What is an estate plan?
A properly prepared estate plan makes sure that you, your loved ones and your assets are cared for in case you should become disabled and when you die.
Do I need an estate plan?
Having a plan in place ensures that your family and financial goals are met after you die. A comprehensive and properly formulated estate plan can ensure that death taxes are minimized and that your loved ones are provided for, in the manner you choose.
If you do not have a plan specifying what you want, then your assets will pass based on the “plan” that the Oregon state legislature has put into effect. In most cases, that “plan” will not be what you want. This is particularly true if you have minor children, a non-traditional family, or you have been married more than once. Also, if you become disabled without your own plan in place, it may be necessary to have public, court-supervised conservatorship (also sometimes known as a “living probate”) to manage your assets while you are disabled. This procedure is expensive and may easily result in something other than what you would have chosen.
Isn’t estate planning only for the wealthy who need to avoid taxes?
No. Although it is true that a good estate plan will employ tax strategies to help your heirs keep your hard-earned assets, there are many other objectives that an estate plan can achieve. But, you may be surprised to learn that even middle class folks will benefit from estate tax planning. In Oregon, if the value of all your assets, including your home, investment and bank accounts, retirement accounts, and life insurance, exceed $1 million, you may benefit from estate tax planning.
If you have any of the following situations or issues, you need an estate plan:
– You have minor children: Your estate plan will direct who will care for your children and appoint a trusted person to handle their finances.
– You have concerns about family members or beneficiaries that cannot manage their financial affairs: Your estate plan can contain lifetime asset protection to prevent these beneficiaries from squandering their inheritance, protect them from creditors, predators, lawsuits, and divorces.
-You are recently divorced.
-Your spouse or partner has recently died.
– Your second (or later) marriage or have a blended family
-You are you in a same sex relationship (married in another state, domestic partnership in Oregon or elsewhere, or in a committed relationship but without specific legal status).
-You have a disabled child or beneficiary: Your plan needs to be carefully structured to be sure that your disabled child or beneficiary continues to receive their crucial governmental benefits. Even a modest inheritance can cause loss of important benefits such as health care and housing.
– You have a family or closely held business or hold an interest in such a business.
– You want to minimize the costs of administration of your estate (financial affairs) if you become disabled and when you die.
– You want to be sure that you leave your money and things of value to the people you care about.
– You have beloved pets and companion animals that need to be cared for.
– You want to benefit charities or causes that matter to you.
A good estate plan has several elements that protect you and your loved ones in disability and death.
A will: to govern what happens to your assets after death. For many individuals and families using a revocable living trust as the main planning tool makes good sense (living trusts are discussed in more detail below);
A durable power of attorney: so that a trusted individual can manage your financial affairs if you become disabled;
An advance directive for health care (sometimes referred to as a living will or medical power of attorney): at the Reynolds Law Firm, we offer an enhanced health care directive that provides you with additional options so that you can be specific about the type of care that you want;
A disposition of remains designation: to identify the person in charge of arranging for the handling of your remains and specifying whether you would like burial, cremation or other arrangements.
For many people and families a revocable living trust also makes a lot of sense.
What is a Revocable Living Trust and what can it do for me?
Trusts aren’t just for the wealthy. Individuals and families of all types can achieve great benefits by having a Revocable Living Trust, or a “RLT”.
A RLT holds most types of property you own. While you are alive and well, you are the Trustee of your RLT and you have full authority to do with property held in the RLT as you wish.
In the event that you become disabled, the RLT offers seamless transition to the next trustee in line to manage your financial affairs. That avoids the possibility of expensive and public court processes known as a conservatorship. If you regain capacity, you can take over again as your own trustee and manage your own affairs.
When you die, a RLT contains a set of instructions that the successor trustee that you have chosen follows to distribute your assets. The RLT can also contain provisions that allow or require your trustee to hold assets for the benefit of your children or other loved ones, providing lifetime creditor and/or divorce protection. The RLT can also contain specific tax planning provisions that allow for maximum flexibility to help your estate minimize death tax liability.
One of the best things about the RLT is that it is private and it does not require court intervention at any time—either upon your disability or at your death. Accordingly, you control who knows what about your plan and the provisions that you have (or have not) made for others.
Should I discuss my estate plan with my family or other beneficiaries?
Discussing your estate plan with others is a very personal choice. In some situations there are good reasons to keep your plan private. In other instances, sharing the plan can be of great value in avoiding conflicts in the future. We will discuss these issues with you and, if you decide it is right for you, we will be glad to meet with your beneficiaries and/or estate representatives to discuss the plan at no additional charge to you.
Lorena has experience in planning for the estate, including wills, revocable living trusts, advanced directives for health care, and durable powers of attorney. We are committed to creating individual plans for all family structures.