Oregon Estate + Business Planning Blog

FAQ: What will happen to our house if we are married, but I am not on title?

A very common scenario that married people face is when they own a house, but one spouse is not on title. What will happen with the property when the owner-spouse dies? The answer to this question assumes that there is not an estate plan in place yet.

Generally, in Oregon, without an estate plan in place, the surviving spouse inherits all of the deceased spouse's property, but not necessarily without the probate court's approval. This is not always the case, but is the general rule. (If you have a blended family, things are different.)

However, the house and any other assets owned solely by the deceased spouse would have to go through the probate process in order for the surviving spouse to become the owner. Probate is a court process that happens after a person dies. The personal representative (called "executor" in other states), with the supervision of the court, takes inventory of assets, valuates the estate, pays off creditors, and distributes what is left to whomever the heirs are. If that sounds complicated, it's because it is. The probate process can cost a lot of money and take a lot of time, and probate is all a matter of public record. The way this usually plays out is that the surviving spouse continues to pay the mortgage for several years and doesn't find out that the house needs to be probated until he or she tries to sell it. At that point, they discover that the house can't be sold until it goes through probate, so a sale is held up for several months and in some cases, years.

How Do I Fix This!?

Well, you can always just create a new deed that names both spouses. The mortgage can stay in one spouse's name. That's the easiest way to do it. When a spouse dies, the surviving spouse simply records the death certificate with the county and becomes the sole owner. But many people don't want to do that because they wish to keep their separate property separate. The only other easy way to avoid probate in this scenario would be through trust planning. Plus, the joint property scenario won't help your kids to avoid probate if both spouses die. A will is not enough. A will basically tells a probate judge what to do with your property. A trust tells the trustee what to do with the property, and the trustee can handle transferring the assets without ever opening a probate. You can even make your surviving spouse the trustee. 

But guess what. You should consult with an attorney before making any of these decisions. I just want to make you aware that these issues exist, and that there are various ways to solve them. Oh, and by the way, this scenario creates other problems if you and your spouse are not legally married. Consult with a lawyer.

To your family's health & prosperity,

 

P.S.  Want to get started on the most important planning you'll ever do for your family?  Give our office a call at (503) 235-5150 to get started.  You'll be glad you did.

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Candice N. Aiston is an Estate Planning Attorney for families in the Portland, Oregon area. She helps loving parents to prepare their families for a lifetime of security, prosperity, and guidance. If you would like to receive her free report, "The 9 Common Planning Mistakes Parents Make," please visit http://candiceaistonlaw.com/.

*Image courtesy of fantasista at FreeDigitalPhotos.net

How Should Your Clients Take Title To Their Home in Oregon? A Guide for Real Estate Professionals

Have you ever wondered if you are doing right by your clients in how you have them take title to their new home or rental property?  It’s a situation I encounter all the time as an estate planning attorney.  You have the opportunity to make sure that your clients have all the benefits of correctly titled property and they will definitely thank you for it.

Why is titling property correctly so important to  property owners?

First, if titled incorrectly, the property owner cannot control what happens to the property after he dies; second, if titled incorrectly, the owners and their heirs can lose the property to creditors, the government, or even an ex-spouse. 

Three Common Ways to Hold Title:

Tenancy by the Entirety:  Tenancy by the Entirety is the most common way for married couples in Oregon to hold property, but it ensures that there will be a probate upon the death of the second spouse. 

Joint Tenancy with Rights of Survivorship:  Joint Tenancy with Rights of Survivorship is a common way for UNmarried couples in Oregon to hold property, but it ensures that there will be a probate upon the death of the second joint tenant.

Tenants in Common:  Tenants in Common is where each owner wants to maintain their interest in the property even upon death, but this can cause a lot of problems for the surviving owner.

The Best Way to Own Your Home – A Revocable Living Trust: 

The best way for homeowners to own their property is in a revocable living trust. 

• A properly drafted and funded trust will avoid time consuming, expensive and public probate upon the first death and the second death.
• A revocable living trust will make sure that the right people receive the property after the death of both owners and that it doesn’t go to creditors, predators, or future spouses.

The Best Way to Own Your Rental Property – An Asset Protection Trust or LLC: 

The best way for your homeowners to own their property is in an asset protection trust or LLC. 

• A properly drafted and funded trust or LLC will avoid time consuming, expensive and public probate upon the first death and the second death.
• A properly drafted and funded trust or LLC will make sure that the right people receive the property after the death of both owners and that it doesn’t go to creditors, predators, or future spouses.
• A properly drafted and funded trust or LLC will ensure that if renters or guests have a cause of action against the owner, the owner’s other assets are not vulnerable to being collected against.
• A properly drafted and funded trust or LLC will protect the assets inside of that entity from being vulnerable to lawsuits arising from other causes of action.

BOTTOM LINE: Your clients are going to need to talk to an estate planning attorney to determine the best way to title their property. Stand out from the competition by bringing these concerns to your clients' attention.

To your family's health & prosperity,

Candice N. Aiston

P.S.  Want to get started on the most important planning you'll ever do for your family?  Give our office a call at (503) 235-5150 to get started.  You'll be glad you did.

___

Want to use this article in your newsletter or on your blog or website?

 

You can!  Just please be sure to use this complete blurb with it:

 

Candice N. Aiston is an Estate Planning Attorney for families in the Portland, Oregon area.  She helps loving parents to prepare their families for a lifetime of security, prosperity, and guidance.  If you would like to receive her free report, "The 9 Common Planning Mistakes Parents Make," please visit http://candiceaistonlaw.com/.

Portland, Oregon Estate Planning Lawyer Discusses Protecting Your Kids Should Something Happen to You

One of my greatest passions as an Portland, Oregon estate planning lawyer is educating parents about how important it is to prepare for their untimely death. Not a fun topic I realize. But it just takes one sad circumstance of parents passing away and leaving the kids to deal with squabbling relatives to understand how critical this is for their well-being.

The possibility of leaving this world can be difficult to accept and many people choose to not think about it. Unfortunately, this fear often prevents people from taking the proper precautions they need to take.

I speak at various groups around Portland and usually deliver this message in an upbeat and cheerful way so people can see that preparing their estate plan for their family is a positive and joyful experience.  But for today’s post I’m going to give you the real-deal about Portland, Oregon estate planning. Blunt, and to the point.

Essentially, it’s critical for everyone to understand the importance of estate planning for those we love – especially our children. As you can imagine, children are incredibly vulnerable if you die while they are still minors due to the simple fact that they are unable to take care of themselves.

Here are a few cold-hard facts about what could happen if you passed away suddenly without a will or trust in place.

1.      A judge that doesn’t know you or your children will decide who raises them.

If something happens to you, who is going to step up?  Is it the person that you want to raise your children?  If you don’t have an estate plan in place, will your relatives squabble over who is or isn’t responsible for raising them? Do you really want to put your children through that?

2.      The person who the judge picks to raise your kids will also be responsible for their financial well-being.

If something happens to you, all of your assets will be handed to the guardian (that you didn’t select) to be managed for them. The obvious fear is that this person could possibly use the funds for something other than the care of your children.  However, there are many other things to consider.  Does the person that the judge picked have the same financial values that you do?  For example, you may feel strongly that you would like your children to attend high-end sports clinics to help develop their athletic skills.  But, will the guardian see the value in this?  What if they think spending money on what you would have wanted is a total waste?  The potential for trouble is endless.

In addition to knowing who will be handling your estate, you probably have no idea of the true amount of money you'll be leaving behind to take care of your kids!  Most families who own a home and have retirement and life insurance accounts will have to worry about paying estate taxes, and that rate will be 55%, starting in 2011.  Additionally, without a plan in place, your estate could be subjected to thousands of dollars in probate fees.  Without a plan in place, you just can't anticipate all of the costs and what those costs eventually leave with your children.

3.      All of the money left from your estate (assuming there IS any) may go to your child in a lump sum when he is 18 years old.

Think about this one.  What would you have done if you had been handed a bunch of money at that time in your life?  Scary thought, huh?  The hard truth is that most 18 year olds are simply not mature enough to properly handle finances at that level.  I have heard story after story of kids who should have been fine financially, but weren’t because they decided to buy cars and clothes instead of investing in their future by going to college. So sad!

And if your child has special needs, you may be screwing him or her out of important government benefits if you don't plan properly.  Then your child would have to use that inheritance to pay for insurance, medical bills, and every other expense until the funds are consumed.  What happens after that?

So, there you have it - some cold, hard questions for you to ponder. My hope for those of you reading this is that you have already taken care of naming guardians for your children and put your estate plan in place and that you are keeping it up-to-date as the circumstances of your life change.  But, if you are not, I would be happy to offer you a free Family Treasures Information Session to start you on the path. 

Don’t worry if you aren’t sure who you would pick as guardian.  I’ll help you with that.

Don’t worry if you think you can’t afford planning.  I’ll work with you on that.

Don’t put this off because you don’t have the time.  Think about how your kids will spend their time if something happens to you and you haven’t made these decisions for them.

Call our Portland, Oregon estate planning office today and make an appointment for a free Family Treasures Information Session and you’ll experience a peace of mind that you didn’t even realize you were lacking.

To your family's health & prosperity,

 

Is LegalZoom my competitor?

There is a lot of talk about LegalZoom and other DIY software in the Estate Planning world. I, and many attorneys, have spent time discussing and writing about how dangerous DIY estate planning can be, and I know a few attorneys who generated documents using the software and documented their critiques of the various programs.

There are some attorneys who say that companies like LegalZoom are direct competitors of Estate Planning attorneys. There are also attorneys who don't believe those companies are competitors at all.

I have been trying to determine whether I think LegalZoom is my competitor, and my first inclination was to look at the clients I have worked with. I can't think of any clients that I have who needed to be convinced that they should work with an attorney instead of doing it themselves. And, maybe it's because I live in the DIY capital of the world (Portland, Oregon), but I have a ton of clients who are DIY-ers for most things. Most people who come to see me have either already decided that they are going to work with me, or they want to get to know me better to decide whether they want to work with me.

The clients I work with have a goal: They want to make things as easy as possible for their families if something happens to them. So they seek out a lawyer's advice on how to make that happen.

Most of the time, the way it goes down is that the client calls and says that they need to set up a will or "get something in place." Most people find out at the first meeting that based on their particular situation, they need a lot more than a will. They usually leave the meeting saying, "Wow, we had no idea!" They realize that they're paying for a lawyer's advice, not so much for the paperwork that follows.

Based on my current clientele, I could say that LegalZoom is not a competitor.

But I don't know about the people out there who didn't call me or another attorney. I don't know if the marketing for LegalZoom  or Suze Orman or any other company convinced them that estate planning is something they can do themselves. 

I decided to get over to YouTube and have a look at some of the commercials that are out there. LegalZoom has its own YouTube page, where they not only have their commercials, but they also have video testimonials generated from a contest for people who have used LegalZoom's services. (Everyone knows that testimonials are a great marketing tool, and yet, I can't exactly hold a contest to get people to submit videos about how great I am.)

In the commercials, the overarching theme is "peace of mind." That's the overarching theme for estate planning attorneys as well, and so it appears that LegalZoom may be my competitor after all. But there's a difference between the peace of mind that LegalZoom offers and the peace of mind that Estate Planning attorneys offer.

Before I saw the testimonials, I only suspected that a lot of people might have a false sense of security with these LegalZoom documents. I hadn't personally gone over a LegalZoom plan, but I just couldn't imagine how software could do everything that an Estate Planning attorney can do. Commercial after commercial doesn't really give me a sense of who these people in the commercials are. Do they own a house? Do they have life insurance, retirement, investments, businesses? What kinds of jobs do they have? What is the family situation?

The difference between LegalZoom and an Estate Planning Attorney is that LegalZoom's job is to deliver a product that a customer requests, and an Estate Planning Attorney's job is to assess a client's circumstances, make recommendations based on those circumstances, and create a plan according to what the fully informed client decides upon. If a person calls me and tells me that they want to set up a will, I set up an appointment, send them our Family Information Packet, and have them fill out a worksheet that tells me about their family, assets, and financial situation. At our meeting, I go through their information with them and show them what things would look like if they died with their current plan (or lack of a plan) in place. We identify areas of concern, such as the cost, time delay, and privacy issues associated with probate, or the expense of estate taxes. We discuss ways to avoid any of these areas of concern. Then the client chooses a plan that best fits their family's needs. (We also address issues such as incapacity - what will happen with a client's kids and assets if the client is unconscious but still living - and asset protection.)

I watched several of LegalZoom's videos, and I heard a lot of people saying that they had peace of mind, but thought to myself, "Well, we won't know if there are any mistakes until after you're gone."

Then I saw Jane's testimonial. You can watch it here. Jane set up a will through LegalZoom and now she has peace of mind. But Jane says that the reason she decided to set up a will is because she experienced the death of a friend whose estate had to go through probate. She decided that she didn't want her estate to have to go through probate, and so she went to LegalZoom and set up a will. The problem? Having a will doesn't mean you avoid probate. This peace of mind that Jane paid for is worthless. If Jane went to see an Estate Planning attorney, she would know this.

There are other slightly disturbing testimonials in addition to Jane's. There's a couple with two kids, and the wife is a medical student soon starting her residency. That's all I know about them, but I can all but guarantee that 1) they didn't get a comprehensive plan to care for their kids if they die or are incapacitated, and 2) they don't have any asset protection if the wife is sued for malpractice. I hope that they will be the kind of folks who revisit their estate plan with an attorney when they're feeling a bit more like they can afford it.

There are numerous parents who gave testimonials about their peace of mind, who probably don't have a comprehensive plan for the care of their kids during incapacity or after death.

There's a guy who invented some sort of parachute/skateboard thing who I assume did his patenting and possibly set up an LLC through LegalZoom. I have no idea what state he is in, but in most states, simply filing as an LLC doesn't protect you from every possibility of liability.If someone gets hurt using his invention, he's probably not protected.

My conclusion is that I am undecided on whether LegalZoom is my competitor, but I will keep having the discussion about DIY estate planning, because I think it's dangerous, and because I think that people are paying money for a false sense of security.

I'd love to hear your comments on this topic!

To your family's health & prosperity,

P.S. If you're in Oregon, and you want to make sure that you've made everything as easy as possible for your family, call my office at (503) 235-5150 to set up your Family Treasures Information Session, valued at $750, but FREE for blog readers!

Wednesday Web Wrap-Up

Welcome to Wednesday Web Wrap-Up! Lots of great information put out over the past two weeks! Thank you to the attorneys and organizations that provided such great information.

Massachusetts Attorney Danielle G. Van Ess linked to this article, which illustrates the importance of business succession planning. Business owners need to think long and hard about how they want their business handled after their death. Not planning can leave a mess for your family. The law may require that some heirs have a stake in the business that you would never have wanted, and it may leave out heirs that you had wanted to include.

Los Angeles Attorney Angelica Simmons linked to this article about the feud between the grown children of Artist Frank Frazetta. Frazetta is still kickin' at age 82, but his children are already fighting over their future inheritance. I think the article speaks to the importance of family communication and planning.

Attorney Mike Lichterman posted this article, called, "What's So Bad About Probate?" on his blog. It explains why many people and their attorneys plan to avoid probate - it can be expensive, time consuming, and the records are public.

I cam across this article, "Celebrity estate fights can offer lessons for us," linked to on Twitter by various Estate Planning Attorneys. From the article: "[Michael] Jackson, for example, died at 50 but had made a will and set up a trust for his children. But like so many everyday fathers or mothers, he didn't take the next key step -- funding the trust or re-titling his assets into it. Now, it's a family mess." It's amazing to think that even Michael Jackson didn't properly set up his trust. It's scary to think that so many regular folks think they can do it properly online! 

WealthCounsel linked to two articles from fool.com: "Make Your Heirs Rich, Not Your Lawyer," and, "The Truth About Living Trusts." The first article talks about how much of your estate can be eaten up in probate fees and costs if you fail to plan (or use a will-based plan), and the second article talks about the use of trust planning. I personally believe that most families should use trust planning. The transfer of assets after death is much smoother, less costly, less time consuming, and totally private.

Attorney Jackie Bedard, of Carolina Family Estate Planning, linked to this Forbes photo article: "In Pictures: Nine Facts You Need to Know about Estate Tax." There are many misconceptions that people have about estate taxes. Most people don't realize that life insurance is included in your estate if you own the policy. Many people don't realize how steep the tax is and that it's not just the uber-wealthy that will be taxed. Look at the article to find out other facts.

To your family's health & prosperity,