Faith Based Estate Planning in Oregon

Everyone that creates an estate plan wants it to be consistent with their beliefs whether they are religious or secular.  In Oregon, any estate plan is enforceable so long as it complies with the requirements of Oregon law.   The typical issues that of faith based estate planning are specialized inheritance rules and medical treatments.   Some people may also wish to set money aside for faith based education and travel.

Faith Based Inheritance

If you pass away without a Will or and estate plan, your belongings will be distributed according to Oregon law.  This "default plan" is called intestate succession and I have diagrammed common scenarios for inheriting property without a will in Oregon.   These are the rules created by the Oregon Legislature and many faiths require a different distribution of property than that of the Oregon law.

For example, Surah An-Nisaa 4:11 says:

Allah instructs you concerning your children: for the male, what is equal to the share of two females. But if there are [only] daughters, two or more, for them is two thirds of one's estate. And if there is only one, for her is half. And for one's parents, to each one of them is a sixth of his estate if he left children. But if he had no children and the parents [alone] inherit from him, then for his mother is one third. And if he had brothers [or sisters], for his mother is a sixth, after any bequest he [may have] made or debt. Your parents or your children - you know not which of them are nearest to you in benefit. [These shares are] an obligation [imposed] by Allah . Indeed, Allah is ever Knowing and Wise.

In order to achieve a Shariah compliant estate plan, the distribution must be written into the will or trust documents.  Many other faiths and traditions differ from the laws of intestate succession so don't assume that your wishes will be followed if you don't prepare a will.

End of Life Decision Making and Medical Care

The end of one's life is an ethically and morally fraught time for most people.  Whether or not to use life sustaining treatment or to opt for treatment that may affect the unborn are concerns you may have when faced with a medical issue.  Advanced Medical Directives  allow you to specify what treatments you wish in these situations.

Using an advanced medical directive allows you to appoint someone to make medical decisions if you become incapacitated.  You can also state whether or not you want to be connected to a ventilator or be provided other life sustaining treatments.   Another tool used is the Physician Orders for Life Sustaining Treatment (POLST).  You will need to complete your POLST with a physician and they will place it with your medical documentation.

Other common concerns are whether to donate organs or if you would like a spiritual leader to visit you in hospital.  You may also want to provide instructions for burial or cremation.

Religiously based Incentive Trusts

These are trusts with strings attached to them.  The religious education of your grandchildren may be important to you and you would like to set money aside for religious schooling.  You may also want to place money in a trust to provide travel costs for the Hajj or religious pilgrimages to the Holy Lands when children or grandchildren marry or reach a certain age.  Special care should taken when drafting incentives because the future is unknown and unforeseen consequences are common.   Terms that are too harsh may cause resentment among your heirs and lead to the opposite of what you intended.

Work with and Educate your Estate Planning Attorney

Often times the attorney drafting your estate plan will not understand the religious requirements of your faith.  If that is case you may want them to contact your faith leader to discuss the requirements.  Of course you do not have to follow the guidance of any faith leader and are free to draft your last wishes however you want.

As with all estate planning, it is important that they understand your wishes when creating your documents so be sure to clearly communicate with your attorney and thoroughly review any document before signing it.

Self-Made Rich are more Generous

Fortunately most of us don't have the problem of having to decide what to do with a billion dollars but those that do have to make a choice between giving away large amounts or leaving it to their children. Intuitively it makes sense that those who make their own money are more generous than those that inherited it.  I'd always assumed that it reflected the priorities and values of the family --why the family inherited money in the first place instead of donating it.   Now there is a study, The Charity of the Extremely Wealthy, that states:

We find evidence that self-made billionaires are three to four times more likely to sign the Giving Pledge and to enter the Philanthropy Top 50 list of biggest pledges, compared with those who inherited their wealth. At the same time, we find that the gap in probabilities between self-made and inherited wealth is much smaller, at about 28%, when looking at the presence in the Million Dollar List. We also find that self-made billionaires give more on average than inherited billionaires do, when measuring total gifts using the Million Dollar List or the Philanthropy Top 50.

What Happens to assets if an Estate isn't Probated in Oregon?

Probate is just the court administered transfer of property after their death.  Not all property is subject to the court process and sometimes it doesn't make sense to initiate a probate proceeding.

Non-Probate Property

Beneficiary Designations

Some property doesn't have to be admitted to probate in order to transfer.  Think about your bank, brokerage or life insurance accounts.  Often times these accounts are transferable by the beneficiary designations.  When you initially opened these accounts you were probably asked to select a beneficiary.  Because these accounts are contracts between you and the bank, brokerage or insurance company, the beneficiary designation will direct whoever holds your account to transfer it to your beneficiary after your death.

Below is a snip from the Servicemember Group Life Insurance application.

SGLI Beneficiary

If you read the language carefully it says "If you do not specifically name beneficiaries, your insurance will be paid by law."  What this often means is that if you don't designate a beneficiary the accounts will be paid to the estate and administered by the court.

While this is a quick and inexpensive way to transfer property after death it is very limited.  Like the picture above, most companies will allow you only a few options on how you want to distribute the account.  If you want to split the proceeds in a more complicated way you will need a more involved estate planning.

Keeping Beneficiary Designations up to Date

Using a beneficiary designation is only helpful if it is accurate.  I suggest that you review your accounts annually to make sure the designations are accurate and up to date.  It's not uncommon to find former husbands and wives as beneficiaries on accounts years after a divorce.   That is not a situation anyone wants to deal with your passing.

Transferable on Death Deeds

A few years Oregon adopted a Transfer on Death Deeds.  I believe most states have adopted them at this point.  Much like their name implies, these deeds transfer title in real estate on your death.   TODD are one of the most loved estate planning tools if you have an uncomplicated family.   The primary reason an estate has to be admitted to probate is real estate.  Removing real estate from the equation may let you avoid probate or allow you to settle the estate via the Small Estate process.

I've inserted a snip from ORS 93.975 that provides the form for TODD deeds.

TODD Language

If you only have one heir then a Transfer on Death Deed may make sense for you but anything more complicated and I would be leery of using it.

Abandoning Property

Often times someone will die owing more money than their estate is worth.  When this happens, heirs sometimes decide to just walk away and let the banks foreclose on the property.

If you have any questions about how probate works or what property is included, please feel free to contact me.

Oregon Probate Jurisdiction

One of the areas that initially confuses many practitioners is the limits of jurisdiction for Oregon Probate Courts. By and large, the jurisdiction of the probate court is the same as that of the Circuit Courts. ORS 111.075 Probate Jurisdiction Vested states:

Jurisdiction of all probate matters, causes and proceedings is vested in the county courts of Gilliam, Grant, Harney, Malheur, Sherman and Wheeler Counties and in the circuit court for each other county and as provided in ORS 111.115 (Transfer of estate proceeding from county court to circuit court).

The individual county courts that are vested with probate jurisdiction are the large sparsely populated counties of Eastern Oregon including the recently famous Harney County.  Although the code says these six counties are vested with the county court, all of Oregon's 36 counties' has a circuit court.  I don't know why this is.

 ORS 111.085 Probate jurisdiction described:

The jurisdiction of the probate court includes, but is not limited to:

(1)Appointment and qualification of personal representatives.

(2)Probate and contest of wills.

(3)Determination of heirship.

(4)Determination of title to and rights in property claimed by or against personal representatives, guardians and conservators.

(5)Administration, settlement and distribution of estates of decedents.

(6)Construction of wills, whether incident to the administration or distribution of an estate or as a separate proceeding.

(7)Guardianships and conservatorships, including the appointment and qualification of guardians and conservators and the administration, settlement and closing of guardianships and conservatorships.

(8)Supervision and disciplining of personal representatives, guardians and conservators.

(9)Appointment of a successor testamentary trustee where the vacancy occurs prior to, or during the pendency of, the probate proceeding. [1969 c.591 §5; 1973 c.177 §1]

Now that we have a general description of the kinds of matters that the probate court is interested in, what are the limits of the court's powers.  A phrase you might hear is that the circuit court is "sitting in probate."  ORS 11.095(1) describes those powers:

The general legal and equitable powers of a circuit court are applicable to effectuate the jurisdiction of a probate court, punish contempts and carry out its determinations, orders and judgments as a court of record with general jurisdiction, and the same validity, finality and presumption of regularity shall be accorded to its determinations, orders and judgments, including determinations of its own jurisdiction, as to those of a court of record with general jurisdiction.

What does this all mean?  In essence, the probate court is the circuit court.  There exist some different procedural rules that expedite the administration of the estate in uncontested proceedings but for the most part the powers of the two are the same.