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