Privacy, taxation and preparation considerations everyone should think about
Estate planning may sound like a process for the wealthy, says Carolyn W. Miller, a Portland-based estate planning attorney, but it’s something everyone should consider.
“If they die without a [plan], the default is their estate will be distributed according to state statutes,” says Miller, the Oregon state chair for the American College of Trust and Estate Counsel.
Picture loved ones in the middle of the grieving process dealing with:
It happens all the time, says Eden Rose Brown, an estate planning attorney with offices in Portland and Salem. But it is avoidable.
A standard will vs. a living trust
“It is about providing the maximum amount of control to you and your loved ones instead of giving control to lawyers and judges,” Brown explains.
Rather than a standard will, Brown recommends creating a living trust. The difference? A will typically requires the involvement of probate court and may not control all the person’s property.
“A properly funded living trust provides one seamless blueprint for the entire estate,” she says. “If you just do a will, you are guaranteed to go into [probate] court.”
Trusts also allow for all sorts of concerns, such as making provisions for disability and specifying how and when to distribute inheritances to heirs. And they leave a trustee, rather than the court, in charge.
“If the person who creates the trust dies, all of the assets are owned by the trust,” says John H. Draneas of Draneas & Huglin in Lake Oswego. “The appointed trustee [then] steps in and makes the distributions without having to go through the probate process.”
When is a will the more appropriate choice? Draneas says that creating a trust costs about $500 more than a will, but adds that the probate process that comes with a will can generate another bill of about $5,000.
“The math is not necessarily the same when you are young, as the probate savings come pretty far into the future,” he says.
Privacy concerns and estate taxes
Trusts are also ideal for anyone with privacy concerns, because wills, by law, automatically enter probate court, where everything automatically becomes public record. “If you don’t want your financial affairs becoming public record, that justifies the trust,” Draneas says.
He also explains that once your estate enters probate, it can be disputed. “One thing that happens a lot now,” says Draneas, “is there are unscrupulous people who search probate records and find documents; and then they come knocking on your door.”
The government stakes its claim, too. In Oregon, anyone with a net estate worth more than $1 million may be liable to pay estate taxes upon death.
A knowledgeable attorney can help minimize some of these taxes. Estate specialists have experience dealing with complicated scenarios, like blended and alternative families, and what to do when someone owns assets in two or more states. (Laws vary state-by-state; and unlike Oregon, many states do not impose estate taxes.)
How to prepare
Clients can help make the most of the process with advance preparation, Brown adds.
In addition to providing attorneys with copies of all relevant documents—deeds, investment accounts—she asks clients to complete a detailed questionnaire, attend a new client workshop and plan for extended meetings so she can get to know the individual and the family.
“Estate planning is not just about saving taxes and passing on one’s valuables,” she says. “It’s also about stewardship, asset protection, preserving family harmony and passing on values.”
“A properly funded living trust provides one seamless blueprint for the entire estate. ... If you just do a will, you are guaranteed to go into [probate] court.”