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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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

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.