Wills vs. Trust III: What Do You Need in Oregon? A Will or a Trust?
This is the final installment of the Wills vs. Trusts series and it is clear that Oregon probate law can be ruthless to those who do not create a written estate plan. It also imposes serious impacts if clients do not create an estate plan that is right for them.
Who needs a Will
The general answer to this question is “everyone!” You would be hard-pressed to find someone who would benefit from dying without a will and allowing their estate to be distributed according to statutes. Even if you have a small estate, you can streamline into a type of mini-probate and having a will makes that process that much easier.
However, there are also specific groups of people where a will is absolutely crucial.
Besides determining the distribution of your property, a will also lists the guardians of your children. You can choose who you prefer for this designation and also alternative guardians if new circumstances make it impossible for the original guardians to take custody.
Without a will, the court determines guardianship through a legal process which will be unbearable for your children. Also, if you are estranged from your family and prefer a friend or live-in partner to assume custody, that may not occur if you do not document your wishes in a will.
So if you have children, draft a will according to the guidelines in Oregon probate law and assure your children are in good hands if anything happens to you.
Those with Charitable Plans
If your only surviving family members are third cousins in Ottawa and you prefer your estate is distributed to the Oregon Historical Society, the only way that will happen is with a will.
Dying without a will places your estate under the guidance of the Oregon intestate statutes. These rules only allow distribution of your assets to family members. Even if a sympathetic friend or relative can prove your preferences, the court will not distribute to a charitable cause under the intestate statutes.
This is true even if your charitable gift is small, like $350 to the Oregon Humane Society. Your wishes for charitable giving will not be honored unless you have a will.
People in High-Conflict Families
Contrary to popular belief, wills reduce rather than cause conflict. Death often brings out the worst in people even in well-adjusted families. In families full of fighting siblings and grudges dating to 1982, these squabbles may evolve to full war.
It is easier to dispute an unclear will or intestate distribution than it is to fight a clearly drafted will that meets all requirements under Oregon probate law. If for example, you know your two children will fight over your classic car, your will can designate one child as the owner of it or you can instruct your personal representative to sell the car and split the proceeds. That level of clarity makes it impossible for a challenge and reduces the amount of time the distribution of your estate is tied up in court.
Who needs a Trust
While wills help everyone, trusts are designed for specific situations. As mentioned in previous articles, there are industries that push trusts and for most people, they are expensive and clumsy vehicles with few advantages. If you fall under any of the following categories, though, a trust may offer advantages.
Parents with Special Needs Children
If you have children who will never reach independence, allowing them to inherit directly from a will is dangerous. Large cash payouts from life insurance or a property distribution may cancel out needed benefit programs. Add this to the likelihood that your dependent children may not spend the money wisely and they face higher chances of poverty.
A special needs trust allows you to use your property for the support of your children with special needs while preventing the squandering of your estate or the loss of their government benefits. It is the best way to assure the needed support when you are no longer around to provide it.
Those with Adult Dependents
The same situation is true if you have adult dependents who are not your children. You may be part of a growing group who also cares for elderly relatives. Just as with any children with special needs, a direct payout to these dependents can eliminate their government benefits.
A trust allows these individuals to benefit from your estate while still receiving retirement income and medical benefits. This may not be possible if you allow for a direct payout from a will or life insurance policy.
Anyone Who Wants to Keep Assets Private
Any information filed in a probate proceeding is public. Inquiring individuals can visit the courthouse and pull information regarding real estate, personal property, and even amounts lingering in bank or investment accounts.
This is often a concern for high-profile people but also those who went through a nasty divorce or have estranged relationships with family members. It can reduce conflict if you keep your property interests private and unavailable.
However, keep this in mind. While your probate proceeding will be public, it does not expose sensitive information like social security or account numbers. If that is what you are most concerned about privacy-wise, you do not have to be concerned about probate. But if your circumstances are more sensitive, a trust will keep your estate confidential.
Those Facing Estate Taxes
Trusts are most frequently used to control the possibility of estate taxes. In Oregon, any estate valued below $1 million is not taxable. But if a value assessment reveals that your estate is currently worth more than that or has the possibility of reaching that mark, a trust may offer needed tax protection.
Anyone Owning Out-of-State Property
If you own a vacation home or land in another state, your personal representative will have to file an additional probate proceeding to allow it to be liquidated or passed on to a new owner. Placing it in a trust avoids that extra step.
Another solution is to place a joint owner on the property title. If the out-of-state property is the only reason you would benefit from a trust, this is a better solution.
When you visit an estate planning attorney in West Linn, OR she will review your assets, their value, and your preferences for distribution. Depending on your circumstances, you may benefit from a will, trust or a combination of both. Estate planning is flexible in that it can be customized to your individual circumstances so your family benefits from Oregon probate law rather than faces hassle.
Diane L. Gruber, Attorney at Law, serves estate planning clients in Washington, Multnomah, Marion, and Clackamas counties. Contact us today to schedule an appointment.