Why do I need a Probate if I have a Will?

By Patricia Louise Nelson

“But she died with a will! Why is the bank requiring a probate?!” I wish this were an uncommon question in my practice. Unfortunately, it is one of our most frequently asked questions. The number one misunderstanding of my clients is that a will avoids probate. The opposite is true.

A will requires a probate to implement it. By contrast, a revocable living trust does not. A will cannot by itself get the assets to the beneficiaries. It is like a car without a transmission. All the working parts are there, but without the “transmission” of probate, it cannot get things to the beneficiaries. The probate process implements the will.

The benefit of a will is that it can change who gets what from the intestate statutes (laws that determine who will get your assets). In Oregon, if a person that dies without a will, is married and either has no children or all their children are also the children of their surviving spouse, then all their assets go to the surviving spouse. If, on the other hand, even one child of the deceased spouse is not the child of the surviving spouse, then one-half of the assets go to the surviving spouse and the other half is divided among all of the deceased spouse’s children (even if some of them are also the children of the surviving spouse). If the person is not married and has children, the children will take the assets. It gets more complicated if a child of the deceased person died before the deceased person, so call our office to help figure out who gets what if a person died without a will.

Find out more at: https://www.twosprucelaw.com/videos/if-i-have-a-will-why-do-i-need-probate

Five Ways You Can Save Money on Probate

By Patricia Louise Nelson

Probate can seem overwhelming at first, but it is possible to go through the process in an efficient way that saves the estate money. Here are five ways:

Choose the right path: In Oregon, there are two ways to probate an estate: the small estate process and the full probate process. Be very sure a small estate will work for your situation before you head down that path. It will be more expensive to start with a small estate and then realize you need to start over with a full probate.

Seek legal advice: Although it may seem counterintuitive, hiring a good attorney from the beginning of your case will save you money in the long run, because an attorney will help you to choose and stay on the right legal path. This advice may seem self-serving, as we are of course, a law office, but we know from experience that fixing mistakes is always more expensive than avoiding them in the first place.

Stay organized: Keep all estate information in one organizational system, so you can easily look up information about heirs, devisees, assets, creditors, bank statements, etc.

Communicate and respond clearly: If your attorney requests something from you, read the request carefully and be sure to respond and cover every topic the attorney has asked you to address. Poor communication and repeated back and forth will cost you money and time.

Be on time: Probate cases involve many important deadlines with the court that you must be able to meet. Hiring a good attorney will help to make sure the estate is efficiently administered within the legal deadlines and with a minimum of delay and cost.

Find out more at: https://www.twosprucelaw.com/videos/how-to-save-money-in-probate

What Are Letters Testamentary? How Do I Avoid Probate?

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.

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

The Perils of Co-Owning a Home as an Unmarried Couple

By Patricia Louise Nelson

Many very smart, well-meaning people accidentally get themselves into complicated legal situations without understanding all of their options or the complications. An example of this is when a very committed unmarried couple purchases real property together. This can be done as tenants in common, where each partner owns half of the real property, including controlling it after that person dies. Alternatively, it can be done with rights of survivorship, where if one of the partners dies, the other one owns the real estate just by filing a copy of the deceased partner’s death certificate in the county real property records.

For many unmarried couples, the right of survivorship option works well if one of them dies and their primary intent is to protect and provide for the survivor. The complexity arises upon the death of the second partner. Let us add some facts to this scenario. Let’s assume both partners contributed equally to the cost of purchasing their home. Let’s further assume that each partner has his or her own children, who are not also the children of the other partner.

On the death of one partner, the surviving partner gets the house by right of survivorship. This result is often what the partners both want. Often the partners anticipate that their children will benefit equally after they have both died. On the death of the second partner, however, his or her children get the value of the house, unless the partners have something in writing that changes that outcome. The children of the first partner who died first receive nothing.

Another complexity that can arise with co-ownership of a home is how to handle unexpected (or expected) expenses related to the house. Who will pay the mortgage (if any)? Taxes? Insurance? Upkeep and maintenance? What if the property has a large, unexpected expense like the cost of a new roof? These questions should be considered in advance and addressed in writing.

If the partners want to address these issues and divide the value of the house among both of their children, they need to have an agreement in place in writing. This writing can be a tenants in common agreement, a real estate co-ownership agreement, or a revocable living trust. The first two are simply contracts by which the original co-owners agree on how to handle distribution of the net proceeds on sale and expenses related to the real property. This sort of agreement can still leave the property at risk of probate on the death of the second owner. A revocable living trust, on the other hand, takes care of the distribution of the net proceeds on sale, addresses unexpected expenses, and avoids probate.

The State of Oregon assesses an Estate Tax on the assets of a resident of Oregon when they die to the extent the person’s assets are worth more than $1,000,000. By “assets,” we mean anything the person owned, which even includes the death benefit value of life insurance on his or her life.

So, the first $1,000,000 passed to heirs or beneficiaries is Oregon Estate Tax-free. The next $500,000 worth of assets is taxed at 10%. The percentage of tax increases as the value of the assets increase. The top marginal Oregon Estate Tax rate is 16%.

For example, an Oregon resident dies owning $1,850,000 in all assets, the first $1,000,000 is Estate Tax free. The remaining $850,000 is subject to the Oregon Estate Tax. The first $500,000 of that $850,000 is taxed at 10%, so the resulting tax would be $50,000. The next $350,000 of the $850,000 is taxed at 10.25%, resulting in a tax liability of an additional $35,875. The total Oregon Estate Tax liability would be $85,875. Of course, this example is overly simplified, but it serves the purpose of demonstrating how the Oregon Estate Tax is calculated.

Note that the tax is assessed per person, so a married couple – planning ahead and collaborating with each other – can pass up to $2,000,000 free of the Oregon Estate Tax. Give us a call so we can help you figure out how to minimize your Oregon Estate Tax liability.

By Patricia Louise Nelson of Two Spruce Law

Many of my clients come to me with a plan to leave assets to fairly young people, say people in their mid-twenties. When I ask these clients whether they trust these young people with their inheritances, the answer is often “yes!” I like to probe just a bit further to be sure the answer takes into account the likely context of the inheritance. For example, many people leave assets to certain family members and only if those family members are dead, do the assets go to the next generation – the mid-twenty-year-olds. Having a parent die is a very life altering event. When we take into consideration the fact that these young beneficiaries have had a parent die, do you still trust these young beneficiaries with their inheritances?

Find out more at: https://twosprucelaw.com/videos/tidbit-whats-the-difference-between-a-settlor-and-trustee-99wnw

Do I Need To Update My EP If I Move To Another State?

By Patricia Louise Nelson

One question I get asked a lot is “I moved to Bend from another state. Do I need to update my estate plan?” The answer is likely “yes,” especially if you are married or the out-of-state estate plan is more than 7 years old. Technically, an estate plan created in another state will almost certainly work in Oregon. However, out-of-state estate plans usually do not have provisions necessary to plan ahead to reduce your Oregon Estate Tax liability. Planning ahead for a married couple can reduce your Oregon Estate Tax liability by upward of $100,000. Call us to find out how and what’s involved so we can ensure that your estate does not write large, avoidable checks to the Oregon Department of Revenue.

Find out more at: https://twosprucelaw.com/videos/v8n1xx0wk8p4fch09yv3xr4g6fw5qa

How to Avoid Being Placed on Life Support

By Patricia Louise Nelson

As an attorney specializing in estate planning, I have helped hundreds of people complete their Oregon Advance Directives. Very often, my clients indicate that they do not want any life support if they are close to death, or the situation is almost certainly hopeless. Sometimes, my clients exclaim “There! Now I’ll never be put on life support!” Unfortunately, that is not true.

To avoid being put on life support, you must go to your doctor, not your lawyer. Doctors can assist you in completing a different form, called a “Physician’s Order for Life Sustaining Treatment” or POLST. A POLST is the form that needs to be completed to ensure that you are never put on life support. An Advance Directive deals with a situation where you might already be on life support but you are likely to die anyway.

One difficulty with a POLST is that it is supposed to be kept on your refrigerator door - and it is bright pink! Many of my clients do not like this constant and obvious reminder that they may die. Emergency responders are taught to look for POLSTS on refrigerator doors. Putting it on the back of the door to your house (which I have found that many people do) almost ensures that emergency responders will not see it – because when the door is open, the POLST is hidden on the back of it. My 91-year-old mother has solved this dilemma by placing her POLST on the very bottom of the door to her refrigerator so she does not have to see it but emergency responders are likely to see it.

Small Estate Vs. Full Probate

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.

Find out more at: https://twosprucelaw.com/videos/full-probate-vs-small-estate

By Patricia Louise Nelson of Two Spruce Law

Precatory language is non-mandatory language. We all know what mandatory language is. It includes statements like “my trustee shall distribute all funds to my children equally at age 30.” With mandatory language, we have certainty and clarity. We also have no flexibility.

On the other hand, precatory language is suggestive, or requesting, as opposed to demanding or requiring. An example of precatory language is “I anticipate that my trustee will provide generously for my children to obtain an education that will enable them to be self-supporting.” Or “I request that my trustee bear in mind that my daughter has struggled with alcoholism when making decisions about when and how to distribute funds to her.” Precatory statements provide information and can convey expectation but allow the trustee to take the information and expectations into consideration while they make decisions. Precatory language allows the trustee to make the best decision possible based on all the facts and circumstances in place at the time the decision needs to be made, which allows the trustee to respond to changes in circumstances that we can’t even imagine at the time we sign estate planning documents.

I recommend that you give your trustee as much information as possible while also giving them the authority to make decisions. Use precatory language to truly customize your estate plan to your family’s needs without tying your trustee’s hands.

Find out more at: https://twosprucelaw.com/videos/is-your-estate-plan-really-yours-1

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 serve as the guardian for their children.

Those 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

By Patricia Nelson of Two Spruce Law

Powers of attorneys are powerful documents. They are used to appoint someone else to make financial decisions for us. That person is called your agent or attorney-in-fact. With a general financial power of attorney, your agent can pretty much do anything with your finances that you could do. For example, if you are stuck in the hospital and you cannot pay your bills, your agent can. Unfortunately, they can also sell your car without you knowing about it or empty your back account. So be very careful who you name as your agent. Give us a call let’s talk about powers of attorney.

Find out more at: https://www.twosprucelaw.com/videos/what-is-a-power-of-attorney-1

By Patricia Louise Nelson of Bend, OR

Often my estate planning clients have an idea about who should serve as the trustee for their revocable living trust. Frequently, that idea turns out to be a very good one. Rather than just noting who is to serve without vetting that selection with my clients, I like to ask my clients some questions to be sure that who they are thinking of appointing will work well.

The first questions have to do with the person who might serve as trustee. Is that person truly, fundamentally trustworthy? If my clients have any hesitation, let’s keep looking for someone they trust. Is that person also someone who can handle the responsibility of serving as trustee? It can be a short-term job or a long-term job, depending on circumstances that we often cannot foresee. Do they have time in their lives to take on this duty? Also, are they a person who can and will say “no” when that is the appropriate answer to a beneficiary’s request for a distribution? Finally, is this person able to handle investing and managing money and other assets? Again, let’s keep looking if there is any hesitation in responding “yes!” to these questions.

Next, how will this person serving as trustee be received by the beneficiaries? If my clients are naming one of their children to serve as trustee, how will the other children feel about that? If my clients are naming one of their siblings to serve as trustee, how will the beneficiaries perceive this choice? Bear in mind that naming Aunt Mary or Uncle Joe can predictably and negatively impact the relationship children have with that aunt or uncle. Not that we can always make everyone happy, but let’s avoid causing foreseeable problems in the family. It might be best to allow Aunt Mary or Uncle Joe to be a loving advocate and sounding board (remember, you’re not there to support them in these ways) rather than putting that beloving aunt or uncle in charge of the beneficiary’s trust fund.

My clients often object that they really don’t have anyone else who can serve as their trustee. This is an understandable feeling. It reflects a limited understanding of the resources available. There are many banks and professional fiduciaries who can serve as your trustee. See our website under helpful links for suggestions. Even though you have to pay a professional to serve (once they are actually serving, but not before), it might be less expensive to do that than to have your trust fund litigation among your beneficiaries and trustee. This sort of litigation is expensive by every measure, especially interpersonally. Let’s avoid damaging your family by carefully considering who will serve as your trustee.

Find out more at: https://www.twosprucelaw.com/videos/who-should-be-your-trustee