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.

By Patricia Louise Nelson

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.

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

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.

Why is Naming Contingent Beneficiaries Important?