessary disputes and can leave your affairs in legal limbo.

Failure to Plan

If you don’t make a Will or Revocable Living Trust, or pass everything through joint ownership, then your assets will pass according to statutes of the State of Oregon. Your property will go through probate, and someone (maybe not the right someone) will be appointed personal representative. While the pattern of distribution set out by statute closely follows the kind of plan that many people choose, it does not allow for any special situations, like particular gifts to friends, gifts to charity, or children who need or deserve a larger or a smaller share of your estate.

What Do You Need To Bring With You to an Estate Planning Appointment?

When you come in to talk about your estate plan, we will need to discuss:

• Who: who are the people, and charities, who should take a share of your estate? Who should definitely NOT take a share of your estate? Ideally, we will develop a brief “family tree” going back one generation and forward to the grandchildren.
• What: what are your assets? Where are they located? What is the approximate value of each asset? Be careful to make a comprehensive list of what you own, including real property, bank accounts, investments, life insurance, retirement accounts, and assets you own jointly with others.
• Plans: what are your goals for your assets? Are there particular gifts that should go to special people? Do you want to remember a charity? Will your assets be divided equally among children, or is there some other pattern of giving that will achieve your goals?
• Special considerations: do you have a beneficiary who is receiving public assistance because of a disability or injury? Are some of your beneficiaries too young to manage property?

Keep Your Plan Up To Date

If you have a Will or Revocable Living Trust, and you move to another state (or you have moved to Oregon with a plan created in another state) you should have your estate plan reviewed by an experienced attorney in your new state of residence. Although your plan may still be valid under the laws of the new state, some changes may be in order to make sure your wishes are correctly carried out.

Getting married, after you have executed a Will, revokes that Will (unless the Will says it was prepared in anticipation of the marriage). This can create real problems in second or subsequent marriages, especially if your estate plan makes provision for children of prior relationships.

Getting divorced revokes provisions of your Will in favor of the former spouse. This usually is a correct result, but may not be in your particular circumstances. In addition, it is important to remember that the former spouse may still be named as a beneficiary of life insurance, annuities or retirement plans.

Spouses have special rights to “elect against the Will,” claiming a portion of their spouse’s estate regardless of what the estate plan says. Legislative initiatives are expected to broaden the terms of this protection for the spouse, and will require special estate planning if the “elective share” is not in accord with your plans.