2016 Oregon Legislation to watch

I'm aware of three pieces of legislation that have been introduced during the Oregon Legislatures 2016 short session that relate directly to estate planning and end of life issues. The first is Revised Uniform Fiduciary Access to Digital Assets Act.   This act authorizes certain fiduciaries to access electronic communications and digital assets of certain persons or decedents.  

Proposed language includes:

SECTION 7.

If a deceased user consented to, or a court directs, disclosure of the con-

tents of electronic communications of the user, the custodian shall disclose to the personal representative of the estate of the user the content of an electronic communication sent or received by the user if the personal representative gives the custodian:

(1) A written request for disclosure in physical or electronic form;

(2) A certified copy of the death certificate of the user;

(3) A certified copy of the letter of appointment of the personal representative or a

small estate affidavit or court order;

(4) Unless the user provided direction using an online tool, a copy of the user’s will, trust, power of attorney or other record evidencing the user’s consent to disclosure of the content of electronic communications

Hopefully this will make it easier for Personal Representatives to manage the estate and digital assets of someone who has passed.

The second bill is SB 1552 relating to Advance Directives in Oregon.  This bill introduces a new advance directive form that will be valid in Oregon.  There are some changes in the language of the form that I think are important but I'm not sure what the practical change will be for Physicians and Patient's family during end-of-life discussions.

4. DIRECTIONS TO MY HEALTH CARE REPRESENTATIVE.

If you wish to give directions to your health care representative about your health care decisions, initial one of the following two statements:

___ My health care representative must follow my instructions unless my medical pro-vider says my instructions are not consistent with medical standards.

___ My instructions are guidelines for my health care representative to consider

when making decisions about my care, but my health care representative should use discretion as the health situation requires.

It is not clear to me what the practical effect of the phrase "unless my medical provider says my instructions are not consistent with medical standards" will be but at first blush it does seem to take some control away from the patient.

The last bill is HB 4102 updating and modernizing certain laws pertaining to intestacy, wills and estate administration.  The bill removes "issue" from the probate code and replaces it with "descendant." I can only assume this change was made because only probate attorneys use "issue" to mean descendants.

There is also some interesting language about lifetime gifts being treated as an advancement on an inheritance or devise.  Specifically the transfer of non-probate property and the effects it has on distributing the estate.

(3)(a) Property not subject to probate administration, the transfer of which is intended by the decedent to take effect on death, is treated as an advancement against the heir’s share of the estate or the devisee’s devise under the will if declared

in writing by the decedent, or acknowledged in writing by the heir or devisee, to be an advancement. Examples of transfers under this subsection include but are not limited to beneficiary designation, right of survivorship and transfer on death deed or transfer on death designation.

My thought is that as transfer on death deeds, beneficiary designations and other similar estate planning tools become more popular, the fights between family members will only increase if there is not a clear understanding of what was intended.  These transfers are only considered an advancement against an heir's share of the estate "if declared in writing by the decedent."  I doubt the fill in the blank wills are going to be able to take advantage of these non-probate transfers and still protect the decedent's intent.

As of right now none of these bills have been passed and undoubtedly there will be amendments if they are passed.  I will post updates if they do become law in Oregon.

Probate Pitfalls (Investing Estate Assets)

The Wall Street Journal has a great article describing some of the mistakes that can be made when settling an estate.  The portion that caught my eye and inspired this post was the section on investing estate assets. While you can and sometimes should invest estate assets you can run into trouble if things don't work out.

One father named his three adult sons as executors under his estate plan, which included a pecuniary formula for funding the trust for the surviving spouse, with the balance of the estate passing to the sons. The estate consisted largely of high-quality bonds, which the sons sold shortly after their father’s death to invest in a much riskier portfolio of small-cap stocks, which they hoped would grow, Mr. Magill says. But the value of those stocks declined more than 50% before the spouse’s trust was funded at the full amount required. The sons’ resulting share bore the entire decline in the stocks’ value, resulting in a loss to them of more than $5 million.

In Oregon the General Duties of the Personal Representative is to "preserve, settle and distribute the estate in accordance with the terms of the will and ORS chapters 111, 112, 113, 114, 115, 116 and 117 as expeditiously and with as little sacrifice of value as is reasonable under the circumstances."

When the Estate has surplus assets that are not needed for the administration, the surplus assets should be invested to generate interest and income.  Oregon's Probate Code section ORS 114.305 (6), focuses on short-term investments of estate assets:

Deposit funds not needed to meet currently payable debts and expenses, and not immediately distributable, in bank or savings and loan association accounts, or invest the funds in bank or savings and loan association certificates of deposit, or federally regulated money-market funds and short-term investment funds suitable for investment by trustees under ORS 130.750(Trustees duty to comply with prudent investor rule) to 130.775 (Trust language authorizing investments permitted under prudent investor rule), or short-term United States Government obligations.

Of course, this is just scratching the surface of the issues that can arise from investing estate assets.  What is important to remember is that personal representatives in Oregon are only held to the standard of a prudent investor.  (Compliance with the prudent investor rule is determined in light of the facts and circumstances existing at the time of a trustees decision or action and not by hindsight. ORS 130.770)

Intestate Succession in Oregon

What happens when you die without a will

When a person dies without a Will in place, the Oregon Probate Law (Intestate Succession and Wills) determines how that person’s estate will be distributed.  The diagrams below will help you understand how the estate will be divided. This is not a complete list of scenarios but should give you a good idea of what can happen.  In real life, families can be incredibly complicated and who inherits what can be equally as complicated.

Surviving Spouse and Children

No Surviving Spouse and Surving Children

When there is no surviving spouse, the Estate is distributed evenly between the children.

Children from a Previous relationship and a surviving spouse

In this situation, the surviving spouse receives half of the estate while the Decedent’s children receive the other half distributed evenly.   Former spouse receives nothing.

Parents Share when Decedent has no children or spouse

When a Decedent passes with no Spouse or Children, the surviving Parent will inherit the estate.

No Heirs, unable to locate heirs or heirs refuse

Caveats

There are many other situations that can arise with families.  For example, parents can sometimes forfeit their share of estate because of neglect or abuse.  If the heir murdered or abused the person who died, Oregon law can prevent them from inheriting property.  There are also rules for grandparents inheriting property and for individuals inheriting property to two lines of relationships.

What appears first as simple can quickly become complicated when blended families, remarriages, not remarrying and other decisions we make throughout life get added to the mix.You can learn more about Oregon Probate on my practice area page. 

If you have any questions on how your property will be inherited after you pass, feel free to contact me.  

Estate Planning for Unmarried Seniors

About once a week I hear from unmarried seniors living together.  Typically they have been living together for about a decade and are previously divorced or widowed.  They had a reason not to get married at the time but one of them has now passed and the ownership of property is in question. 

There are many reasons why people don't want to get married (finances, bad previous marriages, etc.) but marriage does confer certain rights of inheritance. In the absence of a Will, Oregon's intestacy laws will determine who inherits.  This can lead to the surviving partner losing their home because they were not on the title. 

Substituted Decision Making

Unmarried couples are also unable to make financial and healthcare decisions for their partners.  Durable power of attorneys, healthcare power of attorneys, and certain types of trust can help you make decisions and care for your partner if they are to become incapacitated. 

Making sure Children are taken care of too

Trusts can be used to make sure that your surviving partner has the means to support themselves and, when they pass, your children still inherit they way you wanted. 

Marriage has Consequences

When you marry your spouse, your legal status changes and you acquire new legal rights.  The decision not to marry also has consequences and may lead to unintended consequences as you age.  At the very least, you should talk to your partner on how you want your property handled after your death.  If necessary, you should draw up estate planning documents to make sure your wishes are upheld.

What does an Oregon Probate Attorney do?

A probate attorney advises a personal representative and help guide them through the probate process.   While the steps of administering a probate estate in Oregon initially appear simple, there are many opportunities for mistakes and for malpractice.  

A large part of the job of a probate lawyer is to understand the nature of the assets of decedent.  Do they belong in the probate estate or do they pass outside of probate?  Are the assets located in Oregon or another state?  If they are located in another state, the Personal Representative may have to administer an ancillary probate in that state. 

Because the probate process in Oregon is court administered, filing with the court and requesting court permission takes up much of a probate attorney's time.   While personal representatives sometimes have an adversarial view of court administration, the State of Oregon has passed these legal requirements in order to protect the deceased, their heirs and anyone who may have had financial dealings with them.

If you have any questions regarding what a probate attorney does, please feel free to contact me.

End of Life Decision Making in Oregon

End-of-life decision making is an emotionally fraught time for those that are dying and their families.  At some point in our lives, everyone faces the death of a loved one.  The trauma of these deaths can last for many years after their passing.  Because of the advances in modern medicine, many more lives are saved and many more people are living longer and healthier lives.  The downside of this improved healthcare is that many people now linger in ways that were unimaginable a generation or two ago. 

This has created a new set of burdens for the dying and their families.  Individuals want their end-of-life wishes followed and die in a manner consistent with their beliefs and values.  Families want to know that they made the right decisions for their loved ones.

How People die in Oregon

The vast majority of Oregonians die of natural causes.  According to the Oregon Health Authority, 34,160 Oregonians died in 2014.  Of those, 31,395 (91.9%) died of natural causes.  Seventy-five percent of the deaths (25,702) were for Oregonians aged 65 or older.

For 2012, the CDC broke down the Causes of Death further:

Nationally the numbers are the similar.  Most deaths occur in those 65 and older any many die in hospital settings. 

How people want to die

The majority of Americans want to die at home. Survey after survey has found that.  Unfortunately, that is not how most Americans die:  63% of Americans die in hospitals and 17% die in long term care facilities.  In 2010, the average hospital stay that resulted in death was 7.9 days.  (CDC)  Oregonians average of 5.2 days in the hospital before death in 2013.

What do Americans fear most about dying?

People fear that their pain, symptoms, anxiety, emotional suffering, and family concerns will be ignored. Many critically ill people who die in hospitals still receive unwanted distressing treatments and have prolonged pain. Many fear that their wishes (advance directives) will be disregarded and that they will face death alone and in misery. Physicians may use confusing or vague medical terms and talk briefly about treatment options when the patients are too sick to participate. Most people want to discuss advance directives when they are healthy and often want their families involved.  (American Psychological Association End of Life Factsheet)

If Americans want to die at home, then why do so many end up dying in the ICU? 

Effect of End of life decision making on families

The stress of end of life takes a tremendous toll on families and healthcare surrogates (someone who makes medical decisions for you.)   For those who were healthcare surrogates that made medical decisions when love ones were in the ICU, one third had symptoms of Posttraumatic Stress Disorder (PTSD.)  Eighty-two percent of those who had to make end of life decisions had symptoms of PTSD.  (Surviving Surrogate Decision-Making: What Helps and Hampers the Experience of Making Medical Decisions for Others)

Now compare this to the lifetime rate of PTSD symptoms in the American Military.  The lifetime rate of PTSD for Vietnam Veterans is 31% and the rate for Afghanistan/Iraq veterans is 14%.  (Veterans and PTSD)

Surviving spouses and other caregivers also have decreased life expectancy after the death when hospice and other palliative measures are not used.  (PUBMED.) The burden of this decision-making and the negatives outcomes for family members can be lessened when family’s discuss end-of-life decisions before they are need and by creating Advanced directives.

How to Resolve

What is quality of life while dying and what is a good death?  Most people want to die quickly, painlessly and in their sleep but that is not always the case.  People often assume that loved-ones know their wishes and never talk to them regarding it.  Don’t assume that your individual values and wishes are known by your loved ones.

Advanced Medical 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.

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:

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.

If you have any questions regarding end-of-life decisions, please discuss with your family, your physician and, if necessary, with your attorney.

Free Oregon Estate Planning Workshop

January 6, 2016 

6:30 PM

Oak Lodge Library 

16201 SE McLoughlin Blvd

 Oak Grove, OR 97267

Learn the basics of Estate Planning, End of Life Decision Making and Asset Protection from Attorneys Kevin Spence and Michael D. O'Brien. The Workshop is free and open to the public. However, space is limited so please reserve your spot in advance.

Please register by filling out the form below.

Non-borrowing surviving spouse can retain home subject to Reverse mortgage

Reverse Mortgages were marketed to provide cash to older Americans during their retirement by borrowing against the equity in their homes.  The payments were generally based on the life expectancy of the borrower.  In order to maximize payments, some couples would transfer the property to the older of the two so that the payments would be higher.  The older spouse dies and that is how we end up with a non-borrowing surviving spouse living in a property subject to a reverse mortgage.

Because of how Reverse Mortgages are written and regulated, the Garn St. Germain Act's prohibition wasn't applicable.  (Garn St. Germain generally prohibits a lender from calling a mortgage on the death of the borrower.)  This ended with many surviving spouses at risk of losing their homes.

The US Department of Housing and Urban Development (HUD) clarified this with Mortgagee Letter 2015-15 this summer.  This letter allows the Mortgagee (Lender)  to do two things:

“Mortgagee Optional Election (MOE) Assignment” means the optional assignment elected by a mortgagee for an eligible HECM assigned an FHA Case Number prior to August 4, 2014, and associated with an Eligible Surviving Non-Borrowing Spouse.

and

“Mortgagee Optional Election Assignment Deferral Period” means the period of time following the death of the last surviving borrower for an eligible HECM assigned an FHA Case Number prior to August 4, 2014 and associated with an Eligible Surviving Non-Borrowing Spouse during which the due and payable status of a HECM is further deferred based on the continued satisfaction of the requirements for an Eligible Surviving Non-Borrowing Spouse under this Mortgagee Letter and all other FHA requirements.

How is a non-Borrowing spouse defined:

 

“Eligible Surviving Non-Borrowing Spouse” means a Non-Borrowing Spouse of a HECM borrower where the HECM was assigned an FHA Case Number prior to August 4, 2014 and who:

1. Was either: a. legally married - as determined by the law of the state in which the spouse and borrower reside(d) or the state of celebration - to the HECM borrower at the time of loan closing and who remained married to the HECM borrower until the HECM borrower’s death; or

b. engaged in a committed relationship with the borrower akin to marriage but was prohibited, at the time of HECM loan origination, from legally marrying the HECM borrower based on the gender of both the borrower and Non-Borrowing Spouse, but was legally married prior to the death of the borrower, as determined by the law of the state in which the spouse and borrower reside(d) or the state of celebration, to the HECM borrower and remained married until the death of the borrowing spouse;

2. Currently resides and resided in the property secured by the HECM as his or her principal residence at origination of the HECM and throughout the duration of the HECM borrower’s life; and

3. Who has or is able to obtain - within 90 days following the death of the last surviving borrower - good, marketable title to the property or a legal right (e.g., executed lease, court order, etc.) to remain in the property for life.

 

What this means is that Mortgage companies have the option of allowing surviving spouses to remain in their homes.  

Free Oregon Small Estate Affidavits

Oregon Affidavit of Claiming Successor

One of the most common questions I am asked is how to file a small estate affidavit.  Several Oregon counties provide small estate affidavits online.  These counties also provide instruction on how to complete the forms.  Please follow the links below for more information.  All of these links are to the respective County Courts websites.

 I do not use any of these forms in my practice (I've created my own) and can't vouch for their quality.  They are provided by the County Courts.

DISCLAIMER:  THESE ARE NOT MY FORMS AND I HAVE NOT USED ANY OF THEM.  THIS POST IS FOR INFORMATIONAL PURPOSES AND SHOULD NOT BE CONSTRUED AS LEGAL ADVICE. 

Clackamas County Small Estate Affidavit

Clackamas County Small Estate Affidavit Instructions

Deschutes County Small Estate Affidavit

Jackson County Small Estate Affidavit

Linn County Small Estate Affidavit

Marion County Small Estate Affidavit

Marion County Small Estate Affidavit Instructions

Washington County (OR) does have information on how to file a Small Estate but no form.  Linked is the most current information for those who died after January 1, 2010.

As far as I know Multnomah County does not provide a Small Estate Affidavit online.  

Disclaimer:  These are not my Forms and I have not used any of them.  This post is for informational purposes and should not be construed as legal advice.