Estate Planning Weekly

It's that time of year and you can smell taxes in the air. I am seeing and hearing all sorts of news right now about how everyone is getting smaller tax refunds. This isn't necessarily a bad thing. While taxes are on everyone's mind, I'd like to explore how taxes affect estate plans. Small Tax Refunds Are A Good Thing Is your tax refund smaller this year? Don't use that as a measure of good or bad. You need to need to look at your actual tax liability...how much did you actually pay in taxes. If you paid less this year, congratulations. I can hear everyone right now, "but my refund is smaller." That is great - your refund is a return of a no-interest loan that you made to the government. Loaning out money for free is no fun. Plus, that means you had more money in your pocket with every paycheck in 2018. Federal Estate Tax The good news is that 99% of everyone reading this will never have to pay the Federal Estate Tax as it is currently structured. The current Federal Estate Tax Exemption is $11.4 million. Tha

Considering your healthcare decisions in advance is an important part of creating an Estate Plan. The three healthcare documents that most people are concerned with are the POLST, Advanced Directive, and Healthcare Power of Attorney. POLST The POLST, or Provider Orders for Life-Sustaining Treatment) is a medical order not a legal documents. Not everyone needs a POLST. This document is prepared with a physician, and sets forth whether you would want extraordinary measures taken to save you life. These measures include CPR. Physicians will often start a POLST dialog with patients that are in declining health...this is not an order for everyone. Advance Directive An Advance Directive gives instructions for care for serious conditions when you are unable to make decisions on your own. Every adult should have an Advance Directive. In Oregon, Advance Directives take a form set forth in the Oregon Statutes. Effective January 1, 2019, Oregon has a new Advance Directive form. If you already have an Advance Directiv

Not everyone is ready to handle inheriting a lump sum of money. This is especially true of young people that don't have the life experience to appreciate the value of money and haven't acquired the skills to manage money. Many inheritances disappear in the matter of a couple of years or even in a matter of months.   It Can Happen to Anyone Anyone inheriting money can look up a year later and realize that the money is gone and they don't know where it went. This is especially true for younger people. I knew a young man that received over $250,000.00 on his eighteenth birthday. Within 18 months it was all gone and he had nothing to show for it. The money went to a car that was totaled, to computers that were old tech within a year, to parties, to trips, etc. In the end all he had to show was some debt. You Can Protect the Inheritance You Leave Even if you are leaving a small inheritance you can make sure that when it is used there is recognition of where it came from. We call this an "I Love You Trust." Basi

Whether you know it or not...whether you want it or not...you have an estate plan even if you've never signed one. In Oregon, (really in every state) our legislature created and the governor signed an "estate plan for all." Unless you do something to change it, that estate plan created by the State will decide who gets your stuff when you are gone. Dying Intestate When you die without an estate plan, you are said to die intestate. In that case (which happens all the time), the laws of the state kick in and dictate who will get your assets. You can read the Oregon Law by clicking here. Basically the State has set up a hierarchy of who will get your assets. It doesn't matter if you never had a relationship with the person, if they are the correct relative they will inherit from your estate. Guardians For Minor Children Without and estate plan, a judge will decide who will raise your minor children. You have no say in the matter after you are dead. Often times more than one family member will petition the cou

As they say..."there is more than one way to skin..." The same is true with leaving assets to your children. There are good ways, traditional ways, ugly ways and everything in between. Here are four of the most common ways to leave assets to your children. 1. Outright Distribution Leaving money to your children outright is the most basic way possible. You have cash, the cash is handed to your children. You have a house, the house is retitled in the child's name. However, if your children are minors they cannot inherit outright and a conservator will need to be appointed by a court. Stay tuned for a future episode explaining the magical vanishing 18 year olds inheritance. 2. In Trust - Full Withdrawal Rights. With this method, the assets are left to your children in a trust, but they are give full right to withdraw those assets for any reason. This method, much like outright distribution above, does not provide any way to make sure your child's inheritance with last. 3. In Trust - Stated Ages / Distribution

Retirement accounts are often very misunderstood. Dealing with how to incorporate them in your estate plan can seem very difficult. Here is some basics, but you really need to speak to a professional about your particular circumstances.  Don't Title Them Into Your Trust You have your Trust and now you are working on funding it. Your attorney (or online service) told you to put all of your accounts in the name of your Trust. Hold on, don't do that with your retirement accounts. Retirement accounts are treated differently when it comes to taxes; they are also exempt for most collection actions. If you change the ownership of your retirement accounts that will trigger a tax and you'll loose that collection exemption. If someone tells you to change the name on your retirement accounts...get a second opinion before you do anything. Primary Beneficiary If you're married, 9 times out of 10 your should name your spouse as the primary beneficiary. Inheritance of a retirement by a spouse retains the exemption as if

Most people think of Estate Planning solely as an end of life tool. That is an essential part of Estate Planning, but there are more. I like to think of the end of life portion as the pinnacle of a pyramid. At the base there is getting an understanding of your estate; things and people. As we move up the pyramid there is healthcare, incapacity, and how your life is maintained. Taking An Inventory Every client I work with completes an Estate Planning Inventory and Assessment. This includes who you are, who your beneficiaries are, who your decision makers are, what your have (your assets), and your wishes. Completing this Inventory and Assessment gives you a complete picture of the current status of your Estate. Incapacity Whether medical, physical, or mental incapacity, an Estate Plan provides for how you and your things are managed when you can't manage them. This includes appointment of healthcare decision makers, financial decision makers, and instructions to those decision makers. End Of Life Setting fo

As parents we all worry in the back of our heads about our children being cared for after we are gone. Hopefully we all get to see our children grow into adulthood and never have to worry about guardians and leaving money to minor children. As the saying goes, "hope for the best, plan for the worst." Minors Cannot Directly Inherit Money & Assets In most states a person under the age of 18 cannot directly inherit money & property and be in control of it. Rather, the laws require that a third party be appointed to manage and care for the minor's assets.  This third party can be a custodian or a trustee depending on the type of Estate Plan involved.  In the event you have a Will based Estate Plan, or no Estate Plan at all, the third party will mostly likely be referred to as a custodian. You can name a custodian in your Will. If you have no Will a judge will appoint a custodian. In either case, the custodian must be approved and appointed by a judge. In the event that you have a Trust based Estate Pla

A couple that I worked with this year was surprised to learn that they need a Will to go along with their Trust based Estate Plan. This couple came to me with a Will based Estate Plan that they had for years. These was nothing wrong with their plan when it was setup. However, as time passes, circumstances change as to your Estate Planning needs. After learning about their current circumstances, we all agreed that a Trust based Estate Plan was right for them. When they came in for their signing cermony, we reviewed their Trust and other documents. The couple was surprised that switching form a Will based to Trust based Estate Plan would require them to still have Will. There Are Two Main Reasons You Need a Will With Your Trust REASON #1 - You pass away before your Trust is fully funded.  This can happed if you pass away before you have time to fund your Trust, or if there is a mistake/oversight and an asset is properly funded into your Trust. In this case, your Pour-Over Will directs that you are leaving

Just last week I met with a client with three children. They wanted to leave the home they had built to all three of their children.  This can, and often is a bad idea. When you leave a single piece of real property to more than one person, conflicts can often arises. Most likely they will take ownership as tenants in common...meaning that each of them owns a undivided interest in the whole property. The conflict comes in determining how the real property will be used. Who gets to live there? Who pays the property taxes? How much is reasonable to pay the owner managing the property.  I often advise my clients to choose one person to inherit the each piece of real property and offset the value of the real property with other assets to other beneficiaries.  If it is a must that the property must stay in the family, there are solutions to set down rules for the use and enjoyment of real property. Those solutions are often expensive. If its important that to you that you leave real property to more than one pe

"How do I avoid probate?" "Why should I avoid probate?" I get asked questions like this all the time. Many people have heard that avoiding probate is a good thing, but they aren't sure how and why. The how is relatively easy...create a Trust based estate plan. By having a properly funded trust, your estate will not require a probate.  The why varies from person to person. Some the most common and compelling reasons are: A trust keeps everything private. If your estate requires a probate, everything filed with the court is a public record. There is rarely need for court involvement during the administration of a trust. This simplifies the process by not having to make court filings and making sure that you are meeting all of the court's requirements. Cost. While not exorbitant, there are filing fees to open and close a probate. Further, due to the number of notice and filing required a probate usually requires more attorney hours. So now that you know the why and how of avoiding probate the next step is t

One of the most common questions I get about estate planning is "What's the difference between a Trust and a Will?" Trusts and Wills are documents that you create during your life that direct who your assets go to after you pass away. The main difference is that a Trust works during you life and a Will only works after you've passed away, its submitted to probate, and the probate court accepts it. Trusts have the advantage of allowing your successor trustee to step in and manage your affairs if you become incapacitated. A properly drafted, executed, and funded Trust allows a seamless transition without the involvement of a court or the need for other documents. Another advantage of Trusts is that they are private. Wills on the other hand become public once they are filed with the court. In Oregon, the main advantage of a Will is the ability to name guardians for your minor children. You can also accomplish this with a Trust based estate plan by also having a Will that names those guardians and leaves the d