What is Estate Planning?
Estate planning is the process of identifying problems and issues that might arise in the event a client dies or becomes disabled and creating solutions that address those problems and issues. One of the challenges in estate planning is that we are typically planning for situations in which the client doing the estate planning is not able to make decisions on his or her own.
Estate planning typically involves:
What is the Best Time to Do Estate Planning?
Normally, the best time to do something is whenever it needs to be done. Estate planning does not work that way. The best time to do estate planning is BEFORE you need it. In many instances if you wait until you need an estate plan to prepare an estate plan, you will not be able to prepare one. This is because much estate planning involves preparing for situations in which a client due to death or disability is not legally able to create an estate plan. Typically, most people create an estate plan or review their estate plan when something significant has happened in their lives: A marriage, the birth of a child, enlistment in the Armed Services, establishing one's own home, prior to a long trip, when diagnosed with a serious illness, or upon retirement. While this is when many people prepare or update their estate plans, the best time to prepare or update your estate plan is BEFORE its needed.
How Does Estate Planning Work?
Attorneys who do estate planning do it in a variety of different ways. This is how I operate:
1. Initial Consultation
I meet with you and if you are married, I meet with you and your spouse. We can meet at my office or we can have a virtual meeting. The purpose of this meeting is to review the basic issues addressed by estate planning, to review the estate planning tools available to address these issues, to discuss your estate planning goals, to review your situation, to answer your questions, to offer you a recommendation and to quote a price for the work I am proposing to do for you. If acceptable, I will send you a written legal services agreement for you to review and sign and return to me for my signature. I will also send you an intake form for you to complete. This form provides me with information I need to prepare your estate plan. I will also provide you with an advance directive form for you to review and use as a worksheet. At the end of our meeting, we will set a date to review a draft estate plan.
2. Preparation of Draft Estate Plan
Once I have received a signed legal services agreement, a retainer check, a completed intake form and any other information that I may request, I will prepare a draft estate plan. I will send the main draft estate planning documents to you for your review.
3. Review Meeting
Our review meeting can be held in person or as a zoom meeting. At this meeting, we will discuss the draft documents, I will answer any questions you may have, and you will advise me of any corrections or revisions you want me to make. The goal of this meeting is to address any issues related to the draft estate plan and deal with them. In this way when the time comes to sign the estate planning documents all you need to do is sign. We then set a date for the signing.
4. Put Estate Plan in Final Form
I will make any revisions or corrections that need to me made. I will arrange for witness and make other arrangements for the signing.
The signing will occur at my office. Face masks are required. The signing occurs in our conference room. It is equipped with plastic shields to separate the participants. Prior to the meeting, the chairs and tables are wiped with a disinfectant. The estate planning documents are signed. The client receives the original documents and a copy. I keep a copy in my file. The client receives a letter relating to the estate plan which the client can refer to in the future. The client also receives a "to do" list of things that need to be done after the signing. Any additional questions the client may have at this time are addressed.
If as part of the estate plan the client has signed a deed, unless the client chooses to make other arrangements, after the signing, I arrange for that deed to be recorded.
How Much Does Estate Planning Cost?
The cost depends upon what the client decides to do. There are two different methods for determining the fee. The attorney can charge on an hourly or a flat fee basis. Each method has its merits. When using an hourly fee basis, the client fee is based upon the time that the attorney spent working on the estate plan. The more time the attorney spends working on the estate plan, the higher the fee. This is a fair and reasonable basis for compensation. The problem with charging on an hourly fee basis is that no one knows what the estate planning will cost until the work is completed. In a litigation matter this is fair becomes the amount of time spent on a matter can vary greatly from case to case. Most estate planning clients want to know in advance what the estate plan will cost. Given the transactional nature of estate planning, charging a flat fee for services rendered is something that can reasonably be done.
Whenever possible, I do estate planning on a flat fee basis. Typically, my legal services agreement for estate planning will state exactly how much I will be charging you for your estate plan.
One of the advantages of charging on a flat fee basis is that the client is free to ask questions and express concerns without wondering how much each communication will cost. This is possible because these discussions are expected and can be reasonably factored into the determination of the amount of the flat fee.
If the estate plan involves costs paid to someone other than me for services rendered as part of the estate planning, that cost is NOT included in the flat fee. For example, if the estate plan includes the preparation of a deed, my work on the deed is included in the flat fee. However, the cost of recording the deed, which is paid to the county where the property is located, is not included in the flat fee.
What is Meant by a "Decedent's Estate?"
For estate planning purposes, the person who has died is referred to as the "decedent." All the property owned by a decedent at the time of the decedent's death and all property passing to someone else as a consequence of a decedent's death (for example, life insurance) make up the "Decedent's Estate."
How Can My Estate be Transferred to Other Persons Upon My Death?
A Decedent's Estate is transferred to others my operation of law, by means of a revocable living trust or by probate.
What Does Transfer by Operation of Law Mean?
Transfer by operation of law refers to a transfer of ownership or cash without having to create something like a revocable living trust or having to go through probate. For example, if a married couple holds title to real property as husband and wife, upon the death of one of the spouses, title to the property goes to the surviving spouse without the need for a revocable living trust or probate. Another example, if there is life insurance, the cash benefits of a life insurance policy pass to the beneficiary without the need for a revocable living trust or probate. In creating an estate plan for you, we identify all the assets in your estate that will not pass by operation of law and will require a revocable living trust or probate to be transferred from your estate in the event of your death.
What is Probate?
Probate is a mechanism that is used to transfer property from a Decendent's Estate that cannot be transferred by a revocable living trust or by operation of law. Probate is a court case. You begin a probate by filing a petition with the court. There is a set procedure established by the court for processing an estate through probate. It involves the appointment of a personal representative who administers the Decedent's Estate as it goes through probate. The probate administration process involves providing notice, creating an inventory of the Decedent's submitted Estate, identifying and paying the debts and claims against the estate, managing the assets while they are subject to probate, and distributing the assets to heirs or devisees of the estate as directed by the Probate Court based upon the decedent's will or by Oregon intestate succession law subject to Oregon law.
What is a Will?
A will is a legally enforceable document expressing what the person wants done in the event of that person's death.
Some important facts regarding wills:
1. Wills are Not Self Executing
Generally speaking a will has no force and effect until the person creating the will dies and the will is submitted to a court for probate. This is because it is the probate court that establishes that a particular document is the last will and testament of the person who died. Bottom line: Wills and probate go together.
2. A Will Does Not Control Property Passing by Operation of Law.
Basically, a will directs the distribution of a Decedent's Estate that cannot be distributed any other way. For example, if you have an investment account that names A as the beneficiary of the account and you later create a will leaving everything to B, upon your death, the balance of the investment account goes to A, not B.
3. Reasons for Creating a Will Other Than the Distribution of Property
A will can be used to nominate a guardian for minor children. This is subject to the approval of the court, but a court is required by law to consider the preference of a parent as expressed in a will.
In a will, a person can state who that person wants to serve as personal representative for that person's estate. A personal representative has a very important job. The person nominated as personal representative in a will is typically the person who gets the job.
What is a Revocable Living Trust?
If an adult becomes disabled and is legally unable to manage the adult's property, a court will appoint a conservator to manage the assets for the disabled adult. If an adult person dies leaving assets in the decedent's estate that cannot be transferred by operation of law, then the decedent's estate is submitted to probate to manage and distribute those assets.
A revocable living trust is a trust that is designed to manage and transfer assets in such a way as to avoid the need to create a conservatorship or submit a Decedent's Estate to probate. This is done by creating a trust during a person's lifetime and then transferring a person's assets into the trust. The trust is governed by a trust agreement. In the event the person creating the trust becomes legally unable to manage the person's property or dies, a successor trustee named in the trust agreement steps in and manages the assets in the trust as provided for in the trust agreement without the involvement of the court.
How Large Does an Estate Have to be to Require the Creation of a Living Trust?
The size of the estate is generally not the deciding factor. The question is not how big the estate is, but rather the question is whether or not it would be advantageous to manage the estate through a revocable living trust. A relatively small estate with real property in more than one state which would be subject to a probate in each state where property is located may have a more compelling reason to be managed through a revocable living trust than an very large estate consisting of cash which will pass without probate by operation of law. Parents of small children who own real property may be attracted to a revocable living trust because in the event of the death of both parents a successor trustee will be able to immediately begin managing the assets in the trust for the benefit of their children. A revocable living trust is a tool. The question is whether or not it would be useful to use that tool.
How is a Revocable Living Trust Better Than a Will?
It is not a matter of whether a Will is better than a Revocable Living Trust. The question is which one would be more useful in a certain circumstance.
A revocable living trust is preferable if:
How is a Will Better Than a Revocable Living Trust?
Again, it is not a matter of whether a Will is better than a Revocable Living Trust. The question is which one would be more useful in a certain circumstance.
A will is preferable if:
What is a Durable Power of Attorney?
A durable power of attorney is designed to avoid the need to go to court to create a conservatorship. It creates a principal / agent relationship. The person creating the durable power of attorney names an agent and gives that agent the authority to do the things set out in the durable power of attorney document. The agent is given the power to continue to do these things even though the principal who created the durable power of attorney may become legally disabled and no longer able to make these decisions. This the “durable” in the durable power of attorney. The powers granted an agent in a durable power of attorney may begin immediately or may “spring” into action in the event the principal becomes legally disabled. In either case, the powers granted an agent in a durable power of attorney terminate with the death of the person who created the durable power of attorney.
What is an Advance Directive?
An advance directive is a statutory form established in Oregon to deal with a situation where a person is disabled and unable to direct his or her own health care. This becomes a serious problem in situations where the decision that needs to be made is whether or not to continue treatment for a person who is disabled and the person is legally unable to make this decision. The advance directive is intended to avoid the need to litigate this question. In the event of litigation, the advance directive could be presented to the court as an expression of the disabled person’s wishes. An advance directive appoints a health care representative to act on a person’s behalf and provides instructions to the health care representative. Under the current form, a person creating an advance directive can specify whether the health care representative must strictly follow these instructions or may refer to the instructions as guidelines.
Are Estate Taxes Still an Issue?
Yes! The federal estate tax exemption is now so large that very few estates in the entire nation are large enough to pay it. However, the Oregon estate tax exemption, while substantial, it is low enough that many estates may still be subject to that tax.
Why Do I Like to Do Estate Planning?
The vast majority of people who do estate planning do it out of concern for other people. It is always a pleasure to work with people like that.
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