As an estate planning attorney, I often hear similar questions again and again.  This article is designed to ask and answer 5 of those questions.

1.       What makes an Estate Plan? An estate plan is a series of documents designed to convey your wishes to provide for you during your lifetime, even if you are incapacitated, and to provide guidance about what life support you might like in different situations, and to provide how you would like to dispose of your body when you’re done with it. Ideally, it is complete and thorough.

It is likely made up of a revocable living trust, a will, a power of attorney, an Advance Directive, and a document by which you appoint someone to be in charge of disposing of your remains and providing that person with your wishes.

2.       Do I need a will if I have a revocable living trust? Yes, nearly always. A revocable living trust controls what happens to your assets owned by the trust when you die. It is possible that some assets could be left outside the trust, either inadvertently or on purpose.  Regardless, if those assets cannot be accessed by your person in charge or one or more beneficiaries, a probate will be needed to process those assets.  To ensure that your revocable living trust has control over these probate assets, you will need a “pour-over will.” A pour-over will is one that has your trust as the only beneficiary.  It is the last way to get assets into your revocable living trust. It requires probate, which is expensive. So, while I recommend that you have a pour-over will, our plan is that you will never use it.

3.       What is the most important part of my estate plan? It depends. If you are alive but incapacitated, it is likely that the most important part of your estate plan is your power of attorney and your revocable living trust.  If you have died, the most important document in your estate plan may be your will and/or your revocable living trust. If you are near death, it is likely that the most important document could be your Advance Directive.  Generally speaking, the most important document overall in an estate plan is often the revocable living trust, because it controls your assets while you are alive and after you have died.

4.       What is my estate? This is a common question. Many people think of an “estate” as the assets of a rich person.  Actually, an estate is whatever you own. It could be a car and some tangible personal property. Or a car, some tangible personal property, and a bank account. Perhaps your estate also includes a house.  Maybe a retirement account or two. And a life insurance policy. Basically, your estate is everything you own.

5.       Why hire an attorney to work on an estate plan? You don’t have to. I do, however, recommend that you use an attorney. You know that feeling “I don’t even know what questions to ask.” An attorney can help you not only ask the right questions, but also answer them. You maybe be able to save hundreds of dollars drafting your own estate plan. In my experience, self-made estate plans often cost hundreds or even thousands of dollars more to implement when the time comes simply because you do not know what you do not know. You therefore cannot prevent confusion and arguments caused by your documents. Confusion and arguments are expensive.

By Patricia Louise Nelson of Two Spruce Law

There are a couple of times you when being divorced and being in the process of getting divorce justifies updating your estate plan. One situation is if you are getting divorced and you want to avoid your soon-to-be-ex-spouse from receiving any of your assets. The other situation is if you get divorced after putting in place an estate plan that benefits your former spouse.

During the process of divorcing, you are allowed to prepare a new estate plan intentionally giving your spouse nothing, if you are no longer living together as a married couple. If you need to live together as a couple, your soon-to-be-former spouse is entitled to an “elective share” under Oregon law. The elective share is a portion of your assets. It is a sliding scale, which depends on the length of the marriage. The longer the marriage, the higher percent of your assets to which your spouse is entitled. Give us a call so we can help you figure out how the Oregon elective share impacts your situation. Of course, if you have a prenuptial agreement, you are likely allowed to leave nothing to your former spouse, depending on the terms of the prenuptial agreement.

The second situation is if you get divorced after your estate plan is in place. In this situation, the provisions in the estate plan naming the now-former spouse as a fiduciary or giving the now-former spouse assets are revoked by the divorce process. The estate planning documents do not need to be changed unless you want some other terms changed – the spouse is removed by the divorce paperwork. Often, the estate plan needs to be updated for other reasons, so if you are not sure then call us to discuss the terms of your estate plan in light of your divorce.

It is extremely important for parents to select a guardian to nominate to raise their children if the parents die before the children are all at least age 18. I want to be clear, I am very carefully using the word “nominate.” I am not using the word “appoint.” Under Oregon law, a parent nominates a guardian. A court ultimately appoints a guardian if one is ever needed. The court gives great weight to the parent’s nomination. But it is not the only factor a court may consider in selecting the guardian.

A court may even decide not to appoint the person nominated by the parent. Sometimes the person the parent nominated is no long able to serve as the guardian due to health or other person issues. Because that may be the case, I strongly recommend that my client who are the parents of young children state in their will WHY they selected the people they nominated to seThose reasons might include that the people live in a certain town (or don’t live in a particular town); that they people practice a specific religion (or don’t); that they have children my client’s children’s ages (or don’t); that they follow a certain personal philosophy (or don’t); that the prospective guardian will cultivate a relationship with blood relatives (or protect the minors from contact with certain blood relatives for good reasons). The potential reasons are limitless – but very important. Tell the court why you chose to nominate the people you chose so that the court can take into consideration those factors in the process of naming the guardian for your children.

Find out more at: https://www.twosprucelaw.com/videos/how-to-pick-a-guardian-for-your-children

What is Probate?

By Patricia Louise Nelson of Two Spruce Law P.C.

I am often asked “What is probate?” Probate is the court implementation of an estate when someone dies. I want to answer several common questions about probate.

The most frequently asked question is “Just a second. The person who died had a will. Doesn’t that avoid probate?” Unfortunately, it does not. A will can specify who receives assets, but it has no ability to implement itself. A will needs probate to implement it. On the other hand, a revocable living trust – if it is properly managed – does work to avoid probate

So why avoid probate? Well, there are three primary reasons to avoid probate in my mind. One, it is public, anyone can go to the courthouse and access the probate file. That file will include information about heirs and devisees, assets, and other private information. For many people, that alone is enough of a reason to avoid probate.

Another drawback of probate is that it is time consuming. Even with a firm like Two Spruce Law that does a lot of work in probate, it takes 7-9 months to complete the process. Most of that time is caused by required notice periods in the Oregon Probate Code.

The third drawback of probate is that it is expensive. It very frequently costs $6-8,000 in attorney fees plus another $1,350 in other costs such as court filing fees, publication costs, and recording fees, to complete the probate process.

In certain limited circumstances, subjecting an estate to probate is worth doing despite the drawbacks of probate. Specifically, probate has the effect of “cutting of claims of unknown creditors.” Say what? Because part of the probate process is publishing notice of the probate in the tiny print in the back of the newspaper, all creditors about which we may not be aware of are limited to presenting their claims within 4 months of the date of first publication or they are limited to the insurance the deceased person had; they cannot expect payment from the deceased person’s assets after that timeline. Bear in mind that these are “unknown” creditors – we cannot ignore creditors we know about and hope they are limited in a similar way. There are other ways of dealing with known creditors and even suspected creditors. So, call us if you know about a creditor you want to avoid in a probate.

Do you have to have an attorney to complete a probate? The technical answer is “no.” The practical answer in Oregon is “I think you should.” Oregon’s probate code is not simple or easy to comply with without an attorney. We do not charge for initial calls about probates, so give us a call to see if we might be a good fit for you and your situation.

By Patricia Louise Nelson of Two Spruce Law

In Oregon, we have two types of probates. One is called a small estate proceeding, which starts with the filing of an Affidavit of Claiming Successor. The other is generally referred to as a full probate. A small estate proceeding is less expensive, simpler, and takes less time than a full probate. It is vital that when starting a probate, we start with the right kind of probate. Starting with a small estate and later having to start over with a full probate is more expensive than starting with a full probate. There are three primary reasons an estate must go through a full probate rather than a small estate proceeding. Please bear in mind that that probate is only necessary if there are assets held in the name of a person who has died and there is no co-owner or beneficiary designated for those assets.

Under Oregon law, an estate must go through a full probate unless the value of the real property is $200,000 or less and the value of all other property (like bank accounts, investment accounts, cars, manufactured homes that are not part of the land, other tangible personal property – everything except land) is $75,000 or less. These value limits are one of the top three reasons an estate must go through a full probate.

As a practical matter, a small estate is only for very simple situations. The statutes allowing for a full probate give the person in charge full authority to deal with a multitude of different situations. These situations include things like evicting people on the estate’s real property, asking the court for clarification of the meaning of a provision in the Will, objecting to someone who claims the person who died owed them money, and many other matters. On the other hand, the small estate proceeding is simply designed to transfer the assets listed in the Affidavit of Claiming Successor to the people listed to receive them, subject to the debts listed in the Affidavit. If the situation involves anything odd, it is likely best to start with a full probate even if the value of the assets allows the estate to qualify for a small estate proceeding.

The third primary reason for filing a full probate even if the estate otherwise qualifies for a small estate proceeding is that selling real property from a small estate can be very cumbersome, sometimes even impossible. Under the small estate proceeding statues, if the person who filed the Affidavit of Claiming Successor wants to sell the real estate during the first four months after filing the Affidavit, all of the heirs must sign the deed along with the Affiant. Even if an heir is disinherited under the Will of the person who died, that heir must sign the deed. Sometimes the heirs are not yet age 18 so they do not have the legal capacity to sign a deed. These circumstances can make selling the real property impossible. Once four months have passed from the date the Affidavit was filed, the person who filed it must sign a deed transferring ownership of the real property to the beneficiaries – if those beneficiaries are minors, there is no way to sell the real property until they turn 18 with a small estate proceeding. In a full probate, the person in charge can sell the estate’s real property without anyone else signing the deed.

Call us today to find out more!

By Patricia L. Nelson

It is important to leave your estate planning documents unmarked. Let’s pretend that you named your sister from Toledo, OH, as your successor trustee. Your sister later gets married and changes her last name. She and her new husband delight you by moving to Bend, OR. Let’s also pretend that your father, who is named as your alternate successor trustee, does not approve of his new son-in-law.

It can be tempting to “correct” documents by writing a line over your sister’s former last name and neatly writing in her new last name and crossing out “Toledo, OH” and writing in “Bend, OR” as her location. Please do not do that.

Crossing out your sister’s name can lead to arguments that you did not simply mean to update her information. The argument might be made that you intended to remove her as your successor trustee. This would result in your father being the trustee of your trust rather than your sister. While I think it is likely that such an argument would not be successful (but it might), arguments that involve courts making decisions are expensive. Arguments are not just financially expensive; they can lead to life-long fractures in families. Please do not write on your estate planning documents.

There are two general exceptions to this rule. One is the Advance Directive. You may update contact information on this document. If you do, please make sure your local hospital and your personal physician have copies of the updated version.

The second exception are schedules to your trust. If you have a schedule to your trust that indicates, for example, who is to receive which items of tangible personal property, you may change this document. If you do, be sure it is clear and that each item is designated to go to only one person. Again, a lack of clarity can result in arguments. Arguments are financially and interpersonally painful.

By Patricia Louise Nelson of Bend, OR

Many probates include cars. A car is to be included in the probate process if the person who died owned an interest in the car without right of survivorship to a co-owner or owned it alone. Including a car in the probate process means listing it on the inventory at fair market value. You can document fair market value by researching it online. Save the results of your research to document the value of the vehicle as close to the date of death as possible. Generally speaking, the value of vehicles decreases over time, so it is important to preserve the proof of value that you find.

Do not return vehicles to the lienholder unless you have written documentation that the lienholder will not seek a deficiency. Having a vehicle on which the decedent owed more money than the vehicle is worth is a problem. But returning that vehicle to the lienholder so the lienholder can sell it and seek a deficiency against the decedent’s estate is a bigger problem. Try to sell the vehicle, even if you have to accept less than the amount owed on it. That is the least expensive approach – unless the lienholder is willing to accept the vehicle back and assure you in writing that it will not seek a deficiency.

Ideally, you will sell the vehicle to an independent third party during the probate. Hopefully the amount you receive for the vehicle will be close to the fair market value you documented. Another option is to hold the vehicle for the probate period; perhaps disabling the vehicle so no one can drive it.

Of course, there are circumstances where a beneficiary of the estate needs to drive the vehicle. If you know that person is not a safe driver, do not let them drive the estate’s vehicle. If you decide to allow a beneficiary to drive the estate’s vehicle, sign the title over to that person reserving a lienholder interest for the estate. Have the person sign a custodial receipt for the vehicle. Ensure that the person insures the vehicle, naming the estate has an additional insured. Once the probate is complete, you can sign off as the lienholder and turn the vehicle over to the person who has been driving it.

In any of these options, be sure the vehicle is insured and disclose to the insurance company that the owner has died.

Find out more at: https://www.twosprucelaw.com/videos/cars-in-probate

Personal Representative Duties: Trustee’s Duty to Use Special Skills or Expertise

By Patricia Louise Nelson of Two Spruce Law

In addition to many other duties, trustees have the duty to use any special skills or expertise for the benefit of the trust. When a trustee who has special skills or expertise, or is named trustee in reliance upon the trustee’s representation that the trustee has special skills or expertise, that trustee must use those special skills in administering the trust. For example, a CPA is serving as the trustee could be expected to know about and use all tactics available to the minimize the trust’s tax liability.

Also, trustees are allowed to delegate duties and powers that a “prudent trustee of comparable skills” could properly delegate under the circumstances. Of course, that leaves a couple of big questions. Like what is a prudent trustee of comparable skills? And under what circumstances could such a person delegate? This rule is applied on a case-by-case basis. So, if the trustee wants to take a weekend and go drinking on a fishing boat, she may be allowed to delegate her duties for that weekend but probably not to one of her drinking buddies.

In making delegation decisions, the trustee must exercise reasonable care, skill, and caution in: selecting the person to whom they are delegating; establishing the scope and terms of delegation, consistent with the terms of the trust; and review the agent’s actions from time to time in order to make sure they are doing a good job with the scope of the delegation.

Note that the person to whom the trustee delegates duties owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation.

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What are Letters Testamentary? How Do I Avoid Probate?

Many, if not most, of my probate matters begin with a phone call to my office. The caller very often begins by saying, “My mom (dad, sister, brother, or friend) died. Her banker (investment advisor or realtor) says I need ‘Letters Testamentary’ before I can access her bank account (investment account or sell her real property). What is that? I definitely want to avoid probate. Can you help me?” I always feel a bit of sadness for the caller as I explain that Letters Testamentary is the document the court issues when it opens a full probate, so the two questions are mutually inconsistent. If you really need Letters Testamentary, that means you need to take the assets through probate.

The professional advising the caller that they need Letters Testamentary may not be right. Because probate is a significant undertaking with substantial costs, it is important to explore all alternatives that may be available. Give us a call, let’s figure out whether you really need Letters Testamentary.

Ho to Fill Out Oregon’s Advance Directive

Introduction:

Oregon’s Advanced Directive allows you to appoint someone to make healthcare decisions for you, if you become unable to communicate your wishes to your doctor. It is crucial that every section of this important form be completed correctly. Let us go through it together.

Sections One and Two:

In sections One and Two, you fill in information about yourself and your healthcare representatives. The latest Oregon Advance Directive form requests all contact information for your healthcare representatives, including home, work, and cell phone number. Please provide all the information you can. The point of having an address on this form is so that the authorities can locate your healthcare representative in case of an emergency, including possibly knocking on their door. I would therefore recommend that you use physical addresses, as opposed to a PO box.

Section Three:

Section Three is where you need to make your first decision. You need to pick either the first choice or the second choice, but you cannot choose both. If you choose the first option, your health care representative must follow the instructions you provide in the balance of the document. The second option allows your healthcare representative to make decisions for you, using your instructions as guidelines. On the one hand, if a health care representative makes decisions that result in your death, that could leave the person with a sense of guilt. On the other hand, if you require your health care representative to follow your instructions, that leaves them with no discretion.

Section Four:

Section four gives you the opportunity to give directions regarding your end-of-life care.

Part A:

In Section Four, Part A, if you initial A, it’s a shortcut. It is the same as initializing “I do not want tube feeding” and “I do not want life support” under every choice in Section Four, Part B.

Part B:

Section Four, Part B covers four conditions: Close to Death, Permanently Unconscious, Advanced Progressive Illness, and Extraordinary Suffering. For each of these conditions, you can decide whether you want tube feeding, whether you want tube feeding only as your health care provider recommends, or whether you do NOT want tube feeding. In addition, you may make the same choices about whether you want any other life support that might be available to you.

Part C:

Section Four, Part C gives you an opportunity to provide your healthcare representative additional instruction. In the actual form this is a blank line. In our form, we have inserted an additional option. It is a reference to the Dementia Provision. The actual Dementia Provision is the last page of our draft Advance Directive. If you like that provision, you need to initial Section Four, Part C on the bottom of page four of the Advanced Directive form.

We have taken the Dementia Provision as it was drafted by Compassion And Choices. It allows you to decide now whether you want to be fed or given fluids if you have advanced dementia and you could potentially live for years if you were given a feeding tube and intravenous fluids. If you do not want to, you circle “do not” on each of these choices, sign and date the form.

As you can see, it is a tricky form. Please let us know how we can help you fill it out.

2021 Advanced Directive Form, by Patricia Louise Nelson

In September of 2021, the State of Oregon implemented a new Advance Directive form. This new form is quite different from previous Advance Directive forms here in Oregon. Page one of the new form is instructions. The document is broken into sections by number and subsections by letters. Section 1 on page 2 is where you list your name and all of your contact information. Section 2, which is also on page 2, is where you provide the names and full contact information for your Healthcare Representative and all alternates.

Section 3, starting on page 3 is where the 2021 form begins to be different from earlier forms. Subsection A, on pages 3 and 4, discusses three conditions in which you could find yourself. The first one is Terminal Condition. It requires that you have an illness that cannot be cured or reversed, and your health care providers believe it will result in your death within six months.

The second condition is Advanced Progressive Illness, which requires that you have an illness that is in an advanced stage, that your health care providers believe it will not improve and is very likely to get worse over time and result in death, and your health care providers believe that you will never be able to (1) communicate, (2) swallow food and water safely, (3) care for yourself, and (4) recognize your family and other people. If you meet all of those requirements, you are considered to have an Advanced Progressive Illness under the Advance Directive.

The third condition is Permanently Unconscious. To be Permanently Unconscious, you must not be conscious and your health care providers must believe it is very unlikely that you will ever become conscious again.

In each of these three conditions, the 2021 Oregon Advance Directive form gives you four choices. The four choices are the same for each of the three conditions. The first choice is that you want to try all available treatments to sustain your life, including artificial feeding and hydration with feeding tubes, IV fluids, kidney dialysis, and breathing machines. The second choice is that you want to try to sustain your life only with artificial feeding and hydration with feeding tubes and IV fluids but not other treatments. The third choice is that you do not want any life sustaining treatment; that you want to be kept comfortable and be allowed to die naturally. And the fourth choice is that you want your Healthcare Representative to make the decision for you.

Short Trust Names - keep them short and sweet.

Powers of Attorney

By Hanah Mirahmadi

A power of attorney is a very powerful document. They are used to appoint someone else to make financial decisions for you. The person you appoint, and any alternates, is called your agent or attorney-in-fact.

You can specify in your power of attorney whether you would like your agent’s authority to take effect immediately, have it be delayed, or a hybrid of both. Immediate authority is where, upon executing your power of attorney, your agent can make financial decisions on your behalf immediately.

On the other hand, delayed authority is where your power of attorney can only make financial decisions on your behalf in the event of your disability or incompetence. Typically, proving your disability or incompetence requires a written statement from your physician indicating that you lack the ability to make and communicate decisions or evaluate information necessary to make a decision. You can decide whether a written statement from one physician is sufficient or you can require additional written statements if you feel one is not enough. Requiring too many written statements, however, may cause additional delay in granting your agent authority. This can create issues if it is a time sensitive financial situation.

With the hybrid option, you can elect to have some agents take control immediately while others can take under delayed authority. This option works well for spouses who name each other without delay and name an alternative agent whose authority is delayed.

Once your agent is granted authority, your agent can pretty much do anything with your finances that you could. For example, if you are stuck in the hospital and cannot pay your bills, your agent can. Your agent can also, however, act on your behalf to sell your car or house without you knowing or even empty your back account. Clearly, it is really important that you take care in deciding who you name as your agent.

Give us a call to talk more about powers of attorney and how we can get one set up for you.

The Power of an Advance Directive

By Patricia L. Nelson

Like many states, Oregon has an Advance Directive form. This form allows you to name a person to make health care decisions for you if you are ill and unable to communicate your choices by any means. The person you name is called your Healthcare Representative. In your Advance Directive, you may name a primary and an alternate (or two or three) Healthcare Representatives. The Advance Directive also allows you to tell your Healthcare Representatives what life support you would like and what life support you would not like to have.

Why is an Advance Directive important? In the absence of an Advance Directive, no one legally has the authority to make healthcare decisions for you. As a result, we may need to go to court to have a guardian appointed for you. The difficulty with a guardianship is that it is expensive and time consuming, at a time when you are in a medical crisis.

Additional limitations with a guardianship are that we don’t know whom you would have named to be in charge of these important decisions, had you completed an Advance Directive. Also, we don’t know what choices you would have made about which life support measures you want and do not want. Generally speaking, in the absence of that guidance from you, a guardian will likely err on the side of giving you life support you may not have wanted.

Attorney Patricia Louise Nelson located in Bend, Oregon in always happy to help with your legal questions. Two Spruce Law is covering the topic of the Oregon Ancillary Probate in todays video!

Need help with your estate planning or probate in Oregon? Call Two Spruce Law today!

541-389-4646

Visit twosprucelaw.com to download our Estate Planning 101 document that covers many frequently asked questions about Estate Planning - from what an estate plan covers, to what to expect to pay.

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Hey There!

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It means you can get your own, custom estate plan without leaving the comfort of your home.

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Most of my estate planning clients who want to leave assets in trust for young people want to have those funds used for education. But what does “education” really mean? Certainly, it would be educational to fly off to Europe and hobnob with the rich and famous. But is that really the sort of education you want to fund for a young person?

On a more serious note, I encourage you to be specific about what education means to you. For example, if you consider foreign travel to be educational, be specific about what that might look from your perspective so that your trustee has the benefit of your thoughts on the topic. Do you mean foreign travel as part of a formal university study abroad program? Participating in a religious organization’s international service? Or something else?

Even if your trustee is faced with the relatively simple question of paying for in-state tuition, room, and board at a university, so you want to fund the entire cost of an education? Or, perhaps, you might feel more comfortable if the beneficiary has some “skin in the game” by paying for part of the educational experience by working during the summers and having a part-time job during the school year?

These are questions I encourage you to consider in setting up a trust for a young person. Give your trustee the benefit of your vision on this topics so they can make the best decisions for you.

Find out more at: https://twosprucelaw.com/videos/what-does-providing-for-education-mean-to-you