Estate Planning: Is it for me?

I frequently meet people outside the office who don’t have estate planning.  Many of them feel that it isn’t “necessary” at this point in their lives.  Commonly, these couples or individuals are parents, who have children under the age of 18.  My conversations with these individuals generally follow the same scenario:

At atwocartoongents-800pxn event earlier this year, a friend mentioned that he didn’t have a will because he didn’t need one.  That led to this exchange:

Me:  “Your divorced?

Him:  “Yes.”

Me: “You own your house?”

Him: “Yes.”

Me: “You have life insurance?”

Him: “Yes.”Retro beer man

Me: “You have retirement accounts?”

Him: “Yes.”

Me: “Do you want your ex-wife to be responsible for your money if you die and your kids are under 18?”

Him: —Big drink of beer, without an answer.

I hope I gave him something to ponder.  Many people under the age of 50 think that they don’t “need” estate planning because they don’t have “anything”.  However, the what you have doesn’t matter, so much as the what happens to the “nothing” that you have?

The costs associated with not having an estate plan significantly outweigh the costs of having a plan. If you pass away while your children are under 18 and no planning in place, a conservatorship will most likely be necessary to manage the property that you intend to pass to your children.

Conservatorships are Expensive.

If you pass away with minor children, do you want your $250,000.00 life insurance policy to be tied up in a conservatorship that will end up consuming between $20,000.00 to qtq80-okMAli$30,000.00 of those proceeds in attorney fees and filing fees?  The average cost of setting up a basic conservatorship for a minor child is between $2,000.00 on the low end and $3,500.00 on the high end, assuming there are no complications (when an attorney says this, he/she knows that there will be complications, there always are).  Annual accountings and other reporting requirements will run around $1,500.00 to $2,500.00 per year – again assuming no complications.

Who Manages Your Kids’ Money?

Although costs are important, the scarier proposition is that your ex will be managing your money again.  You divorced for a myriad of reasons, and you may not trgreedy manust your ex with your money.  It’s not an absolute, but there is a good chance that your ex will petition the court to be appointed conservator of her child’s estate.  Your parents may petition too, but for many people that isn’t an option, or it’s scarier than having your ex serve as conservator.

If your married and something happens to both you and your spouse, a conservatorship will also need to be established to manage the estate for your children.  Again, you will have no input into who manages this money for your child.  A professional conservator may be appointed, which results in additional fees and costs.

Child Turns 18, Now What

After I walloped my friend with points 1 and 2, I knocked him out with point 3.  Without a properly drafted will, your kid gets his or her share of your estate when he turns 18.  Just imagine the D&B (Dave & Busters) points he can earn with $125,000.00 100,000.00

(don’johnny-automatic-bag-of-money-800pxt forget to subtract attorney fees and court costs).  The claw machine never had it so well.  While some people’s kids may be able to make wise financial decisions at age 18, that is not always the case.

Seriously, imagine yourself at age 18 with $10,000.00 let alone $100,000.00.

So what can you do to avoid this result and enjoy an evening when you’re out with me…

Call my office at 503-668-3558.

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Probate flowchart*

Probate can be confusing.  There are deadlines and time requirements and sometimes it seems to go on and on.  Below is a helpful chart that outlines the basic probate procedures in Oregon.  While the chart does not cover every possible aspect of probate, but is a great reference tool to understand where you are at the in the process.  Our goal at Tillson Law P.C. is to provide you with assistance and guidance every step of the way.

Download (PDF, 58KB)

 

*Disclaimer (because we are a law office!):  This chart does not reflect every possible probate scenario.  It should only be used as a guide to understanding probate.  There may be additional requirements and/or deadlines that need to met in the probate of an estate.  Consult with an attorney to ensure that you are fulfilling your duties as a personal representative.

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Where there is a Will there is a Way!

Most potential clients that call our office start the conversation by stating “I need a will!”  They are searching for peace of mind in knowing that upon their death their property transfer where they want and to who they want.  Tillson Law P.C. is here to help you do just that.  However, our job isn’t just to draft a document and see you on your way.  Rather it’s to figure out why you need a will; get you to understand what a will is and what it does and doesn’t do; and have you execute your will correctly.

“My will avoids probate”

No. In fact, the exact opposite is true.   Your will is a dormant document until you die and courthousesymbol-800px(1)it is admitted to probate by a court.  We will frequently meet with clients after a loved one has passed, review the deceased’s assets and determine that no probate is necessary.  This occurs when someone passes away with assets that are jointly owned with another individual or have payable on death or transfer on death accounts.

For example, if your estate consists of IRAs with beneficiary designations, no probate is necessary.  A husband and wife own their real property as joint owners, no probate is necessary upon the first spouse’s death.  However, following the surviving spouse’s death, probate may be necessary to transfer that property to the beneficiaries designated in your will.

The will really has no power until admitted to probate by a court of competent jurisdiction.  There is no requirement to probate a will; therefore, if you don’t have any probate assets your will is never used.

 “But my will says…”

Estate planning doesn’t just mean drafting a will and sending you on your way.  A great deal of time is spent finding out about your finances and assets.  We do this for multiple reasons; to make sure that you are getting an estate planning package that adequately meets your needs and to make sure that your accounts with beneficiary designations reflect your estate planning intentions.  Issues arise when your will says one thing but your beneficiary designations say something different.

Say you have a minor child.  We draft your will to include a trust for minors so that your 10 year old son doesn’t inherit your estate until he turns a certain age, say 25.  You have a life insurance policy for $1,000,000 that states the death beneficiary is your wife and the contingent beneficiary is your son.  If you and your wife are tragically  involved in an accident when your son is 18, then the beneficiary designation controls and he receives the $1,000,000 in life insurance proceeds at the age of 18, not the age stated in your will.  This is not what you intended.  Nor is it what we would recommend.  Coordinating the beneficiary designations in your will and non-probate assets is a significant part of what we do as estate planners.

“I don’t understand what this says”

People are intimidated by legal documents.  Even lawyers will readily admit that they often sign on the bottom line without reading the fine print; because they know the legalese in most contracts is nearly impossible to understand.  This type of language shouldn’t be in your headscratcher-300pxwill. “Per stirpes”? What does that mean?  Issue? Why can’t you just say children or descendants?

Wills can be confusing and difficult to understand.  That’s why we try to spend as much time as possible working with our clients to create a comprehensive and readable document.  We want people to understand their wills and other estate planning documents.  We don’t rush people through the process and we make sure that they understand where their property will go and how it will get there.

Most of our estate planning is done on a flat fee basis for this reason.  Our goal is for you to feel comfortable calling our office with questions, not worrying that every minute you talk to us is going to cost you more money.  The flat fee ensures that you  can spend as much time as necessary to understand your will and what happens after you die.

“I can do this all on my own”

We often hear from people who wonder why they need an attorney to draft their estate planning documents.  Much like a doctor would probably not recommend performing your own surgery, it is usually not a good idea to prepare your own estate planning documents.

Our role at Tillson Law P.C. is not only to prepare the documents, but to ensure that they are prepared correctly.  Often times when people bring in estate planning documents that a loved one drafted themselves, they are not valid.  When that happens, the will their loved one prepared is essentially thrown out.  The Oregon laws of intestate succession then apply.  Frequently these laws do not reflect what the deceased person intended to do with their estate.  For example, family members who they haven’t seen or spoken to in years may end up receiving a portion of their estate.  To ensure that your estate is handled the way you want it to be, it is important to have your documents prepared and executed by someone who understands the law and how estate planning works.  Give us a call today to discuss things further!

 

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Durable Power of Attorney – A Powerful and Confusing Document

 

The durConfusionable power of attorney is probably the most important document in your estate plan and may also be the least understood. What is it and how does it work?

In a simple estate plan in Oregon, you generally have three documents: your will; your durable power of attorfiles-and-folders-clipartney for finances; and your advance health care directive. The will disposes of your property after you die. The advance healthcare directive dictates who will make decisions concerning your health care when you cannot and what decisions that individual can make.

The durable power of attorney designates an individual to act as your agent throughout your lifetime, unless revoked prior to your death, making financial decisions on your behalf.

“Even while I can still make decisions?”

Is the durable power of attorney effective while you can still make decisions on your own? Maybe. The answer depends on whether your power of attorney is springing or not. A springing power of attorney is only effective when you are incapacitated and unable to make financial decisions on your own behalf.

The more common type of power of attorney is effective immediately upon signing. I will typically use this type of power of attorney in husband and wife situations or where a parent wants a child to take immediate control over the parent’s finances.

“I thought you are my attorney?”

Generally, the first paragraph of your durable power of attorney appoints an individual as your agent or “attorney-in-fact”. I avoid the term “attorney-in-fact” because it confuses people – I am their attorney. The agent is the person that will be responsible for doing what you authorize that person to do in the document. In a general power of attorney this individual will have extensive power over your finances so naming a trustworthy individual as your agent is important.

“Why is my document called a General Durable Power of Attorney?”

A General Durable Power of Attorney grants your agent broad authority over your finances. You are not giving your agent limited authority. For example, when you buy a car from a dealer you will typically sign a limited power of attorney giving the dealer the authority to register you as owner of the vehicle with the DMV. The document that you sign does not give the dealer the authority to deal with any other aspects of the transaction or the ability to deal with anything else. It is limited.

A general power of attorney lists a number of items that your agent can handle. Typically, the authority is over most anything, including: accessing your bank accounts, paying your bills, selling your property, dealing with your retirement plan administrator, dealing with the government. As I tell people, whatever you can do, your agent can do.

“Who do I name as my agent?”

This question is difficult to answer. Who you appoint as your agent is a personal decision that requires you to have the utmost trust in the person you appoint. For couples, this usually means your significant other will be named as agent. Of course there are exceptions. The successor agent in these cases is the difficult decision.   If you have multiple children, your selection may be more difficult. Some people will name their oldest child as successor just because they don’t want to offend him or her.  Others choose a child based upon proximity.  Some people just choose their favorite kid!  Whoever you choose, you should choose the child that you trust the most with your financial decisions.

“I am dead; now what?”

When you die, your power of attorney dies. Your agent can no longer make decisions on your behalf. The power to pay your bills, sell your house, deal with life insurance companies, etc. stops. Frequently, I have children call me saying that their parent died and that they have a power of attorney. That no longer matters. Now the will steps in.

As you can see, a Durable Power of Attorney can be a powerful and important document.  It is important to make sure that your current estate planning includes a Durable Power of Attorney that accurately reflects your needs.  Contact us to ensure that your Durable Power of Attorney is right for you.

 

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Estate Planning and Peace of Mind

Preparing your estate plan may not be the first item on your list of things to do to unwind.  But getting your estate planning done, may quiet that nagging voice in the back of your head that sometimes says, “What happens if?” Beyond the legal implications, having a comprehensive estate plan provides peace of mind.

Your concern about who will get your house or your grandmother’s wedding ring, or your father’s military service medals, will be gone, clearly articulated in your Last Will and Testament.  The worries about what will happen to you if you can’t make health care decisions for yourself, gone; the decisions spelled out in your advance health care directive. Thoughts about who will pay your bills if are unable to: dictated by the power of attorney for finances.

Peace of mind will be achieved.

So why don’t people have an estate plan? Why do we have potential clients, sometimes into their 90’s, sometimes already dealing with serious health issues, come in to our office on a nearly weekly basis with no will, no power of attorney, and no advance health care directive in place?

Often times the issue is mental. For many people, the most difficult part of estate planning is that in order to have peace of mind, you have to face your mortality. It is often easier to ignore the fact that you will die (death and taxes: the only two certainties in life) then to take the active steps to have peace of mind when the time comes.

This mental aspect to estate planning prohibits many people from ever putting a plan in place.  They ignore the concerns associated with not having an estate plan and, therefore, never have peace of mind.   So how do you get around this mental hurdle?

Think about life and living.  Think about providing a roadmap to your children, other family members and friends; showing them how you want to be cared for when you can no longer take care of yourself.  Provide clear instructions of where and to whom you want your property to go. Give them the peace of mind that they will make the right decisions because you have left them a clear and comprehensive idea of how you would like things to be handled, even if you are no longer capable of making articulating those decisions for yourself.

Because when you do a comprehensive estate plan, you’re not just giving yourself peace of mind, your providing peace of mind to the rest of your family, friends and loved ones. To help you get over the mental hurdles and provide you with peace of mind, take the first step and contact our office to schedule your initial appointment.

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Welome to the New Year.  2015 was a busy year and ended with a bang!  We are still recovering over here from all of the holiday fun and festivities.  2016 promises to be an exciting and fulfilling year at Tillson Law.

11986441_10153543332372980_3270107433356775179_n2015 brought along the addition of family to Tillson Law. Codi, Kevin’s wife, joined the firm as an office manager and paralegal.

Lloyd, the Tillson’s Boston Terrier, can also be seen at the office – eager to meet you when you enter.  Hopefully you can distinguish whose who!

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Tillson Law has been operating in Sandy since taking over for Jeff Crook upon his retirement in August 2014.  Our practice continues to focus on estate planning, probate and trust administration, real estate transactions and business planning. Planning for your future and your family’s future is our primary goal.

We appreciate the warm welcome we received upon moving our practice to Sandy, and the reception that we have received from existing clients and new clients alike.  We continue to strive to bring the same compassionate and expedient legal services that Jeff provided to the community for over 30 years.  Feel free to pop in and meet us if you haven’t had a chance!  Lloyd especially appreciates new visitors!

Many people ask how Jeff and Pam are doing, and I am happy to say they are doing wonderful, enjoying retirement and a slower change of pace. They’re still in the area and there’s a good chance you have, or that you will, run into them at the store or just around town.

We wish you the best in 2016 and if you need any information about what we do and how we can help you, visit our website at www.tillsonlawpc.com.

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Will the State Get My Property?

At the beginning of my initial appointment with estate planning clients I ask them what their goals are – or why did they come in to my office. I ask this question to gauge their understanding of the estate planning process; to ensure that I address their most important goals.  It is impossible to advise clients on what they need if you don’t know their most basic goals.

Most of my estate planning clients have one goal in estate planning – they want a will to make sure the state does not get their property.  Not to reduce taxes or avoid probate.  No, they don’t want the state to physically take their property because they don’t have a will. They don’t trust the state (for good reason?).

This goal is a basic desire – we give enough to the state during our lifetimes, we certainly don’t want the state to take our property when we’re dead.

The good news is that, except in the most extreme cases, the state won’t take your property if you don’t have a will.  In Oregon we have “intestate succession” laws that dictate to whom your property will be distributed if you don’t have a will.  We call these the default laws.

If you’re married, your spouse will receive your property.  If you’re in the process of a divorce or you have been separated for 20 years but never divorced, your spouse is considered your heir under Oregon law.  If you’re not married but have kids, then your kids receive your property.  Even if you have a child that you haven’t seen or spoken to in 15 years, he or she will receive your property.

If you’re married but have kids from a different relationship, your spouse receives ½ of your property and your kids receive the other ½.  If you and your spouse have lived on property titled in your name only for over 50 years, your children from another relationship receive 50 percent of that property, and can force your spouse to sell her interest in the property.

If you’re not married and don’t have any kids, grandchildren, great grandchildren then your parents receive your estate, or, if they are not alive, then your property passes to your siblings.  This includes your brother that you haven’t spoken to since he disappeared in the 60’s in a drug induced haze.

Finally, if you have no wife, children, grandchildren, great grandchildren, parents, siblings, and nieces or nephews, then the state will step in and take your property.

As you can see, in general the default laws prevent the state from taking your property. However, without a will your property may go to someone that you don’t want it to go.  The key reason to have a will is not to prevent the state from taking your property; rather the primary goal is to make sure your property goes where you want it to go.

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Happy Thanksgiving

Thanksgiving

From everyone at Tillson Law P.C.

 

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