If you completed your estate plan in 2017, congratulations! You are ahead of the 55 percent of Americans who do not have a will or other estate plan.
But estate plans are not a love-it-and-leave-it proposition. They require periodic review and maintenance as your circumstances change. You should have a scheduled time near the beginning or end of the year to complete this review. Even if you only take 15 minutes to confirm beneficiaries and account for current real estate, that is time well-spent to assure your plans still reflect your wishes.
A simple checklist is a good place to start. These items do not take long to consider and they can make a big difference in how your estate is managed.
Where is your will or trust document?
Know the location of the original will. If it is in a safety deposit box, give an extra key to your executor. Trust documents should be in a secure place. But confirm that location so that you are not hiding them from yourself.
Keep all the documents together. Wills, powers of attorney, and advance health directives need to be in one place with copies provided to your appointed agents.
Are beneficiaries, executors, guardians, and trustees correct?
Changes in family circumstances may require adjustments in beneficiaries and appointments. You may designate your oldest child as executor only to have them move across the country. A relative or friend who lives closer and understands your situation may be a better choice. Similar developments may make other individuals better candidates for guardians and trustees.
The same is true for beneficiaries. You may find a child who was once self-sufficient is now unable to work due to a disability. A new child or grandchild also affects beneficiaries. Adjusting your non-probate assets to reflect these needs may create a more desirable estate plan.
Death also changes the nature of these appointments. If your spouse passed away and is still designated as the agent in your Power of Attorney, you may want to consider redrafting that document with a new agent.
What has changed?
Assess life changes over the last year. If you quit your job to run a small business, your estate plan is no longer relevant. While beneficiaries, executors, and agents may remain the same, you now have to plan for business succession. Also, a Power of Attorney may need to be expanded to include business functions.
The same is true if you divorce, remarry or welcome an additional child. Major events should warrant an immediate review of your estate plan although that may not have occurred to you at the time. So, accomplish this now. You do not want to leave a former spouse as a life insurance beneficiary when your current spouse could use those immediate funds upon your death.
Changes in income and major property acquisitions will also affect estate plans. Becoming a homeowner, purchasing business property or receiving a large inheritance can affect the value of your estate. Depending on the type of income and property growth, you may need to consider a trust or lifetime gifts.
Are all affected people notified?
Estate plans do not help if they remain secret. Even if you let people know that you completed an estate plan, you may have overlooked a few details.
For example, you may keep your original documents in a safety deposit box and allow your executor access. But if only your executor knows of this fact, it could cause hysteria if that individual is not immediately available to answer questions. Identify your executor but also provide location information for the documents whether that is a safety deposit box or a locked file drawer.
Share information about beneficiaries on life insurance policies and 401Ks, too. Beneficiaries will have an easier time taking possession of proceeds if you provide account and policy details.
Even if you believe you shared this information before, it does not hurt to share it again. While you could receive an eye-roll or two, at least you can rest assured that everyone is current on your estate plan.
If you find it is time to revise your estate plan, make an appointment with a dedicated and knowledgeable estate planning attorney. Contact Diane L. Gruber to schedule a consultation.
Granted, there are cheerier topics for the holiday dinner table than mortality and property distribution, but it is important that you discuss your estate plan with loved ones. This is the best time of year to bring up this topic since everyone is already together. You can avoid repeating discussions and assure everyone is on the same page.
Here are five tips on how to approach this discussion in a productive manner.
Prepare Documents First
It is much easier to be clear about your intentions and avoid dispute if you already drafted a will, trust or other estate planning documents. Start by explaining that you finished a will or trust and you have copies of the documents if anyone wishes to review them.
Not only should wills and trusts be complete, but also any advance directives and health care powers of attorney. Keep copies of those handy as well and let family know that your wishes concerning future health care in writing. This shows firm decision making and leaves little room for argument.
Do not hide the fact that you limited someone’s inheritance or excluded them all together. If your family is fraught with conflict, consider bringing in a third uninvolved party as a mediator when you share this information.
If the excluded loved one discovers this after you die, it allows them better grounds for a will contest. They may claim that was not your intention and even indicate that another relative exercised undue influence over you. However, if you communicate to them that this was your intention and have a witness there to confirm that, there is no doubt and few grounds to contest the will. This can make the probate process easier for everyone involved and maintain the value of your estate by reducing the chances of high attorney fees.
Consider Appointments Carefully
If your youngest child is extremely detail-oriented and has good math skills, it makes complete sense that you would choose him or her as your executor (personal representative) rather than the frequently forgetful older child. Never let birth order or false obligations choose executors, guardians or health care representatives. You want to choose the best person for the job. Keep in mind that may not always be a family member.
Inform those who will be appointed for various roles. Unlike disinherited parties, this often does not cause hurt feelings. Your sibling who already has children will likely embrace the role as guardian of your children more than the childless sibling who lives in a one-bedroom condominium. Also, your children will likely recognize which one of them is better skilled at managing your estate as an executor. The adult child who prefers making metal sculptures to filling out paperwork will actually be incredibly relieved that you did not choose him or her!
Even if there is a dispute over these roles, you control arguments by having these appointments made before you start discussions. That is why finishing your estate plan first is so crucial.
Conflict may be unavoidable but confrontation is not necessarily unavoidable. Treat this as an intimate discussion, not an argument. Explain your reasons for your decisions from the heart and avoid statements of judgment.
For example, if you reduce a family member’s share in a life insurance policy or business interest, explain it as, “The other beneficiary needs the cash to send a child to college,” not “You filed bankruptcy four times already and I know you will squander this money.” Keeping this positive reduces defense mechanisms and keeps this discussion positive.
Of course, you may have an adult child or other relative who will take offense no matter how you frame your reasons. The trick is to avoid the bait. If they look for a fight, simply state, “I expressed my intentions and they are not up for discussion.” Sometimes, the best you can do is make your plans known and understand that there will be hurt feelings no matter how you handle this.
Expect an Ongoing Discussion
You may not wish to bring this up at the first discussion but it is likely there will be updates in the future. Right now, you may have four adult children who are still single or in school. However, when you bring this up again in two years, there may be grandchildren or adult children who are doing much better financially than before–or one may face greater financial needs.
Just as you want to inform family of your first estate plan, also keep them in the loop when you update it. Avoiding surprises when you pass away is a good way to assure a better probate process and a reduced chance of a relative contesting a will or trust.
Prepare for this important discussion by completing the first step–the complete and appropriate Oregon estate plan FOR YOU. Call Diane L. Gruber, Attorney at Law today to schedule a consultation.
Strategies focused on avoiding probate in Oregon often focus on trusts. Companies that specialize in trusts make a profit off of people who often do not need a trust in the first place.
Those seeking to avoid probate often do so because their families need payments quickly from their estates. Even though a well-written will keeps probate short and sweet, sometimes a six-month wait is often too much for some people. That is what makes a living trust so appealing.
Rather than invest in the expense and formalities of a trust, look into non-probate assets. Also called payable-on-death (POD) or transfer-on-death (TOD) accounts, these options allow your loved ones to receive money quickly. Here are three options if your family members need money or property quickly after you die.
Adding another name to your bank accounts or real estate deeds allows for instant transfer without the process of probate. If you know your home or banking assets should pass to a particular individual, add them as a joint owner with rights of survivorship. This allows instant transfer of those assets when you die and gives your beneficiary access to funds or shelter.
There is one disadvantage to this approach. If your estate is being chased by aggressive creditors, they may garnish your bank account or file a lien against your real estate. This can diminish the value of your assets and place a competing interest against your beneficiary. If your beneficiary has creditors, they can take your assets to pay off that debt. Speaking with an estate planning attorney can help you assess this possibility and decide whether your situation warrants the protection of a trust.
Unless you designate your estate as the beneficiary on a life insurance policy, the proceeds will not go through probate. They pass to the beneficiary or beneficiaries you choose when you start the policy.
When you designate a beneficiary or beneficiaries on your life insurance policy, inform them of that fact. Also, provide them the name of the company, policy number, and contact information so they can collect on the proceeds as soon as possible.
Also, if it has been a while since you reviewed your life insurance beneficiaries, do so now–especially if your family recently expanded, or you finalized a divorce, or you recently married. People often forget to check beneficiaries after a major life event and loved ones are often shocked to discover a life insurance policy still lists deceased persons or formers spouses as beneficiaries. This leads to considerable delay and heartache, so check your life insurance at least once a year to be sure that your beneficiary list still reflects your wishes.
Saving for retirement assures your comfort after you stop working, but it also assures your loved ones are provided for in case anything happens to you. IRAs, 401Ks, and annuities all give you the opportunity to add beneficiaries. If you are not certain whether or not you designated beneficiaries on these accounts, take time to check. Otherwise, these assets must go through probate.
Just as with life insurance, check beneficiaries on these accounts after each major event. Marriage, death, divorce, and new children or grandchildren may change your priorities for estate planning. That affects your non-probate assets too so pay attention so your plans always reflect your current wishes.
Estate planning is not just about preparation for probate. It is about informed decision-making. Estates plans are as unique as the clients who request them and it is important that you meet with an attorney to create a customized approach that considers non-probate assets, family members’ special needs, and probate concerns. There are situations where relying on non-probate assets is not the best strategy and that can be discussed in detail at your estate planning consultation.
Diane L. Gruber, Attorney at Law, practices family and estate planning law in West Linn, OR. We serve clients Washington, Multnomah, Clackamas, and Marion Counties. Contact our office today to schedule an estate planning consultation.
Most people do not need to avoid probate. They need the right tools to make it easier. The first step to that is drafting a will and informing loved ones of its location and contents.
Even then, the challenges are only beginning. In addition to managing the paperwork and legal formalities that follow a death, your loved ones are also facing their grief. This is an overwhelming time where even a simple telephone call to a life insurance company feels like a monumental task.
Efforts made now can make this easier for your friends and family in the future. Once you finish your will, complete these five tasks to assure a more efficient probate process for your loved ones.
Keep It All Together
Once you draft a will, keep the original in a safety deposit box, a copy with your attorney, and another copy with your executor, the person named in your will to manage your estate. Let other family members or close friends know you have a will and who has copies of it.
Wills do no favors if they are kept secret. If no one knows you have a will and/or cannot find it, then your loved ones will be forced to file an intestate probate in order to transfer your assets. An intestate probate is a probate without a will. It is more time-consuming and more expensive than a probate with a will. Moreover, this leaves your loved ones wondering what to do. A will expresses your wishes and directs your loved ones what you want to become of your assets after your death.
Keep other important documents near your will as well. These may include real estate papers, car titles, stock certificates, and life insurance policies. If all these documents are together in one place, life for your grieving executor just became easier.
Make Lists Now
One of the largest tasks in probate proceedings is the inventory. This is a list of all your assets and their values. The court uses it to determine the value of your estate and the distribution of your property.
Start keeping updated lists now to make this job easier for your grieving relatives. If you have a special collection of art, jewelry or other high-value items, keep track of these items in a spreadsheet or even a notebook. List values if you have them. Your executor may have to get some items appraised, but even just a list will make the inventory step easier for your executor.
If a loved one is a joint owner on a real estate deed or car title, tell them. This makes it easier for them to take possession of these items after you die and keeps the asset out of probate. The same is true for any life insurance policies. If beneficiaries know they are entitled to these funds, they may be able to collect them without the involvement of the court or your executor.
Likewise, if there are family members who are not receiving any of your property, be direct about this situation and who is affected. You may want to tell a trusted family member. Being clear about all your wishes, even those that work against family members, prevents problems after your death.
Organize Your Finances
Just as you own assets, you may also carry debt. Keep mortgage documents, credit card statements, and medical bills in an accessible place and maintain a current list. Then when you executor must send out notices to creditors, they do not have to engage in an exhaustive search to find them all.
Provide Attorney Contact Information
When you pass away and your family and friends grieve, your estate planning attorney can be a guiding voice of reason during a difficult time. It is much easier to complete a probate filing with the attorney who knows you, and drafted your will, then to start from scratch with a new attorney.
Your attorney’s name, address, telephone number, and email address should be in the margins of your will. Inform your family members who you hired to handle your estate planning. Even if your attorney moves from the area or retires, having that information can still help your loved ones find someone else to represent them in the probate proceeding.
Diane L. Gruber, Attorney at Law, offers estate planning and probate guidance for Oregon residents. Not only can we design an estate plan that best reflects your wishes but we can make the probate process more efficient and effective for your family. Contact our office today to schedule an estate planning or probate consultation.
Avoiding probate should not be your primary goal when estate planning in Oregon. For most people, probate is a quick process that allows you an appropriate vehicle for distributing assets, protecting loved ones, and honoring your charitable wishes. Trust companies convince you otherwise so you will buy their product–not because it necessarily works to your advantage.
But there are exceptions. Our law office encounters a few clients who may benefit from avoiding probate and should create a trust as their main estate planning vehicle. Here are four possible reasons why clients may need to establish a trust in order to avoid probate.
Need for Continuous Asset Management
During the probate process, your assets are essentially placed on hold until the court approves their distribution. This can be troublesome if your assets generate income that may be vital to supporting your family.
If you own a business, rental properties or even investment accounts, these assets continue to generate income but that cannot be distributed unless a special motion is filed with the court or probate concludes with assets being liquidated or passed on to their new owners. In cases of incapacity, a power of attorney allows an agent to pay bills or distribute income. But once you die, that agent no longer has the authority to accomplish those tasks.
When you own multiple income-producing assets, a living trust may be your best option. It continues distributing income until it is dissolved which reduces interruption of support and hardship.
Probate is a public process. Technically, anyone can access your court files and see your asset inventory and the value of your estate.
This creates anxiety for some people. A contentious divorce or family estrangement leads some clients to want to keep the assets of their estate private. Sometimes, the motivation is less conflict-driven. Clients may not wish to compromise their family members’ safety by making the ownership of high-value property public. There is always a risk that if it is known a family member owns an expensive car or rare work of art, they may become a target for crime.
In most cases, you do not need to keep the distribution of your assets after death private. If you are worried about social security or credit card account numbers, those are kept private anyway. However, if you believe a public probate will compromise safety or heighten tensions within your family, a trust could be a better option for you.
When assets are placed in a trust, they technically no longer belong to you. They belong to the trust which is why they are not subject to probate proceedings.
This works well for clients whose estate is valued over $1 million. You can move assets into a trust and reduce the estate’s overall taxable value. Income and property are then distributed to your loved ones rather than used to pay a tax burden.
The cost of probate in Oregon is modest compared to some other states. Unless your estate exceeds $1 million, you are unlikely to lose a significant amount of it in administration fees or taxes.
However, if you live in Oregon and own property in other states, it is likely that you will need an ancillary probate in each of those states, as well. An Oregon probate proceeding cannot address property outside the state. If you own a hunting cabin in Alaska, for example, you must file a separate probate proceeding there.
People who own a number of out-of-state property and investments will see their costs rise with each separate probate proceeding. Placing out-of-state assets in trust or owning them jointly with a spouse or other family members may prevent this dilemma.
Before you choose a trust company and decide to transfer all your assets into a trust, see if that is necessary for you. Diane L. Gruber advises clients on all their Oregon estate planning options including those for avoiding probate. Contact us today to schedule a consultation and see what is necessary for you.