Estate Planning

2018 Oregon Estate Tax Rates

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The State of Oregon levies a tax on taxable estates that have a value of more than $1 Million.  Estates of less than $1 Million are exempt from the Oregon Estate Tax.  This is a separate from the Federal Estate Tax.  In 2018, individuals with less $11.2 Million and couples with less than $22.4 Million are exempt from the Federal Estate tax.  The top Federal Estate tax rate is 40%.  More information on determining the Federal Estate Tax rates can be found at IRS.gov.

Taxable Estate Equal to or more than: Taxable Estate less than: Tax rate on Taxable Estate amount more than column 1
$1,000,000 $1,500,000 $0 + 10%
1,500,000 2,500,000 50,000 + 10.25%
2,500,000 3,500,000 152,500 + 10.5%
3,500,000 4,500,000 267,500 + 11%
4,500,000 5,500,000 367,500 + 11.5%
5,500,000 6,500,000 482,500 + 12%
6,500,000 7,500,000 602,500 + 13%
7,500,000 8,500,000 732,500 + 14%
8,500,000 9,500,000 872,500 + 15%
9,500,000 1,022,500 + 16%
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Is a Handwritten Will Valid in Oregon?

Is a Handwritten Will Valid in Oregon?

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The short answer is no.  Wills that are handwritten and not witnessed are not recognized as valid in Oregon.  A handwritten will that is witnessed by two individuals will be considered valid.  

I have written more about about the basics of estate planning in the following articles:

  1. Basics of an Oregon Estate Plan (Part 1)
  2. Basics of an Oregon Estate Plan (Part 2)

  3. Basics of an Oregon Estate Plan (Part 3)

 

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

Oregon Probate Inventory

What is required on an estate inventory.

One of the first tasks must be completed during the administration of an estate is the inventory.  The inventory must be completed within 60 days of the appointment of a personal representative and provide estimates of the value of the property as of the date of death.

ORS 113.165 Filing inventory and evaluation

Within 60 days after the date of appointment, unless a longer time is granted by the court, a personal representative shall file in the estate proceeding an inventory of all the property of the estate that has come into the possession or knowledge of the personal representative. The inventory shall show the estimates by the personal representative of the respective true cash values as of the date of the death of the decedent of the properties described in the inventory.

Determining the values of assets is generally straightforward.  You can look at the balance of a bank account or investment account at the date of death.  

Hiring Appraisers

Sometimes the estate will have unusual or unique property that must be appraised.  Oregon law allows the personal representative to hire an appraiser that will be paid by the estate as a necessary expense.

ORS 113.185 Appraisement

(1) The personal representative may employ a qualified and disinterested appraiser to assist the personal representative in the appraisal of any property of the estate the value of which may be subject to reasonable doubt. Different persons may be employed to appraise different kinds of property.
(2) The court in its discretion may direct that all or any part of the property of the estate be appraised by one or more appraisers appointed by the court.
(3) Property for which appraisement is required shall be appraised at its true cash value as of the date of the death of the decedent. Each appraisement shall be in writing and shall be signed by the appraiser making it.
(4) Each appraiser is entitled to be paid a reasonable fee from the estate for services and to be reimbursed from the estate for necessary expenses.

Personal Items and Household Goods.

Generally speaking, it is fine to lump the household goods and personal items together on the inventory.  If the items have a substantial value, they should be listed individually on the inventory.  

When determining a "substantial value", most attorneys rely on 26 CFR 20.2031-6 - Valuation of household and Personal effects.

(b) Special rule in cases involving a substantial amount of valuable articles. Notwithstanding the provisions of paragraph (a) of this section, if there are included among the household and personal effects articles having marked artistic or intrinsic value of a total value in excess of $3,000 (e.g., jewelry, furs, silverware, paintings, etchings, engravings, antiques, books, statuary, vases, oriental rugs, coin or stamp collections), the appraisal of an expert or experts, under oath, shall be filed with the return. The appraisal shall be accompanied by a written statement of the executor containing a declaration that it is made under the penalties of perjury as to the completeness of the itemized list of such property and as to the disinterested character and the qualifications of the appraiser or appraisers.

Amended and Supplemental Inventories

Occasionally the personal representative will have to correct or add information to the inventory that was filed with the court.  

When the information filed with the court was incorrect, the personal representative must file an amended inventory to correct that mistake.  

A supplemental inventory is required when the personal representative finds property of the estate after the original inventory has been filed.

Other types of assets

Real estate located outside of Oregon should not placed on the inventory.  Certain beneficial interests may or may not be listed on the inventory.  You should talk to your attorney if you have any questions regarding beneficial interests.

 

 

 

 

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

Basics of an Oregon Estate Plan (Part 3)

Part 3.  Advance Care Planning

This is the Third Article in our Basics of Estate Planning series.  In this article, we will explain options for health care decision making.  We will talk about two documents that allow you to express your wishes when you are not able to.  The first are legal documents call advance directives.  The second are medical orders call Physicians Orders for Life Sustaining Treatment (POLST.)

Advance Directives

The Oregon Health Care Decisions Act (ORS Chapter 127) allows Oregonians to create Advance Directives for Health Care, Powers of Attorney, Declarations for Mental Health Treatment and other documents.  Advance Directives are legal documents.

Healthcare Representatives

Advanced directives allow a person to decide their treatment wishes while they are still able.  They also allow you to appoint a healthcare representative to direct your health care when you are unable to do so.  You can also place limits on the decisions that your Healthcare Representative can make for you. For example, you may have certain religious or ethical beliefs that you want taken into account when life-sustaining decisions are being made and that your Healthcare Representative should honor your wishes.

Healthcare instructions

Advanced directives also allow you to make decisions about specific medical conditions and treatments.  Below is an excerpt from an Advanced Directive:

Oregon Advance Directive

 

In this example, you have an Advanced Progressive illness and are very unlikely to substantially improve.  Importantly, you are unable to communicate and someone else will have to make medical decisions for you.  With the Advance Directive you can choose the care you desire in this situation by initialing the form. 

The State of Oregon has information regarding Advance Directives and an Advance Directive form available online (http://www.oregon.gov/DCBS/insurance/shiba/topics/Pages/advancedirectives.aspx)

Physician Order for Life Sustaining Treatment (POLST)

A POLST is an optional form that you create with your health care provider.  A POLST is a medical order that must be signed by a health care professional in order to be valid.  A POLST is typically used by those that are seriously ill or are near the end of life.  

A POLST will tell medical professionals whether you want CPR, tube feeding or any other medical interventions that may sustain life.  


Basics of estate planning series

You can review the other articles in this series.

 

 

 

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

Basics of an Oregon Estate Plan (Part 2)

Part 2. What is a Trust.

This is the second article in our basics of estate planning series.  In this article, we will explain what a Revocable Trust is, what it can be used for and what it can’t do.

The first article in the series is Part 1. What is a Will.

What is a Living Trust?

A living trust is simply a contract with yourself.   You establish a trust by written agreement and by “funding” the trust by transferring your property into it.  The trust will appoint a “trustee” to administer the assets of the trust.  The trust agreement will also provide instructions for how the trust is to be administered.  A living trust can be a used to avoid Probate or Conservatorship.  

How does a Living Trust Work?

By retitling all of your property from yourself to the living trust while you are living and providing instructions for the “successor trustee” to distribute your property after your pass, very little of your property will pass through probate.

 

A diagram explaining the mechanics of a living trust.

A diagram explaining the mechanics of a living trust.

A “Pour Over Will” is often used alongside a living trust to move property into the trust that was missed or was acquired after the trust was formed.  A downside of this method is that “Pour Over Will” may have to be settled through a probate proceeding before the assets of the living trust can be distributed.  Another option is to transfer the property not included in the living trust directly to the heirs by a small estate proceeding.  

How does a Living Trust avoid Conservatorship?

Conservatorship is when the court determines that you are unable to manage your financial affairs and appoints a conservator to do so.  By transferring your property to a revocable living trust and providing detailed instructions for the successor trustee in the event you become incapacitated, you can avoid the court oversight and costs involved in a conservatorship.

Drawbacks of a Living Trust.

The main drawbacks of a Revocable Living Trust are:


1.    Complexity.  Trusts are often left unfunded and property acquired after the formation of the trust is not moved into the trust.  Living Trusts require more maintenance and ongoing administration than a will.
2.    Costs.  Living Trusts are more expensive than creating a will.  For young and healthy individuals, the costs of probate and conservatorship are likely many years down the road.  For these individuals, they are often times better off investing the money they would have spent setting up a Living Trust.  Older individuals will more quickly see the benefits of probate and conservatorship avoidance and may want to consider a living trust.
3.    Unforeseen Consequences.  Family’s change and the law changes.   Companies may want to review the trust documents if you purchase or insure property.  Stock in certain corporations may not be held in some trusts without serious tax implications.  You may also have difficulty acquiring assets in other Countries.

 

 

If would like to learn more about how to plan your estate, visit our practice page or search the blog on the right.  You can also sign up for our newsletter and have estate planning tips delivered to your email.

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

Basics of an Oregon Estate Plan (Part 1)

Part 1.  What is a Will.

This is the first article in our basics of estate planning series.  In this article, we will explain what a Will is, what it can be used for and what it can’t do. 

Part two of our series is Part 2. What is a Living Trust.

What is a Will? 

A Will allows someone to decide how they want their assets divided after they have passed away.  Any person who is 18 years or older or who has been lawfully married or who has been emancipated, and who is of sound mind, may make a Will.

What happens if I die without a Will in Oregon?

If you die without a Will your assets are distributed according to the laws of Oregon.  Inheriting without a Will is called intestate succession and we have an article that diagrams some of the common ways your assets may be distributed. (Intestate Succession in Oregon)

Benefits of a Will.

There are many benefits to creating a Will.  At the minimum, a Will should appoint a personal representative and waive bond.  A Will can allow you to make a charitable gift, create a testamentary trust for your children, or even provide for your pets.

Formalities of making a Will.

There are several formalities that you need to follow in order to have a valid Will in Oregon.  The most important are that they are in writing and that two witnesses watch you sign your Will.

Does a Will avoid probate in Oregon?

A Will does not avoid probate but it can make the administration of probate cheaper and easier.  Your Will allows you to appoint a Personal Representative  to manage your estate and you will be able to waive bond for the personal representative.  Just doing those two things will save your estate money and move your estate through the probate court more quickly.

Elective Share.

While your Will ordinarily controls how you distribute your assets, your spouse has a right to claim part of your estate.  You are not required to provide for anyone in your Will and Oregon doesn’t allow anyone to claim a portion of your estate except for your spouse.

I have no money.  Should I make a Will?

How you distribute your assets is only part of what your Will does.  Your Will also allows you to make arrangements for your minor children. 

How do I change my Will?

You can make changes to your Will be adding something called a codicil.  A codicil requires the same legal formalities as a creating a Will. 

How do I revoke my Will?

Your Will may be revoked by creating another Will or by the physical act of destroying the Will with the intent to revoke it.  Certain acts automatically revoke your will.  If you get married or divorced, you should consult with an attorney to see how it affects you.  Getting married may revoke a previously written Will.  Getting divorced in Oregon revokes portions of your Will that benefit your former spouse.  If you have or adopt children after executing your Will, your Will may be modified by state law to provide for those children.

 

If would like to learn more about how to plan your estate, visit our practice page or search the blog on the right.  You can also sign up for our newsletter and have estate planning tips delivered to your email.

 

 

 

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

Oregon Personal Representative Checklist

What to do when someone dies in Oregon.

The death of a loved one is a trying time for all families.  There are several items that should be found and steps taken so that the transition will be easier.

Documents

  1.  Will, Trusts or any estate planning documents of the deceased.   A Will must be submitted to the court in order to admit the Will to probate and to appoint the Personal Representative.   You can find more information about the Probate Process in Oregon and other probate topics on the blog.
  2. Life Insurance Policies.  Up-to-date originals of the policies may be needed to claim the proceeds of the policy.
  3. Car Titles.  Titles to any automobiles, boats, trailers or any other vehicle that the deceased may have owned.
  4. Deeds.  Any document that proves ownership of real estate.  If it's necessary, you can obtain these from your local county.
  5. Stock, Bond or Deposit Certificates.  Any document that proves ownership of a financial instrument.

Tasks

  1. Death Certificates.  You can obtain death certificates from vital statistics but typically a funeral home will order them for you.  Death certificates are used to prove death and are useful for many legal and financial reasons.
  2. Records and documentation. It is important that accurate records are kept of all bills paid, money deposited and spent, and every other transaction of the estate. 
  3. Forward Mail. Forward the mail with the Postal Service of any business or personal of your loved one.  Review the mail regularly for any bills or other important documents.
  4. Safe Deposit Box. Locate and inventory any safe deposit box that the deceased may have had. 
  5. Inventory Assets.  Make a list of all assets.  If necessary, obtain date of death valuations from banks and brokers. 
  6. Taxes. The estate may owe property and income taxes.  The timing and valuation of assets can be important so talk to an attorney and a CPA before paying taxes.
  7. Records and documentation. Because it is what most commonly gets people in trouble I'll say it again.  It is important that accurate records are kept of all bills paid, money deposited and spent, and every other transaction of the estate. 

This is an overview of the most common tasks that a personal representative needs to perform in Oregon.  If you have any questions feel free to contact me or search the blog.

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

2016 Oregon Estate Tax Rates

The Oregon Estate Tax rate for 2016 is left unchanged from 2015.

Taxable Estate Equal to or more than: Taxable Estate less than: Tax rate on Taxable Estate amount more than column 1
$1,000,000 $1,500,000 $0 + 10%
1,500,000 2,500,000 50,000 + 10.25%
2,500,000 3,500,000 152,500 + 10.5%
3,500,000 4,500,000 267,500 + 11%
4,500,000 5,500,000 367,500 + 11.5%
5,500,000 6,500,000 482,500 + 12%
6,500,000 7,500,000 602,500 + 13%
7,500,000 8,500,000 732,500 + 14%
8,500,000 9,500,000 872,500 + 15%
9,500,000 1,022,500 + 16%
Ask us a question.
We can help you minimize your oregon estate taxes.
Name *
Name
Phone
Phone
Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878

Elements of an Oregon Estate Plan

What is Estate Planning?

There is much confusion about what estate planning is and what you actually need to do.  I will go through some of the most common estate planning tools, how they work and when they are useful.

1. The Do-Nothing Option

This is probably the most common estate planning technique in Oregon and rarely is it ideal.  If you die in Oregon without a will, your assets will be distributed by the laws of intestate succession.  These laws are the Oregon Legislature's best guess of how most people would have wanted their assets divided among their heirs.  Typically your assets will be inherited by your surviving spouse or equally among a class of heirs.  If you are more interested, I have a full post dedicated to the common intestate scenarios linked here.  You can also learn more about Oregon Probate on my practice area page.

2. Last Will and Testament

The basic Will is the simplest and most well known estate planning tool.  They are generally assumed to have been invented in Ancient Greece around 600 BC.  (Wikipedia has an article on the History of Wills.)   At its simplest, a Will appoints someone to manage your estate after your death and provides them instructions on how to distribute your assets.

In Oregon you must have "testamentary capacity" in order to create a will.  Testamentary capacity defined:

ORS 112.225 Who may make a will

Any person who is 18 years of age or older or who has been lawfully married, and who is of sound mind, may make a will.

Now, there are several formalities that you have to follow in order have a duly executed will.  I often hear complaints about these formalities.  It is best to think about these formalities not as burdens but rather as quality control measures that make sure people don't steal from you after you die.

Oregon outlines the formalities of a duly executed Will in the ORS.

112.235 Execution of a will

A will shall be in writing and shall be executed with the following formalities:

(1) The testator, in the presence of each of the witnesses, shall: (a) Sign the will; or (b) Direct one of the witnesses or some other person to sign thereon the name of the testator; or (c) Acknowledge the signature previously made on the will by the testator or at the testators direction. (2) Any person who signs the name of the testator as provided in subsection (1)(b) of this section shall sign the signers own name on the will and write on the will that the signer signed the name of the testator at the direction of the testator. (3) At least two witnesses shall each: (a) See the testator sign the will; or (b) Hear the testator acknowledge the signature on the will; and (c) Attest the will by signing the witness name to it. (4) A will executed in compliance with the Uniform International Wills Act shall be deemed to have complied with the formalities of this section.

There is much more to cover on the topic of Wills but this post is meant as an overview for estate planning.

3. Revocable Trusts

Sometimes marketed a "living trusts" or "loving trusts," a revocable trust is a contract with yourself that you can "revoke" if you change your mind.  I've written about revocable living trusts in Oregon before but I will recap their uses here as well.

Many people have difficulty understanding how a revocable trust works so I've diagrammed it below.

Copy of Living Trust
Copy of Living Trust

The two most common uses for revocable trusts in estate planning are the avoidance of probate and conservatorship.

Avoiding Probate

The most common reason why probate proceeding are started in Oregon is because the titled property of the estate exceed the statutory amounts for small estate proceedings.  (I will go into small estate proceedings later.)  What that means in non-lawyer speak is that your home is worth more than $200,000.  There are other ways to exceed the small estate limits but for most people it is the value of their home.

So, by placing your home and other assets into a revocable trust you can avoid probate all together or be able to settle your estate by Affidavit of Claiming Successor.  When done properly, a revocable trust can avoid several thousand in probate administration fees and save months of time.  Revocable trusts don't avoid estate taxes or shield assets from creditors.  There are other tools that can be used to minimize taxes and protect assets and I will discuss those in a later post.

Avoiding Conservatorship

Conservatorship is a kind of protective proceeding in Oregon where the court appoints a conservator to manage the assets and finances of a protected or incapacitated person.

ORS 125.005 (3) defines financially incapable:

Financially incapable means a condition in which a person is unable to manage financial resources of the person effectively for reasons including, but not limited to, mental illness, mental retardation, physical illness or disability, chronic use of drugs or controlled substances, chronic intoxication, confinement, detention by a foreign power or disappearance. Manage financial resources means those actions necessary to obtain, administer and dispose of real and personal property, intangible property, business property, benefits and income.

As people aged they sometimes experience diminished mental capacity or conditions that make it difficult to manage their financial affairs.  In these instances it may be necessary to go to court to establish a conservatorship and appoint a conservator.  These can be expensive and time consuming proceedings so it is best to avoid them.

A revocable trust can avoid conservatorship by appointing a successor trustee if you become incapacitated.  You can provide instructions in your trust on who you want to manage it and how you want it managed in the event you become incapacitated.

4. Advanced Medical Directives and POLST

For many people how they die is often more important than what happens to their belongings.  I've written extensively on Advanced Medical Directives and Substituted Healthcare Decision Making before and how a person's faith influences medical decision making.

In a nutshell, Advanced Medical Directives allow you to appoint a Healthcare decision maker and leave instructions for end-of-life treatment.  POLST (Physicians Orders for Life Sustaining Treatment) all you to decide what treatment you want if you have a terminal disease.  I encourage all of my clients to complete their Advanced Medical Directives and POLST if they do no other estate planning.  I will often hear from a family member who had to guess at their loved-one's desires for medical treatment in the ICU and are traumatized by the experience.

If you have any questions about Advanced Medical Directives, please follow the links above or leave a comment.

5. Virtual Asset Instruction Letter

This is a new area of estate planning that deals with virtual assets and how you would like them handled after your passing.  For many of us the majority of our communications and photographs now exist on the servers of Google, Facebook, Apple and Microsoft.  I wrote about this before (What is going to happen to your Facebook account when you die?)  I've also written about Grieving Online.

How these accounts are handled after your death depends on the Terms of Service of each of the companies.  What is important is that you decide who you want to have access to these accounts and what you want them to do with them.  Facebook allows you to add a legacy contact to manage your account or to delete your account after your death.  Below is a snip from the Facebook Legacy Account Page.  Other companies are creating similar programs to help you manage your accounts if you die.

facebook memorialization
facebook memorialization

The Virtual Asset Instruction Letter (VAIL) can work alongside your other estate planning documents and provide guidance to the person administering your estate.  The VAIL can contain the passwords and logins for your accounts along with directions.  Logins and access to financial institutions should be controlled by the Will or Trust but you may want to list them here as well but that is not what VAILs are typically designed to manage.

I would use a VAIL to give instructions about who you want to have copies of your emails or photos after your death.  For example, you may have quite a bit of email correspondence with your grandchildren in a gmail account and you may want to provide copies of those emails to them.

For those of you who have monetized Youtube, Instagram or other accounts I would contact an estate planning attorney to advise you on the managing those accounts.

6. Beneficiary Designations and Payable on Death

Certain property does not need to pass through probate in order to be transferred to your heirs or devises.  Most often this non-probate property are accounts that allow you designate a beneficiary.  These accounts are basically contracts between you and the company holding your account.  When you pass away the company will pay or allow access to the account without going through probate.

I explain beneficiary designations and non-probate property in more detail in a previous post.   This most important thing to remember is to keep your beneficiary designations up to date and to review them regularly.

7. Specialty Trusts

There are many other specialty trust that are used in estate planning.  The most common are Special Needs Trusts, Gun Trusts and Pet Trusts.

Special Needs Trusts

Special Needs Trusts are designed to hold property for a disabled person while at the same time allowing them to utilize government benefits.  When creating a special needs trust, great care should be taken so that any government benefits under medicaid or SSI are not disrupted.  I will discuss Special Needs trusts in more depth in a later post.

National Firearm Act Gun Trusts

These are trusts created to hold and purchase weapons regulated under the National Firearms Act.  The purpose of a Gun Trust is to eliminate much of the burden of owning and transferring what are known as Title 2 devices (machine guns, sawed-off shotguns, grenade launchers, etc.)  I think most of the marketing around gun trusts is based on fear mongering but there are some legitimate uses if you have NFA Firearms or a large/unique firearm collection.

Pet Trusts

A pet trust provides for the care of your pet if you are to die or become disabled.

Conclusion

I hope you have found this overview of common estate planning tools helpful.  This is by no means an exhaustive list of options nor is it meant as advice for your situation.

If you have any questions please search the blog, contact me or leave a comment below. As always, please read the Disclaimer in the sidebar before commenting. It is there for your protection.

Portland Probate Attorney
kevin@pnwprobate.com
(503) 893-5878