An estate plan is the legal documentation to carry out your wishes and distribute your property upon your death. An estate plan also includes planning to handle your affairs during any time when you are unable to do so, directions to medical care providers regarding decision making, and if you still have minor children, states your wishes as to whom you would like to care for your children if you should unexpectedly pass away. An estate plan will also be designed to minimize the impact of federal estate taxes, the Oregon inheritance taxes and other taxes that may be involved.
There are two basic types of estate plans. Both types work fine, but have different advantages. One type is based upon a legal instrument known as a “will” and is called a “will-based plan.” The other is based upon legal instruments known as a “living trust” and is called a “trust based plan.”
A will is a document that is signed by you and witnessed (in Oregon, two witnesses are required). Because it is you that is signing the will, you are known as the testator. In Oregon, a will must be probated after the testator dies. This requires filing a petition to initiate proceedings in circuit court. Those proceedings are known as “probate.” These proceedings are public. In Washington, the probate procedure is initiated in Superior Court. In Oregon, the probate procedure requires the filing of many different documents and the procedure is fairly complex when compared to that of some other states. However, there is a judge to oversee the procedures and this provides a measure of comfort to some people. Oregon allows for a stream-lined process for the “probating” of small estates by a small estate affidavit. Estates that are valued at not more than $140,000 qualify for this procedure.
One advantage of using a will-based plan is that the expense of preparation of a will-based plan is less. Another potential advantage is that some people are more comfortable having a judge oversee the administration of the estate.
Some disadvantages of using a will-based plan is that the proceedings are public (some people do not like this, whereas others do not care) and, except for the small estate streamlined procedure, the probate procedure is rather cumbersome. This adds some legal expense to the administration of the testators plan. The average cost to probate an estate is between 3% and 5% of the total value of the estate, and legal fees can add to this cost.
A living trust is a document which provides for the creation of a legal unit or “entity” known as a trust. Typically, under a trust based plan, most of the property of a couple will be transferred into one living trust for both spouses, or on occasion, two living trusts, one for each spouse. When you sign a trust document creating a trust you are the “trustor.” The trust documents will provide for a trustee who will administer the property during your lifetime, and this usually can be you for as long as you remain able to do so. In a typical situation, both spouses will be equal co-trustees for as long as they both are living. The living trust also provides for how the assets are to be distributed upon your death. One advantage of a trust-based plan is that the administration of the trust following death of the trustor is normally not public. There is usually no need to go to court. Also, if the trust instruments are drafted properly, it is relatively easy for a replacement trustee to take over the administration of a trust during the lifetime of the trustor if the trustor loses the ability to understand his or her financial affairs. It is likely that the legal expense associated with the administration of a trust after death is less than that associated with a probate court procedure. Also, because the administration of a trust tends to be less complicated in Oregon, it can be faster than the probate procedure. A disadvantage of a trust-based plan is that it is more expensive initially to set up.
It should be stressed that both will-based plans and trust-based plans are effective and acceptable estate planning forms.
Any estate plan should also include an Advanced Health Care Directive, which is a document that tells health care providers who is to make your health-care related decisions (when you are not able to do so) and provides guidance as to choices about tube feeding and life support. Additionally, with either plan, a Durable Power of Attorney is recommended so that your designated representative can take care of financial and other affairs if you were to lose the ability to manage those affairs. There are some other matters that should also be included in your estate plan, and a competent estate planning attorney can go over these matters with you.
Brad Schrock is an attorney in Beaverton, Oregon emphasizing Business Law, Estate Planning, and Personal Injury Litigation. Brad has in depth experience in probate proceedings and in trust administration. He has over 25 years of experience as an attorney. He also speaks Japanese and lived in Japan for six years during which time he was an attorney in the Toyota Group company Aisin Seiki, working in the Licensing Group of the Intellectual Property Department on international licensing, intellectual property and a variety of international business transactions. Brad was located in Kariya Japan, in Aichi Prefecture. Brad’s phone number is (503) 626–3087. The web site of the Schrock Law Office can be viewed at dev.schrocklaw.com. The firm handles business and corporate matters, licensing, intellectual property matters, business and intellectual property litigation, estate planning and personal injury litigation. Schrock law office serves Beaverton, Portland, the Portland metro area, and all of Oregon and Washington. Contact Beaverton attorney Brad Schrock with your estate planning questions today!