Estate Planning Lawyer Offers “Come-To-You” Legal Services Estate Planning
Salem Oregon Wills and Trusts Attorney Offers “Come to You” Estate Planning Services
An Estate Plan is More than Wills and Trusts
When people hear the phrase “Estate Planning” they think of Wills and Trusts. And if that is what you think of when you think of “estate planning” you are partially correct. However, estate planning is much more than Wills and Trusts. Estate planning includes developing a strategy to deal with the unexpected live events, that leave you or a loved one disabled on incapacitated. While a Will provides a document to ensure that whatever you own at the time of your death gets transferred to your loved ones in the manner that you have documented in your Will, other documents deal with preparation for the time during your life when you might need someone to make financial or medical decisions for you. Your life event planning includes a financial Durable Power of Attorney and a medical power of attorney, which in Oregon is called an Advance Directive. Further, you need a HIPAA Waiver and Release so that the agent you have selected to make medical decisions for you when you are unable to make those decisions, can have access to your medical records. A Trust on the other hand is both a living document and a wealth transfer at death document. You can place assets in Trust during your lifetime with a Trustee that you name, responsible for managing the Trust assets and accounting to Trust beneficiaries. Usually during your lifetime you will be the Trustee or have your spouse as the co-trustee. Some people prefer to have both professional management of investments and administration of the Trust and will appoint a corporate trustee. The incapacity or loss of a loved one is extremely stressful on a family.
Why Do You Need an Estate Plan?
What are some of the things you can accomplish by having an estate plan in place now, before one of life’s tragic events or death occur?
- Ensure that in the case of incapacity that someone you trust and is responsible can handle your financial affairs;
- Be comfortable with your choice of a loved one to make medical decisions for you when you cannot do so and if necessary to make those tough end of life decisions by following your instructions that you have identified in your Oregon Advance Directive;
- Know that to the extent possible those assets your worked so hard to acquire and available for the needs of your family are protected from creditors, predators, and frivolous lawsuits;
- That when your assets are transferred to your loved ones at your death, that they will be transferred in the most efficient manner with the minimal estate tax;
- Develop a plan to deal with the potential for long term care and the cost of a nursing home without draining your life savings;
- Selecting methods of providing for the guardian of your choice for your children if both you and your spouse should die at the same time, or when the surviving spouse dies;
- Naming the conservator for money left for minor children to insure that they are provided with basic needs, money if managed wisely, and funds can be used for your children’s welfare;
- Providing tax minimization strategies to help you and your loved ones keep as much of your assets in the family as possible based on your situation;
- If possible, avoid Probate with its long delays, public court process, and costs ranging from 2-7% of the gross estate value for the majority of estates;
- Provide for organization of documents, accounts, digital asset inventories, and preservation of family photos and special assets; and
- Making sure those family members with special needs are taken care of after you are no longer there to care for them.
Three Estate Plans Are Available for You to Protect Your Family
Whether you live in Oregon, Washington or California at the time of your death, you will have one of three estate planning programs in place at the time of your death. Those plans will be the State’s Plan, a Will and Last Testament Plan, or a Trust Plan. Let’s look at the Oregon law to understand how the three plans work.
State of Oregon Intestate Plan
If you fail to plan, you are not without a plan. The State of Oregon already has a plan in place for you. Instead of you making decisions of your personal representative, the disposition of your assets, and doing tax reduction planning, you let the State of Oregon make all the decisions for you. At the time of your death, your family will have to file a lawsuit in Probate Court, ask the Probate Court to appoint a personal representative, and let the Court determine how to apply the State of Oregon’s estate plan. If anything is left after court costs, attorney fees, representative fees, administrative expenses, and taxes, then any remaining assets will be distributed according to the State of Oregon’s statutory distribution scheme. Don’t be shocked, but the State of Oregon is not going to do any tax planning to minimize the tax you pay to the IRS or the Oregon Department of Revenue.
Your Last Will and Testament Plan
With your Last Will and Testament Plan you, rather than the State of Oregon make the decisions as to the disposition of your assets, who will be the guardian and conservator for your children, determine the person that will make medical and financial decisions for you if you become incapacitated, and you can structure your plan to minimize taxes. You accomplish you Last Will and Testament Plan by consulting with an experienced Will and Trust attorney who can advise you on the documents you need, how to structure those documents to accomplish what you intend, and advise you on tax planning. While planning with a Last Will and Testament shifts all the decision making to you and not the State or Oregon, planning with a Will does not avoid Probate. Your estate will still have to go through the public, time consuming, and costly Probate Court process. This plan will also let you make the choice of decision makers in the case your unexpected incapacity through other legal documents including a financial Power of Attorney, an Advance Directive, and a HIPAA Waiver and Release.
The Revocable Living Trust Plan
Trust are not just for the wealthy. Anyone who wants to keep their financial and family affairs private, control how assets are managed during your life and transferred at the time of your death, and manage assets to minimize taxes, will use the Revocable Living Trust Plan. If you select the Revocable Living Trust plan, you are not obligated to keep this plan forever. Revocable means revocable. You can make changes to the Trust or even revoke it in its entirety. You are in control. One of the benefits at the time of your death, the Trust property will pass privately per the instructions in your Trust and avoid Probate.
A Guardian and Conservator Can Only be Named in Your Will
Only the Court can actually appoint a Guardian or Conservator. Guardianship and Conservatorship require that someone file a legal proceeding in Probate Court so that the Court can appoint a person to be responsible either for the living standard and upbringing or the financial control of assets for the benefit of a minor or incapacitated person. The Guardian is appointed ensure that the child or incapacitated person’s personal needs are taken care of and see to their well-being. On the other hand, the Conservator is appointed to manage the person’s finances and property. The Conservator can also be the Guardian, or each position can be held by two different people. Only with a Will, whether it is a Pour Over Will used with a Trust, or a Last Will and Testament, can you let the Court know who you want to perform these functions if neither you nor your spouse is alive.
Why Work with Pike Professional Legal Services?
We are Different
Pike Professional Legal Services is a different type of law firm. We do not have fancy offices, high overhead, and a large staff. PPLS is a boutique law firm which address the needs of its clients in what is a client friendly, cost efficient, client convenient process.
I personally have practiced in the Northwest since 1985. I have worked with multiple million dollar estates and with modest estates. I know that the most important thing in providing an estate plan that carries out your wishes, and keeps your family from fights and arguments after your death, is to first learn your wishes, values, special situations, and concerns. I listen and will not rush this part of the process. That is one of the reasons, I offer an initial free consultation. During the initial consultation you can expect to discuss your desires and wishes, but you will also get all of your questions answered. I am not going to rush you through because the initial consultation is free.
I Come to You
Everyone in today’s world is busy. To accommodate my clients I come to them whether it be their home, office, retirement facility, or the local coffee shop. I also schedule evening and week-end appointments if my clients cannot be free during the work week.
Be a Hero to Your Family- Give Us a Call to See if Qualified Professional Assistance Can Help You Give Your Family an Estate Plan
If you live in the Salem Oregon, Beaverton Oregon or the surrounding areas pick up the phone and call me, Russ Pike, now-503.888.0952 to schedule a free consolation, When we meet I will give you a copy of my book, “Estate Planning for the Not Yet Wealthy.”
Advanced Directive or Advanced Medical Directive. A legal form that allows you to choose a health care representative and provide end of life health care directives to your physician. The person selected as your health care representative is given the authority to make medical decisions for you whenever you are unable to speak for yourself.
Annual Exclusion. The amount of property, valued up to $14,000 per year in 2016 that you are permitted to give away to any other person each year without incurring any gift tax or filing a gift tax return. There is no limit on the number of people to whom you can give gifts in each year. If you are married, both the husband and the wife can give up to $14,000 per year to any person without payment of gift tax.
Applicable Exclusion or Exemption. The value of the assets a person can have at the time of his or her death without incurring an estate tax. In 2016, the federal exemption is $5.45 million. Some states have their own inheritance or estate tax. In 2016, the inheritance tax exemption amount in Oregon is $1.0 million.
Attorney-in-Fact. Sometimes this is referred to as an agent. This is a person who is given written authorization by one individual to transact business as the agent for the first person. This power is given in a written document called a Power of Attorney.
Beneficiary. A person who is named to receive benefits. A person can be a beneficiary of a Revocable Trust, Irrevocable Trust, Last Will and Testament, life insurance policy, retirement account or investment account.
Beneficiary Designations. Beneficiary designations are forms which are used to designate how a specific asset will be passed to beneficiaries at your death. These beneficiary designations must be
in writing and often are required to be on specific forms. Beneficiary designations are used with life insurance, pension plans, 401k plans, IRAs, and annuity death benefits.
Capital Gain. A profit that results from a disposition of a capital asset, such as a stock, bond, or real estate, where the amount realized on the disposition exceeds the purchase price.
Charitable Gift. A gift recognized by the Internal Revenue Service to a legal charity. The charity must meet special requirements under the Internal Revenue Code. If the requirements are met, the gift will be deductible for income and estate tax purposes.
Charitable Trust. A charitable trust is created for the benefit of a legal charity. Trusts can be created that provide an income to you during your lifetime with the remainder assets going to the charity upon your death or income can be provided to the charity during your lifetime with the remainder assets going to your beneficiaries at the time of your death.
Claw Back Rule. If you are transferring an existing life insurance policy to a trust and you die within three years of the date of the transfer the policy, the policy proceeds are pulled back into your estate for federal estate tax purposes and for Oregon tax purposes as if you had remained owner of the policy.
Community Property. A way of owning property under the law of the minority estates. Under community property law, when a married couple acquires property, each spouse is considered to own a one- half interest in the property.
Computer Fraud and Abuse Act (CFAA). An amendment to existing computer fraud law enacted by Congress in 1986. The CFAA was written to clarify and increase the scope of the previous version the law and also criminalized additional computer-related acts.
Credit Shelter Trust. A trust that is established at the time of death to hold assets that do not qualify for the marital deduction. The Credit Shelter Trust takes advantage of a person’s lifetime exclusion and bypasses the surviving spouse’s taxable estate and is not subject to estate taxes. The Credit Shelter Trust may be for the benefit of the surviving spouse, the decedent’s children, and other beneficiaries. While all the assets are not subject to inheritance tax and estate tax, when the assets are transferred to the beneficiaries upon the second spouse’s death, the assets carry a cost basis to the beneficiaries and not a stepped-up fair market value basis.
Decoupled. The Oregon inheritance tax exemption amount has been $1.0 million for many years and there is no indication of change in the future. This creates a gap in the exemption amount created by the “decoupling” of the federal estate tax from the Oregon inheritance tax. The gap in 2016 is $4.45 million.
Digital Assets. Anything that is stored in a binary format and comes with the right to use, such as images, multimedia and textual content files (examples: email accounts, social media accounts, photo and video sharing accounts, music accounts, cloud storage, blogs, eBook accounts, video game accounts, online financial information).
Disclaimer. A refusal to accept an inheritance the beneficiary is entitled to receive. The disclaimer by the beneficiary currently must be made within nine months of the date of death.
Discretionary Trust. A trust where the beneficiaries do not have a fixed entitlement or interest in the trust funds. The trustee has the discretion to determine which of the beneficiaries are to receive the principal and income of the trust, and how much each beneficiary is to receive.
Durable Power of Attorney. A financial Power of Attorney is a legal document that authorizes someone to legally “step into your shoes.” You can authorize your agent to do such things as sign checks and tax returns, enter into contracts, buy or sell real estate, deposit or withdraw funds, run a business, or anything else you would do for yourself. This Power of Attorney can be effective when the document is signed or it can “spring into effect” when you become disabled or incapacitated.
Executor. A person or institution appointed by a testator to carry out the terms of their Will. The term varies among different states and the person is often identified as an administrator or personal representative.
401(k) Plan. A feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts on a tax-deferred basis.
Fiduciary. A fiduciary is a person held to a higher standard of responsibility and duty in a position of trust. Fiduciaries include the executor of a Will, the trustee of a trust, an agent under a Power of Attorney, or anyone responsible for holding or managing assets of another person.
Generation-Skipping Transfer Tax. A tax assessed on gifts in excess of the exclusion amount given to grandchildren, great- grandchildren, and others at least two generations below the individual making the gift. Some states have a generation-skipping transfer tax, and other states do not have this tax.
Gift Tax. A federal tax that taxes the value of a gift when it exceeds both the annual gift tax exclusion ($14,000 per person in 2016) and the applicable lifetime gift tax exclusion amount. There is a variance among states, with some states having a gift tax and other states not having a gift tax.
Grantor-Retained Annuity Trust. A trust that provides for lifetime transfers designed to save taxes, avoid probate, and transfer property to your heirs upon death. This is an irrevocable lifetime trust that permits you to enjoy some use of the transferred assets, avoid probate, and save estate taxes. Generally, these trusts can be structured so that you receive income for a period of years.
Guardian. A person who cares for and is legally responsible for someone who is unable to manage their own affairs, such as an incompetent or disabled person or a minor child whose parents have died.
Health Insurance Portability and Accountability Act (HIPAA). Federal privacy rule first passed by Congress in 1996 which provides important privacy rights and protections with respect to the dissemination of your health information. HIPAA also provides the ability to transfer and continue health insurance coverage for millions of American workers and their families when they change or lose their jobs
Heir. A person who receives the property or assets of a deceased person. Property can be received by Will, trust, or intestate.
Incompetence Proceeding. A legal process in a probate courts which guarantees the allegedly incompetent person due process of law.
Irrevocable Life Insurance Trust (ILIT). An irrevocable trust used to hold a life insurance policy. The proceeds of the life insurance policy are not part of the deceased person’s estate and thus, reduce estate taxes.
Irrevocable Trust. A trust that cannot be changed.
Joint Tenancy. A method of holding property in joint names. It can be for two or more people with the survivor having automatic ownership of the property after the death of the other owner. This method can be used to avoid probate.
Limited Liability Company. A form of entity that provides for limited liability for all investors with an income flow through to the investors. A limited liability company is similar to a partnership. Limited liability companies provide options for business and estate planning. Whether it is a limited liability company or a family limited partnership, businesses must have written agreements concerning ownership, operation, management, and transfer of interest.
Limited Liability Partnership. A partnership that limits the risk that a general partnership would have. This form of business is often used to transfer business assets to children at a discounted value.
Long-term Care Insurance (LTC or LTCI). An insurance product which helps provide for the cost of long-term care beyond a predetermined period. Covers care generally not covered by other health insurance, Medicare, or Medicaid.
Marital Deduction. The unlimited amount of assets that can be transferred from one spouse to another during life or at death of the first spouse without incurring any gift or estate tax cost.
Minor Trusts. Irrevocable trusts used to transfer assets from your estate to make gifts to minors while retaining control. Income and principal may be accumulated or distributed. The trust must terminate, and all trust assets distributed to the child upon reaching age 21 unless the child voluntarily consents to allow the trust to continue. Individuals often use the annual gift tax exclusion to make gifts to a minor trust.
Non-Probate Assets. Assets that transfer automatically on death such as pay on death accounts, joint tenancy property, retirement accounts.
Pay on Death Account (POD account). A special type of financial account that transfers the account to the designated person on the first death.
Pour-Over Will. A Will that transfers your assets at death to a Trust. The Trust must be in existence at the time of death. The Will pours over the assets to the trust through the state probate process.
Probate. A court process by which a person’s Last Will and Testament is proven valid or invalid. Probate is the legal process wherein the estate of a decedent is administered. Even if there is a Will, the estate must be probated. During the Probate process the court has the assets inventoried, creditors are notified and requested to make claims.
Qualified Domestic Trust (QDOT). A trust that is used along with a QTIP trust when one spouse is a non-citizen of the United States. The QDOT trust requires that if a surviving spouse is a non-citizen, the trustee must be a citizen of the United States in order for the trust to qualify to defer estate taxes.
Qualified Sub Chapter S Trust (QSST). Businesses can be run as a sub-chapter S corporation. Upon death, an S corporation election is terminated if it is acquired by a non-qualified shareholder. If a trust qualifies as a QSST, and a timely election is filed with the Internal Revenue Service, a trust can hold stock of an S corporation without the corporation being disqualified for a limited period of time.
Qualified Terminal Interest Property Trust (QTIP). A trust that requires the surviving spouse to receive all income from the trust at least annually that upon termination transfers the trust assets to persons designated by the deceased individual. This trust qualifies for the unlimited marital deduction. Trust assets are included in the taxable estate of the second spouse to die.
Required Minimum Distributions (RMD). This is the amount that the federal government requires you to withdraw annually from your 401k plan, traditional IRAs, and employer-sponsored retirement plans.
Revocable Living Trust. A trust created while a person is alive. It can be amended, changed, terminated any time while the trustor or maker of the trust is competent. This is often referred to as an inter vivos trust. The trust becomes irrevocable upon your death.
Self-Cancelling Installment Note (SCIN). A technique used by estate planners when transferring a family business from one generation to another involves selling the business in exchange for a self-cancelling installment note (“SCIN”). A SCIN is a debt obligation which, in the event of the death of the seller/creditor, will be extinguished with the remaining note balance automatically canceled.
Spendthrift Trust. A trust created for the benefit of a person (often unable to control his spending) that gives an independent trustee full authority to make decisions as to how the trust funds may be spent for the benefit of the beneficiary.
Spousal Share. Some states, including Oregon, have statutes that require that for married couples, a minimum percentage of the assets of the first spouse to die are transferred to the surviving spouse.
State Estate or Inheritance Tax. Many states have decoupled from the federal estate tax system and individuals in those states are subject to both federal and state estate or inheritance tax. The treatment of taxes varies from state to state because of federal tax credits and the different state laws. For example, in Oregon, there is a $1.0 million exemption for state inheritance taxes, but there is no gift tax.
Stretch-Out. The IRS has provided an option that will allow a stretch out of inherited qualified plans or IRAs to allow the plan assets to accumulate tax deferred and avoid immediate income and estate taxes. A benefit of qualified plans and IRAs are tax deferrals which maximize the growth of assets within the plan.
Tax or Cost Basis. This is a term used for tax purposes that is used to compute the taxable gain for income tax purposes on the sale of property. Assets that are in the estate of the deceased person at the time of death take the fair market value of the assets at the date of death or six months after the date of death, whichever evaluation date is elected. This means that the appreciation of assets in an estate is not subject to federal income tax if passed to the beneficiary at the time of death. On the other hand, assets in a credit shelter trust are not subject to estate tax at the death of the second spouse, by they do not get the advantage of the step-up in basis to the fair market value.
Testamentary Trust. A trust that becomes effective upon death.
Trust. An agreement when one person holds property for the benefit of another. The person creating the trust is the trustor, grantor, or settler, depending on the particular state. The person with a fiduciary duty holding the property is called a trustee. The person or persons for whose benefit the property is held is called the beneficiary. The trustee holds legal title to the property, and the beneficiary holds equitable title to the property. The document establishing the trust is called the trust agreement. A trust can be effective during the trustor’s life (inter vivos trust) or become effective upon the trustor’s death (testamentary trust). If a trust can be revoked or modified, it is a revocable trust. If a trust cannot be revoked or modified, it is an irrevocable trust.
Trustee. The fiduciary who holds legal title to trust property and who is responsible for managing the trust assets.
Uniform Gift to Minors Act. A method of transferring assets to minors during your lifetime, which requires mandatory distribution to minors at a certain age.
Uniform Trust Code (UTC). A law in the United States, which, although not binding, is influential in the states, and used by many as a model for their law. A majority of states have adopted some substantive form of the UTC.
Will or Last Will and Testament. A legal document that transfers property at a person’s death to those individuals he or she has designated. A Will only affects property owned at the time of death. Usually, a person will appoint an executor to manage his estate in the Will. If there is a conflict between a beneficiary form and a distribution in the Will, the beneficiary form designation will prevail.
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