Questions and Answers for Brooks Estate Law
What documents are included in an estate plan?
A Will or Trust is only the beginning of an estate plan. Your estate plan includes planning for your assets, your health care, and (if needed) the care of your minor children. Some documents that are included in all my estate planning packages are: a Will, Durable Power of Attorney, Advance Directive, HIPAA Authorization, Disposition of Remains, and Personal Property Memorandum. Various other supporting documents are also included.
Isn't estate planning just for people with lots of money?
Estate planning is for anyone who wants to protect their family from great expense, delay, inconvenience, and an emotional roller-coaster. An estate plan allows you to clarify who will receive what assets, to state what you would like your health care to be like if you cannot speak for yourself, to name guardians to care for your minor children (if needed), and possibly to avoid the cost and delay of probate.
I have kids and I simply want everything to go to them. Why do I need an estate plan?
There are many issues, large and small, that an estate plan can address. You may not even be aware of all of them. Among the more significant benefits of having an estate plan are: the ability to save money, time and work by simplifying or avoiding probate, the ability to leave specific personal property to certain individuals, the ability to provide protection for your children’s inheritance, and the ability to provide certainty as to your health care decisions as well as peace of mind for those who may have to carry out those decisions.
How much do you charge for an estate plan?
My estate plans range from $1,100 to over $5,000 – it all depends on what is appropriate for your individual situation and what you want me to prepare after discussing the pros and cons of your options. A consultation for a new estate plan is free, and I believe strongly that the client is boss. I will educate you on the possibilities and you will direct my actions.
Is it expensive to change my Will or Trust once I have established it?
No. The greatest cost in your estate plan is virtually always the cost of getting it set up in the first place. Your Will or Trust is easy to change, and the cost for those changes is often around $300-500, depending on the complexity of the changes. The Personal Property Memorandum even allows you to change who will receive items of personal property without consulting a lawyer.
What happens to my assets if I don't have a Will or Trust?
Several bad things can happen. Your estate almost certainly has to go through probate. Also, the default laws of the state will come into play to distribute your assets as the law guesses what you would have preferred. Essentially, your assets are divided among your closest living relations. Odds are they will not receive those assets for at least a year after your death, due to the delay of probate.
What is probate?
Probate is the court process that ensures a deceased individual’s assets are distributed as required by law. If the individual left a Will, probate ensures the Will is honored to the greatest extent possible. If there is no Will, probate follows the default plan of distribution set out in the law (called “intestacy”). Probate is carried out by the court and is subject to many procedures required by law, so it is time consuming and expensive. Probate generally takes nine to eighteen months. As a very rough example, for a modest estate (valued at $250,000-$500,000) probate may cost about $4,000-$15,000 (depending on various factors, especially the law firm that handles the probate).
Do you need a lawyer for probate?
In virtually all instances, a lawyer will need to be hired to handle probate. The probate process is governed by many statutes and supervised by the court. There are so many technicalities involved in the process that even among attorneys only those who know the area of law well will undertake a probate case. I cannot recommend strongly enough that you hire a lawyer to help you with this process – even if you don’t hire me.
If someone has an estate that is small in value, does their estate still have to go through probate?
Maybe. If someone dies owning real property – like a house – their estate will probably have to go through probate even if the real property is entirely mortgaged. It is possible, if the property is a small condo or a small rural house, that the value of the property will be sufficiently small to qualify for a simplified version of probate called an Affidavit of Claiming Successor. To take advantage of this procedure, the entire value of the person’s estate must be under a certain dollar limit set by Oregon law.
I've heard a Trust is better than a Will. Is that true?
It is true for some people. A Will may be the most efficient choice for others. A Trust allows for avoidance of probate, better protects you in the event of incapacity, and usually has better tax advantages. However, with the right planning, it may be possible to achieve some of these benefits with a Will.
What is a Trust, and why does it allow you to avoid probate?
To get legally technical, a Trust is a contract between yourself, as Settlor (creator of the Trust) and yourself as Trustee. You transfer assets to the Trust, where they are held for your benefit as long as you live. Since you don’t own anything when you pass away (it is all owned in the Trust) there is no need for probate. Sometimes people are worried that by transferring their assets to a Trust, they are giving up control of the assets. That is not something to be nervous about. First, as the Trustee, you completely control the assets. Second, as the Settlor (creator of the trust), you can remove assets whenever you like, amend the Trust to address your concerns, or even revoke the Trust (making it as if there had never been a Trust at all).
Can my estate plan save me taxes?
There are many estate planning options that can prevent substantial tax liability. Some of them are rather complex, and are best discussed in person. One commonly employed method for married couples a “Bypass Trust”. This method effectively doubles the size of estate a married couple can have before having to pay estate tax. However, while a Bypass Trust is a useful tool, there is no magic solution to taxes, and even a Bypass Trust may not eliminate all taxes.
I want to get a Trust so that, if I'm ever sued, my assets are protected. Can you do that?
Due to various obstacles, while it is possible to create a Trust that would protect your assets, the vast majority of my clients choose to achieve this goal by other means. Unless you have a very large estate or are in a profession that has a high risk of liability (like a medical doctor) it is almost always better to protect your assets through insurance. This is definitely an aspect of estate planning we can discuss to determine how your specific interests would be best served. The answer is different for your children. We can easily create a Trust to defend their inheritance from creditors.
How can a Will or Trust protect my children or grandchildren?
If you pass away without a Will or Trust, any minors have a right to receive their entire inheritance when they turn eighteen. The law will not attempt to determine whether they are financially responsible – whether they will save the money for college or blow their inheritance in a week at Vegas. With either a Will or a Trust, you can set up a Sub-Trust that will allow distributions for legitimate needs (such as education, health care, or even a college trip to Europe) while making sure funds are not wasted. The remainder of the inheritance could be distributed to your children or grandchildren when they are slightly more mature, or it could even be held in an Asset Protection Trust that will prevent creditors (even ex-spouses) from ever taking away their inheritance.
Can I name someone to serve as a guardian for my children if something happens to my spouse and me?
Yes. I will prepare provisions to nominate guardians and to ensure your children end up with the individuals who you would prefer to care for them. This is done in a way that minimizes the possibility of any hurt feelings among family members.
I have items of sentimental value I want to go to specific individuals. Can I provide for that in my estate plan?
Yes, and it is easy to do. Whether I prepare a Trust or a Will for you, I will include provisions for you to leave your personal items to specific individuals by simply writing down what you want done on a Personal Property Memorandum. This convenient method for setting out your wishes allows for revision without consulting a lawyer.
Can't I avoid probate by jointly owning bank accounts and other assets with my children?
Jointly owning assets with your children is generally a bad idea. By being joint owners, you expose your assets to twice the risk. If your children get into any kind of legal or financial trouble, your bank accounts could be seized just as if they belonged only to your children. If you need Medicaid, the government will count the assets as belonging to you. There are also additional risks that are difficult to spot, such as potential gift tax or capital gains tax issues.
Why do I need to plan for my health care? My spouse or children know what my wishes are.
Even if one or more individuals who are very close to you are aware of your health care wishes, your family and friends may be susceptible to disputes that can break a family apart in a time of extreme vulnerability, such as a medical emergency. If you make your wishes clear and designate specific individuals to carry them out, your family will be better equipped to come together and agree on your health care. Additionally – especially if you would not wish to be kept alive by artificial life support if your death was inevitable – having a document in which you make your intentions known can make family decisions much less of a burden. Knowing your wishes, family members can implement those wishes without guessing and worrying about what you would really want. This also may prevent the creation of a great financial hardship caused by an extended hospital stay that may be against your wishes.
My child has a disability. Would an inheritance cause my child to lose government assistance?
There is a unique tool for situations such as these. A Special Needs Trust provides benefits to an individual while making sure that the individual remains eligible for government aid.
What is incapacity?
A person is “incapacitated” when that person no longer has the ability to competently handle his or her affairs. A person may lose capacity due to injury (for example, a person who is in a coma is incapacitated), old age, chemical dependency, or other factors.
My insurance agent says that life insurance isn't taxed. Are life insurance proceeds subject to estate tax?
Yes. When you are considering your estate tax liability, you have to take into account the full amount of any life insurance benefit that will be paid out to your beneficiaries. There are other tax benefits to life insurance, and it can often be confusing what exactly the benefits are.
Your practice is in Portland. Do you do much estate planning for Washington?
Yes. Since I am located less than ten miles from Washington, a significant amount of my practice involves estate planning for Washington residents. A small amount of my practice is also in California. I am licensed in Oregon, Washington, and California.
Do I have to come to your office?
Not necessarily, but it is usually best. I try to make your visit to my office as easy as possible by providing clear directions and parking. It is best to meet at my office since all resources are easily at hand, and we need witnesses for your estate plan signing. I usually charged a reduced hourly rate for travel to meetings that are not in my office. If I am driving somewhere to meet a client, that takes away time I could use to work for a different client.
What is trust administration?
Trust administration is the process of carrying out a Trust. Among other things, it involves collecting the Trust’s assets, paying outstanding debts, notifying the beneficiaries, and distributing the assets.
Do you need a lawyer for trust administration?
Trust administration is a much simpler and faster process than probate. It is possible to carry out an administration without a lawyer. However, there are still laws that need to be followed. A lawyer can be very useful for answering questions and giving you the peace of mind of knowing you are administering the trust properly. A lawyer can also be especially handy to help deal with difficult creditors or beneficiaries and to help ease the Successor Trustee’s burden. Fees are usually much less than in a probate, and the Trust usually provides that it will pay for attorney fees.
