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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 Diane L. Gruber 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 L. Gruber, Attorney at Law to schedule a consultation.

Your 2018 Oregon Estate Planning Checklist

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.

Non-Probate Assets: Quick Money For Your Loved Ones

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.

Joint Ownership

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.

Life Insurance

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.

Retirement Accounts

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.