By Patricia Louise Nelson of Two Spruce Law

What is a cookie cutter estate plan and why do I recommend that you not get one? First, a cookie cutter estate plan is a Will and/or Trust that is so generic it is designed to suit anyone. They are cheap, non-customized documents that appear at first glance to get the job done. What’s wrong with that? In reality, they suit no one. Worse, they often create a great deal of complexity (meaning expense – both financial and interpersonal) in the administration of an estate. A few hundred dollars saved on drafting can result in several thousand extra dollars spent on administering a poorly drafted estate plan.

Of course, if you’re using a website or app to create your Will and/or Trust, you will get a cookie cutter estate plan. Those systems are designed so that you fill in information and the system puts that information in a template without any consideration of whether that information actually works in the overall estate plan.

Even if you are working with an attorney, however, you may get a cookie cutter estate plan, so watch for the tell-tale signs. What tell-tale signs? Well, if the attorney is simply writing down your choices for things like who will be in charge without pressing you to really consider your choices in light of the attorney’s personal experience with implementing estate plans, then you may be headed towards a cookie cutter estate plan.

An example of a question an attorney might ask that would tip you off that we are not headed toward a cookie cutter estate plan might be to question whether it will actually work for you to name your sister, Mary, your children’s beloved Aunt Mary, to serve as the trustee of the trusts you plan to set up for your children. One question about that could be whether Aunt Mary really has the time and knowledge to manage your trust assets. Serving as trustee is a job that can last for years.

Another question is how will Aunt Mary serving as trustee of your children’s trust impact the relationships between your children and their Aunt Mary. Sometimes having your beloved Aunt Mary in charge of “your” money can cause children to resent Aunt Mary and her refusals to spend the money mom and dad left you the way you see fit. Perhaps it might be better to allow Aunt Mary to be their sounding board and advocate and put someone else, perhaps a professional fiduciary, in charge of the money. Of course, the final decision is yours – it’s your money and your family. I think your plan is better after you’ve considered these questions and made an informed decision.

Find out more at: https://www.twosprucelaw.com/videos/why-you-should-avoid-online-wills

By Patricia Louise Nelson of Bend, OR

In books and movies, we often see the very solum reading of the deceased family member’s will – often with a healthy dose of drama. The deceased family member unexpectedly leaves all of her worldly assets to a heretofore under recognized maid, or something along those lines. The entitled and unappreciative family members are shocked and enraged! So how often does this happen in real life? Well, pretty much it doesn’t. In over 26 years of probate practice, I have never held a will reading. I believe they are plot devices to make movies and books more interesting. We provide a copy of the will to interested parties, including family members, but there is no gathering at which it is dramatically unveiled.

Find out more at: https://www.twosprucelaw.com/videos/when-will-i-have-my-will-reading

By Patricia Louise Nelson

Under Oregon law, the Personal Representative (person in charge of a probate) must give notice of the probate to the heirs of the decedent (the person who died). This is true even if an heir is disinherited, meaning they are intentionally given nothing under the Will. An heir is a person who would receive the decedent’s assets, or some of them, if the decedent died without a Will. An heir is still an heir even if a Will says they are not to receive anything. As an heir they are entitled to notice, but not to receive anything under the Will. It is easy to confuse heirs with devisees. Devisees are people who receive assets under a Will. Often the heirs and devisees are not the same.

Just to be clear, under Oregon law, the Personal Representative must give notice of the probate to both heirs and devisees.

Find out more at: https://www.twosprucelaw.com/videos/do-i-need-to-give-notice-to-heirs-even-if-they-are-disinherited

By Patricia Louise Nelson of Two Spruce Law

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. Probate is the court oversight of the administration of an estate when the owner of the asset dies, with or without a will. 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.

Now that we’ve covered what probate is, here are some frequently asked questions about probate:

1. How can I pay for probate when I have no money and I can’t access my deceased loved one’s bank account? Excellent question! This is a common predicament. Obviously you’ve done some homework. If you really need help paying the upfront costs, we can advance those for you until you are appointed as the Personal Representative and can access the decedent’s bank account to repay us. The attorney fees in probate are not payable until the court approves them at the end of the process. Generally attorney fees are paid from the estate assets.

2. How long with probate take? The typical probate in Oregon takes 6-9 months. Sometimes they take longer, depending on the situation.

3. When do I get the stuff left to me in the will? The court must approve distributions from the estate. The general estate is usually distributed at the end of the probate. Sometimes we can get court approval for an earlier distribution, but often not until the probate has been open for 5 or 6 months.

4. How does probate work without a will? When there is no will, the probate process is the same except that the assets go to the heirs of the decedent rather than to named beneficiaries. The heirs are generally people related to the decedent by blood or marriage. We can help you figure out the heirs, give us a call.

5. Can I file probate without an attorney? Technically, yes. It is a very significant undertaking. We recommend you use an attorney right from the start to avoid heading down the wrong path.

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Learn more at https://twosprucelaw.com/videos/what-are-letters-testamentary-and-5-more-common-probate-questions

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.

I have a passion for developing a team of amazingly competent, extraordinarily compassionate, and exceedingly intelligent professionals who collaborate for the greater good of the firm and our clients. I derive great satisfaction from providing jobs that I would want to these wonderful professionals. These jobs provide a generous income as well as flexibility to allow people to deal with the unpredictable twists and turns life sends our way from time to time. Hiring paralegals affords me the opportunity not only to develop this team but also to save my clients significant amounts of money because a paralegal can do a lot of the legal groundwork at a much lower hourly expense to my clients.

By Patricia Louise Nelson of Two Spruce Law

We often tell people that having a revocable living trust can result in avoiding probate on death. But is that really true? Technically, it is true. But it depends on whether the person creating the trust transferred all of his or her assets to the trust or otherwise named beneficiaries for all of their assets.

It is important to bear in mind that when we create an estate plan that includes a revocable living trust, there are two phases to the estate planning process. The first phase is working together to craft documents that are unique to the client and meet the client’s needs. Phase one of the estate planning process is completed when we meet to sign documents.

Phase two of the estate planning process begins at the meeting where we sign all the documents and continues for the life of the person creating the trust. Phase two consists of placing assets in the trust and/or naming beneficiaries for items such as retirement accounts and life insurance.

There is a debate among estate planning attorneys about whether revocable trust can really be used to avoid probate. The gist of the argument, as I understand it, is that clients do not really read estate planning documents. In my experience, clients do read their estate planning documents. They often have very good questions about the minutia in documents.

Another argument is that clients do not really understand their documents. Again, that is not consistent with my experience. While clients may not understand all of the legal nuances of their trust, they do understand how a trust works and when it is important to get help.

The third argument against trusts is that clients will allow assets to slip out of their trust over time or will fail to “fund” the trust – that means transfer all their assets to the trust. This can definitely be a weak point. I work hard to coach my clients on making sure their assets get into the trust in the first place and stay there for the long run. We provide written instructions to clients at the signing meeting that tell them how to make sure different types of assets get into the trust or have beneficiaries designated.

We also encourage them to set a reminder on their smart phone to check in once a year to see if anything has happened in the past year that could cause a probate. We encourage you to read the letter of instructions. If, after reading your instruction letter, you still have questions about an asset, please call us. The instruction letter has evolved over my 29 years of practicing law due to client questions and experiences. We are here to help you. Give us a call.

By Patricia Louise Nelson

Frequently as part of the estate planning process, my clients need to select a professional fiduciary to serve as trustee of their revocable living trust, or as personal representative of their probate estate, or both. Generally speaking, there are two categories of professional fiduciaries: banks and others. There are pros and cons of either option. With either option, you get the benefit of a neutral third party, who has no history with your family, who is detached and objective. These people are professionals.

On the “pro” side, banks generally bring an exceedingly high level of competence and expertise to serving as professional fiduciaries. Banks need less support and guidance from their attorneys, so the attorney fees are less than those incurred by an individual fiduciary, especially an individual who is a family friend and has no experience with the duties of being a fiduciary. Banks are often equipped to handle unusual assets, like real property that could be contaminated by hazardous waste. Banks virtually never disappear or die, so they offer consistency and predictability.

On the downside, banks are generally more expensive than an individual in that they charge a percentage of the value of the trust assets every year they serve. The percentage is generally between 1.4-2.0% per year. Bank often require the value of the trust assets exceed a certain value (often $500,000 or $1,000,000) before they are willing to serve. So, banks bring dependability and expertise at a predictably higher cost.

On the plus side, individuals or small companies often cost less if they charge an hourly fee for their services. Be sure to ask these professional fiduciaries for their fee structure, as some non-bank professional fiduciaries charge a percentage like a bank. In my opinion, this is unnecessary and inappropriate profiteering. If individuals offered the same level of hyper-expertise as a bank, I could see them reasonably charging a percent of the assets for their services. I have yet to find an individual or small company that justified charging a bank’s fees, in my opinion.

On the “con” side, individuals sometimes die or the small company dissolves. I recommend that your documents include a provision for how to replace a “missing” professional fiduciary. So, individuals or small fiduciary companies may save you money, but they may also not be around when you need them.

Our office has a list of professional fiduciaries we prefer. Sometimes there are professional fiduciaries who are not included on our list. Please ask us if we are aware of them. If we are, and they are not on our list, there is a good reason for that, which we will likely not be willing to share with you.

Beware of Inheritance Advance Companies

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

In many of our probate matters lately, the beneficiaries are receiving advances on their inheritances from companies that offer such advances. I ask you not to do this. I also encourage you to ask the beneficiaries of the estate you are administering not to take an advance.

As I understand it, the advance company will give the beneficiary about half of what the advance company expects the beneficiary to repay the advance company. So, for example, if the inheritance advance company gives the beneficiary $10,000, they will expect to be paid $20,000 from that beneficiary’s share of the estate. The time it takes for an estate to be ready for distribution is about 7-9 months. That’s over a 100% rate of interest for a fairly short-term investment by the advance company.

Not only are advances expensive to the beneficiary, they are also expensive for the estate, reducing the funds available for distribution to all the beneficiaries. Advance companies contact our office. I have had advance companies tell me things that I allegedly said to them when I said no such thing. I do not want my paralegals to get caught in a “he said, she said” situation. So, in our office only attorneys are allowed to speak with inheritance advance companies.

We charge our hourly rate for all communications with the inheritance advance companies, including reviewing documents and potentially preparing documents as a result of the advance. All of these activities result in time expended for the estate and therefore attorney fees payable by the estate.

Avoid the expense. Wait up to 9 months. Receive your full inheritance without sharing it with an inheritance advance company.

So, You’ve filled an Affidavit of Claiming Successor with the court so you are now in charge of administering a small estate in Oregon. Please act quickly! The filing of that affidavit starts a 4-month timeline by which the estate must be administered. At the end of that 4 months, your authority as the claiming successor disappears.

Sell estate assets. Access the deceased person’s bank accounts. Access his or her investment accounts. Pay all the money they owed to anyone.

Do not make distribution before the end of the 4 months. Once the 4 months is up, you may make distribution of the remaining estate assets.

Avoid delay. Get the job of claiming successor done in the allowed 4-month timeline or we may be forced to convert the small estate into a full probate, resulting in more expense and delay.

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?