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Estate Planning After Remarriage

There are triggering events which make estate planning, or editing an estate plan, necessary in Oregon. Remarriage is one of these triggers. This is especially true if your new marriage includes children from previous marriages, stepchildren, and additional children from your current marriage.

Even in the most well-adjusted blended families, death challenges relationships. This makes a clear estate plan vital if you want to provide for family members while also reducing conflict. You must also avoid making the same estate planning assumptions that are appropriate in first marriages but are likely to backfire in subsequent ones. Here are four unique considerations when creating an estate plan after remarriage.

Conflicts of Interest

The natural inclination is to leave everything to your spouse and for your spouse to do the same. This is a safe avenue in first marriages when children only come from that marriage.

Remarriage changes that dynamic. If you pass all your property and money to your current spouse, understand that they have no obligation to consider your children from a previous marriage. Your death may create distance between them and if your current spouse outlives you considerably, he or she will be more likely to account for his or her own children and any new spouse. They are not likely to pass property to your children, especially if they have not spoken to each other for years.

One solution is to place your property in trust to provide income to your current spouse. Once your spouse passes away, remaining property is distributed to your children. You may include children from both your previous and current marriages and any stepchildren in that distribution.

If you decide to take this approach, appoint an uninterested third party to serve as trustee. Otherwise, there is a strong possibility of a conflict of interest based on self-interest.

If you appoint your spouse as the trustee, they may choose to invest your assets in low-yield options that leave nothing for your children once your spouse passes away. Likewise, your children may choose more long-term approaches that leave your current spouse inadequate income. An independent trustee is more likely to manage assets to everyone’s advantage.

Beneficiary Designations

Sometimes, the best approach to provide for children is with non-probate assets. Making them beneficiaries on your life insurance, retirement, and investment accounts is an excellent way of ensuring they receive something after your death. You are then safe to pass property and money to your spouse through your will.

This strategy is easier and less expensive than a trust but it requires attention to detail. Check the beneficiary designations on these assets and change them now. Most importantly, let your family know you made these changes and why. You do not want your spouse to expect a life insurance payout only to find out after your death that they are no longer entitled to those funds.

Agent Appointments

Your estate plan will likely include an advance directive and a durable power of attorney. These cover decision-making should you become incapacitated. The advance directive appoints a health care representative who makes health care decisions on your behalf. A power of attorney appoints an agent who manages your financial and business affairs if you are unable to do so.  A power of attorney dies when you do.

Spouses are often the first choice for these appointments. In blended families, this may not be the best idea. Hurt feelings and conflict can arise if your children from a previous marriage do not feel your spouse is acting in your best interest or puts his or her self-interest above your needs.

You are better off choosing family members who are suited to these tasks rather than focus on relationship status. For example, you may discuss end-of-life decisions more frequently with an adult child rather than your spouse. Your child may listen better while your spouse shuts down when you bring up the topic. Or you may run a small business with a daughter, who is likely a better candidate to be your power of attorney.

The important part is, you want to appoint individuals to get along well with all family members, including your spouse. If there is so much tension that this is impossible, consider appointing someone outside your immediate blended family, like a close friend or sibling.

Dangers of Intestacy (when you don’t have a Will)

It may be tempting to do nothing and let intestate statutes take control. This may seem to prevent difficult discussions but it will only lead to many, many problems for your loved ones after you pass away.

Intestate succession only considers blood relatives. It will ensure support for spouses, children, parents, and even siblings. But if you are close to your stepchildren and want them to inherit assets or take over a small business, intestate succession will not allow that. Your stepchildren may also have special needs that you want to be provided for if you pass away. Again, intestate succession will not even take them in account, even if you had a close relationship. This only changes if you adopted them, which often does not occur if you remarry their parent when they are adults.

Blended families offer distinct estate planning challenges, but they are not surmountable. Find solutions by discussing them with an Oregon estate planning attorney. Call Gruber & Associates today to schedule a consultation.

You Are Never Too Young For Estate Planning

Estate planning is often associated with middle age or even the retirement years. Millennials, who range in age from 18 to 36, are often too busy managing student loan debt, building careers, and buying homes to give much thought to their mortality. Like other young adults, they may still feel invincible.

On the contrary, these years are the best time to start estate planning. As less traditional family arrangements take over and options expand, you must be prepared in case the worst occurs. If you are younger than 40, here is what you need to do at a minimum for your estate plan and why you should think beyond that.

The Bare Minimum

If you have more debt than assets, never had children, and do not own real estate, it may be difficult to comprehend the importance of a will. There is some truth to this: If you are 24, single, and childless, you likely do not need a large complex estate plan unless you are blessed with early success.

At the very least, start with the bare minimum of estate planning; an advance directive and a power of attorney. Both of these documents are vital for continuing your affairs should you face incapacitation.

Advance Directive

An advance directive outlines your preferences for health care should you be rendered incapable of communicating your treatment preferences. This document appoints a healthcare representative to make these decisions on your behalf and indicates your preferences regarding life-sustaining treatment.

Your health care representative can be anyone you trust with that decision including a parent, sibling, best friend or live-in partner. They will act as your voice when you cannot speak. Before you appoint them, let them know what you plan to do, and perhaps have a conversation regarding your medical preferences.

The advance directive also allows you to limit life-sustaining treatment. Many people prefer not to be kept alive by artificial means if they are rendered permanently incapacitated after an accident or terminal illness. These situations often cause substantial heartbreak not only because of the tragedy involved but also when friends, family, and partners have no idea of your preferences.

You can make this a little easier by making your wishes known through an advance directive. This is a complimentary service when you meet with Diane L. Gruber of Gruber & Associates for estate planning.

Power of Attorney

It is often assumed that if you are incapacitated your spouse, parents or cohabitating partner will handle your affairs for you. Unfortunately, if your accounts and business interests are held only in your name, your helpful loved ones will not be able to access them. This can make it impossible for them to make your student loan payments or even take a pet to the vet.

A power of attorney makes this possible. While you recover from what limits you, the agent you appoint in the power of attorney document can have access to your assets. This allows them to pay your bills and even apply for disability benefits on your behalf. If you do not execute a power of attorney, these tasks become difficult. Depending on the extent of your incapacitation, your loved ones may even have to go to court to appoint a conservator to act on your behalf!

These two documents will help in moments of unexpected developments. However, you should consider a will in case the worst occurs.

Why a Will?

Many young adults fail to execute a will because they focus on what they do not have. They do not own real estate or make a substantial income. Some of you may not have children or even a partner. So, why draft a will?

You draft a will because of what you gained so far in life. Even without a large stock portfolio or a mortgage, there are still items that require care should you meet an untimely demise.

Pets

You consider your pets family but the law still considers them property. Oregon law has slightly backed off from this with court precedent finding that animals have awareness and allowing animal control officers to act on an animal abuse situation with the same urgency as harm to a person. But that does not help your animal from being vulnerable should something happen to you.

Just as you can name a guardian for children in your will, you can also do the same for a pet. You can name your cohabitating partner or a friend who loves your animals. A will also allows you to name a backup guardian in case your primary appointee cannot care for your pets. 

Some people even establish pet trusts to assure good care. You can do this even if you lack assets. Purchase a life insurance policy and make the pet trust your beneficiary. Or if you trust your pet guardian, name them as the beneficiary with the understanding the funds are meant to help them care for your animals.

Basically, establishing a caretaker for your pets in a will assures they are safe if anything happens to you. It also makes the process of rehoming your animals much easier on your family.

Cohabitating Partners

There is a movement away from tradition as more young adults decide to cohabitate before marriage. This can have unfortunate consequences if you pass away.

Unless you marry your partner, they have no rights to your assets after death. The intestate statutes, which dictate the distribution of property when someone dies without a will, do not make allowances for non-married partners. You could be engaged but if you die in a horrible accident the day before the wedding, your partner will still be treated as a non-entity by the intestate proceedings.

This can lead to distressful consequences. For example, let’s say you own a home with a mortgage. If you die, the mortgage holder will liquidate the house to pay off the debt.

If you have a will, you can dictate that the equity from that sale passes to your partner. Even if that is only $3,000, that is still enough for them to find a new place to live. However, without a will, that $3,000 will not pass to your partner. It will first go to any children you have, and if you do not have children, your parents and then to your siblings.

This goes for any property you own, including cars, furniture, and other assets. There is no way you can pass property to an unmarried partner without a will.

Children

If you are a single parent, a will helps you designate guardians for your children. Unless you do so, the court will make this determination.

This is not ideal if you are estranged from your family. Your children may be closer to a friend or your live-in partner. However, the court is more likely to grant custody to family members. Even if you come from a close family, it is likely a particular sibling is better suited to take custody of your children.

Guardianship is another preference that is enforceable only through a will. Even if you do not feel you have any other reason to sign a will, if you have children, this reason alone is sufficient.

Digital Assets

Many millennials appoint “digital executors.” These are people with access to your social media and other online accounts. Their job is to manage your digital assets should something happen to you.

Sites like Twitter and Facebook are notoriously bad at dealing with death. Pages often remain accessible with reminders going out to friends and family about your birthday and other milestone events. Unfortunately, without someone knowing your passwords, it is often impossible to shut down these accounts.

There are other digital assets that could also prove troublesome. If you rent out a room on Airbnb, the platform will continue making that room available for rent until someone shuts down the account. Your family could be at your home grieving and sorting your possessions only for an Airbnb patron to suddenly show up wanting access to the rented room.

Besides these accounts, you likely own Kindle books, iTune music libraries, and maintain subscriptions on Audible or Netflix. Unless you appoint someone to deal with these online accounts, they will likely continue charging bank accounts or accruing balances after you pass away, causing more issues that will delay the closure of your estate.

Other Options

There are other estate planning options that could be relevant to your situation. If your children have special needs or you are a trust beneficiary, you likely need to review your situation and create a more customized estate plan.

Planning now is a good precaution. At the very least, it starts a habit that will make wealth management easier as you become older. To start the estate planning process, contact Diane at Gruber & Associates to schedule a consultation.

Help! My Dead Relative Never Executed a Will!

No one is immune to dying without a will. Some people believe it is unnecessary and others never find the time to sit down with an estate planning attorney and make plans. The chances of you discovering that one of your loved ones fell into the same trap is fairly high, considering only 40 percent of Americans have a will or living trust.

The result of this discovery is extra work to top off your period of grief. Here is what to know when your loved one dies intestate in Oregon.

There are Big Differences

Estates are classified as testate or intestate. An intestate estate belongs to an individual who died without a will. The opposite is testate, which means there is an enforceable will in place at the time of death. The estate can also become intestate if there was a will but it failed to meet legal requirements.

Property distribution in intestate estates is determined by statutes, not the decedent’s preference. Even if family members proclaim to know what their loved one truly desired, that is not enforceable unless those wishes are documented in a will.

Property distribution procedure is the primary difference between an intestate and testate estate. Other differences involve administration.

With all probate proceedings, the Court appoints a personal representative (PR) to handle the estate. If there is a will, the court virtually always appoints either the primary PR or the alternative PR who is named in the will.  Since the deceased chose the PR and the will does not require a bond, the court will not require that the PR buy a probate bond.

In an intestate proceeding, the court chooses the personal representative. Normally, this duty is granted to a surviving spouse or child. If the decedent was not married and does not have children, the search will continue to find a suitable relative, even if that person has not seen the deceased for years. While there is more leniency to appoint a live-in partner or friend to this position, it is still done with resistance.

Intestate proceedings also require the PR to buy probate bond. Basically, this is an insurance policy, that protects creditors and heirs if the estate is mishandled. The amount of the bond is determined by the value of the estate, as well as the credit-worthiness of the PR.

When you start an intestate probate proceeding, be prepared to list potential personal representatives and pay for a bond. The first will be easier if you can get all relatives to agree to one person.  If not, a court hearing may be necessary before the judge chooses a PR.

Start Searching

To streamline the probate process, you need comprehensive lists of the following:

  • Possible heirs
  • Real estate holdings
  • Financial accounts, including checking, stock brokerage, and long-term savings
  • Personal property of note, including jewelry and art
  • Debts
  • Income tax records
  • Life insurance policies

Once probate proceedings have begun, you must alert possible heirs within 30 days and provide an inventory of property within 60 days. All creditors must also receive notice of the probate so they can file claims against the estate to pay off the decedent’s debts.

Intestate proceedings often take longer due to this step. People who do not draft wills also fail to communicate on what they actually own. If they were estranged from their family, they may never have communicated with their friends the identity of any family members or even where they live.

This often means hunting down information. If family is unknown, finding heirs is often dependent on published newspaper notices. Since few people share their financial information openly, you often have to request credit reports, search paper files, and review mail to collect a list of property and debts.

If the decedent was working at the time, you need to contact their workplace to see if there were any employer-provided retirement accounts or life insurance policies. Those assets may list beneficiaries who can receive the funds immediately and give you one less item to manage during the probate.

Looking around the decedent’s home, you may need to call in an appraiser to value any art, jewelry or other assets. It is better to assume something has value and discover it does not, than be accused of devaluing the estate later.

Many of these tasks cannot be performed until a personal representative is appointed. But if you can start making a list of what you do find before you start proceedings, it will make it that much easier to compile the required documents.

Consider Options

Depending on your discoveries, you may be able to avoid a full probate process.

This includes using a small estate affidavit. This is a streamlined probate process that addresses estates containing less than $200,000 of real estate and less than $75,000 of personal property or less that $275,000 of the two combined. If the estate meets these qualifications, you can probate the estate and transfer property with an affidavit rather than filing multiple documents with the court.

This often becomes possible because a decedent purchases mainly non-probate assets. If an account or real estate deed contains a joint owner with right of survivorship, those assets are transferred to the survivor immediately.  No probate is necessary. In fact, you do not even have to report them in a small estate affidavit.

If you believe the decedent does not own much in the way of assets, value the estate and talk with a probate attorney before filing anything with the court. That way, you can file the small estate affidavit rather than risking a full probate process for no reason.

Grief already makes the loss of a loved one difficult but when they die without a will, your work has unfortunately just started. In these instances, an Oregon probate attorney can make a big difference in assuring that the probate process goes as smoothly as possible.

Gruber & Associates, P.C. handles Oregon testate and intestate probates with confidence so you can worry less. Contact us today to schedule a consultation.