Five Ways You Can Save Money on Probate

By Patricia Louise Nelson

Probate can seem overwhelming at first, but it is possible to go through the process in an efficient way that saves the estate money. Here are five ways:

Choose the right path: In Oregon, there are two ways to probate an estate: the small estate process and the full probate process. Be very sure a small estate will work for your situation before you head down that path. It will be more expensive to start with a small estate and then realize you need to start over with a full probate.

Seek legal advice: Although it may seem counterintuitive, hiring a good attorney from the beginning of your case will save you money in the long run, because an attorney will help you to choose and stay on the right legal path. This advice may seem self-serving, as we are of course, a law office, but we know from experience that fixing mistakes is always more expensive than avoiding them in the first place.

Stay organized: Keep all estate information in one organizational system, so you can easily look up information about heirs, devisees, assets, creditors, bank statements, etc.

Communicate and respond clearly: If your attorney requests something from you, read the request carefully and be sure to respond and cover every topic the attorney has asked you to address. Poor communication and repeated back and forth will cost you money and time.

Be on time: Probate cases involve many important deadlines with the court that you must be able to meet. Hiring a good attorney will help to make sure the estate is efficiently administered within the legal deadlines and with a minimum of delay and cost.

Find out more at: https://www.twosprucelaw.com/videos/how-to-save-money-in-probate

What Are Letters Testamentary? How Do I Avoid Probate?

By Patricia Louise Nelson of Two Spruce Law

Many, if not most, of my probate matters begin with a phone call to my office. The caller very often begins by saying, “My mom (dad, sister, brother, or friend) died. Her banker (investment advisor, or realtor) says I need ‘Letters Testamentary’ before I can access her bank account (investment account, or sell her real property). What is that? I definitely want to avoid probate. Can you help me?” I always feel a bit of sadness for the caller as I explain that Letters Testamentary is the document the court issues when it opens a full probate, so the two questions are mutually inconsistent. Probate is the court oversight of the administration of an estate when the owner of the asset dies, with or without a will. If you really need Letters Testamentary, that means you need to take the assets through probate.

The professional advising the caller that they need Letters Testamentary may not be right. Because probate is a significant undertaking with substantial costs, it is important to explore all alternatives that may be available. Give us a call, let’s figure out whether you really need Letters Testamentary.

Now that we’ve covered what probate is, here are some frequently asked questions about probate:

1. How can I pay for probate when I have no money and I can’t access my deceased loved one’s bank account? Excellent question! This is a common predicament. Obviously you’ve done some homework. If you really need help paying the upfront costs, we can advance those for you until you are appointed as the Personal Representative and can access the decedent’s bank account to repay us. The attorney fees in probate are not payable until the court approves them at the end of the process. Generally attorney fees are paid from the estate assets.

2. How long with probate take? The typical probate in Oregon takes 6-9 months. Sometimes they take longer, depending on the situation.

3. When do I get the stuff left to me in the will? The court must approve distributions from the estate. The general estate is usually distributed at the end of the probate. Sometimes we can get court approval for an earlier distribution, but often not until the probate has been open for 5 or 6 months.

4. How does probate work without a will? When there is no will, the probate process is the same except that the assets go to the heirs of the decedent rather than to named beneficiaries. The heirs are generally people related to the decedent by blood or marriage. We can help you figure out the heirs, give us a call.

5. Can I file probate without an attorney? Technically, yes. It is a very significant undertaking. We recommend you use an attorney right from the start to avoid heading down the wrong path.

Find out more at: https://twosprucelaw.com/videos/what-are-letters-testamentary-and-5-more-common-probate-questions

The Perils of Co-Owning a Home as an Unmarried Couple

By Patricia Louise Nelson

Many very smart, well-meaning people accidentally get themselves into complicated legal situations without understanding all of their options or the complications. An example of this is when a very committed unmarried couple purchases real property together. This can be done as tenants in common, where each partner owns half of the real property, including controlling it after that person dies. Alternatively, it can be done with rights of survivorship, where if one of the partners dies, the other one owns the real estate just by filing a copy of the deceased partner’s death certificate in the county real property records.

For many unmarried couples, the right of survivorship option works well if one of them dies and their primary intent is to protect and provide for the survivor. The complexity arises upon the death of the second partner. Let us add some facts to this scenario. Let’s assume both partners contributed equally to the cost of purchasing their home. Let’s further assume that each partner has his or her own children, who are not also the children of the other partner.

On the death of one partner, the surviving partner gets the house by right of survivorship. This result is often what the partners both want. Often the partners anticipate that their children will benefit equally after they have both died. On the death of the second partner, however, his or her children get the value of the house, unless the partners have something in writing that changes that outcome. The children of the first partner who died first receive nothing.

Another complexity that can arise with co-ownership of a home is how to handle unexpected (or expected) expenses related to the house. Who will pay the mortgage (if any)? Taxes? Insurance? Upkeep and maintenance? What if the property has a large, unexpected expense like the cost of a new roof? These questions should be considered in advance and addressed in writing.

If the partners want to address these issues and divide the value of the house among both of their children, they need to have an agreement in place in writing. This writing can be a tenants in common agreement, a real estate co-ownership agreement, or a revocable living trust. The first two are simply contracts by which the original co-owners agree on how to handle distribution of the net proceeds on sale and expenses related to the real property. This sort of agreement can still leave the property at risk of probate on the death of the second owner. A revocable living trust, on the other hand, takes care of the distribution of the net proceeds on sale, addresses unexpected expenses, and avoids probate.

The State of Oregon assesses an Estate Tax on the assets of a resident of Oregon when they die to the extent the person’s assets are worth more than $1,000,000. By “assets,” we mean anything the person owned, which even includes the death benefit value of life insurance on his or her life.

So, the first $1,000,000 passed to heirs or beneficiaries is Oregon Estate Tax-free. The next $500,000 worth of assets is taxed at 10%. The percentage of tax increases as the value of the assets increase. The top marginal Oregon Estate Tax rate is 16%.

For example, an Oregon resident dies owning $1,850,000 in all assets, the first $1,000,000 is Estate Tax free. The remaining $850,000 is subject to the Oregon Estate Tax. The first $500,000 of that $850,000 is taxed at 10%, so the resulting tax would be $50,000. The next $350,000 of the $850,000 is taxed at 10.25%, resulting in a tax liability of an additional $35,875. The total Oregon Estate Tax liability would be $85,875. Of course, this example is overly simplified, but it serves the purpose of demonstrating how the Oregon Estate Tax is calculated.

Note that the tax is assessed per person, so a married couple – planning ahead and collaborating with each other – can pass up to $2,000,000 free of the Oregon Estate Tax. Give us a call so we can help you figure out how to minimize your Oregon Estate Tax liability.

By Patricia Louise Nelson of Two Spruce Law

Many of my clients come to me with a plan to leave assets to fairly young people, say people in their mid-twenties. When I ask these clients whether they trust these young people with their inheritances, the answer is often “yes!” I like to probe just a bit further to be sure the answer takes into account the likely context of the inheritance. For example, many people leave assets to certain family members and only if those family members are dead, do the assets go to the next generation – the mid-twenty-year-olds. Having a parent die is a very life altering event. When we take into consideration the fact that these young beneficiaries have had a parent die, do you still trust these young beneficiaries with their inheritances?

Find out more at: https://twosprucelaw.com/videos/tidbit-whats-the-difference-between-a-settlor-and-trustee-99wnw

By Patricia Louise Nelson

In the context of a trust, there is a Settlor and a Trustee. Often the same person serves in both capacities. These two rolls are quite different.

The Settlor is the “king of the world” in the context of a trust. The Settlor owns the trust. The Settlor usually reserves the right to amend or revoke the trust. As such, the Settlor says who will be the trustee, who will benefit from the trust assets, and under what circumstances.

The Trustee is the “worker bee” of the trust. During the lifetime of the Settlor, the Trustee makes sure the trust assets are used for the benefit of the Settlor. Upon the Settlor’s incapacity, the Trustee continues to ensure the wellbeing of the Settlor. Upon the death of the Settlor, the Trustee gathers the trust assets, pays any debts, sells assets that need to be sold, and distributes the assets per the instructions in the trust agreement.

The Trustee must be trustworthy. The Trustee must have skills for dealing with someone else’s money. The Trustee must have time in his or her life to take on the job of managing the assets. The Trustee must be able to say “no” if a beneficiary requests a distribution with which the Trustee disagrees. In other words, the Trustee must do the work on maintaining and managing the trust.

Find out more at: https://twosprucelaw.com/videos/tidbit-whats-the-difference-between-a-settlor-and-trustee