Oregon Estate + Business Planning Blog

What Estate Planning Documents Do I Need?

I recently returned from a trip to Hawaii, where I visited my family and attended my brother's wedding.  My two kids left a week before me with my parents, and that gave me some time to think about whether my estate plan was up to date.  No, it was not.  My guardian designations were outdated, my trustee designations were no longer going to work for my situation, and the new revisions to the Oregon Inheritance Tax created a big problem for my estate.  Honestly, I am embarrassed to say that I thought, "My plane is not going to crash.  I don't plan on dying.  This can wait."  But after the couple of weeks I just had with a friend dying and with two friends winding up in the hospital, I quickly shook off that nonsense.  I needed to update my plan.  A lot had changed in my life since I last updated it.  

I decided to show you what things look like now. Here is a list of everything in my binder and what you need to include in your plan:

• KidsCare Plan:  Long-term guardian designations; short-term guardian designations; instructions to caregivers about emergency plan; instructions to guardian about long-term care of kids; wallet ID cards (TO RECEIVE YOUR FREE KIDS CARE PLAN, CLICK HERE);
• Overview: The "Cliff's Notes" of the trust;
• Trust Agreement: Outlines terms of trust during lifetime and how assets are to be distributed after death; names Trustees;
• Pour-Over Will: Names Personal Representative and "catches" and assets that may have been left out of the trust;
• Nominations: A quick reference to see who is involved in the plan;
• Personal Information: Your most recent personal and financial information sheet;
• Funding Instructions: Shows you how to title assets and is handy to refer to when you acquire assets in the future;
• Power of Attorney: Names an agent to act for you financially if you are incapacitated;
• Privacy Affidavit: The short and sweet version of what banks and other institutions need to know about your trust;
• Trust Assets: Includes your asset spreadsheet, confirmation of asset transfers, and any information about your assets that your trustee will need to know;
• HIPAA Release: Allows your trustees and representatives to gain access to your medical records without a court order, saving your family money if you are incapacitated;
• Advance Directive: Names a Healthcare Representative to make healthcare decisions for you and outlines your healthcare wishes;
• Memorial Instructions: Everything your family needs to know to prepare an obituary, notify friends and groups of your passing, and plan a memorial service;
• Property Agreements: Any agreements you have with people you co-own property with;
• Personal Property Memorandum: Gives away specific items to specific people;
• Other Documents: This can include a Letter of Instruction to your trustee and letters you or your lawyer writes to your fiduciaries;
• Trust ID Card: This is handy to carry in your wallet to remind you how your trust should be titled;
• CD of Documents: For ease in sending any documents to fiduciaries, banks or other institutions, or doctors;
• Family Treasures Conversation: A recorded message to your family so that you can say all the things you want to make sure you've said.

 Of course, you may need more than this if your estate will be subject to estate taxes, or if you need to incorporate asset protection or business succession into your plan.  The most important part of your plan is professional counsel.  An estate planning attorney will be able to guide you in the direction that is right for your family.

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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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/.

 

LAW CHANGE ALERT: Oregon Inheritance Tax

The Oregon House and Senate have passed House Bill 2541 with Senate amendments. The Bill is on its way to the Governor, who is expected to sign it into law.  The Bill modifies the existing Oregon Inheritance Tax laws, rates, and exemptions and sets forth a new tax table:

To calculate what your tax would be, determine at which level your estate would be taxed at (i.e. between $1M and $1.5M).  Include all property in your determination, including life insurance.  (Note: A commonly held belief is that life insurance is "not taxed."  This is only true in that it is not taxed as income to the beneficiary.  It is included as an estate asset and taxed as part of your estate.)  Your tax is the sum of the amount in Column 3 of your row (so for the second row, $50K) PLUS the product of the difference bwtween Colums 1 and 2 times the percentage from Column 4.

To illustrate how it works, let me give you a few examples.  DISCLAIMER: Keep in mind that these are very simplistic examples, and cannot substitute for an in-person meeting with an estate planning and/or tax attorney. This post is for educational purposes only and does not constitute legal advice.

1.  Taxpayer dies with $800K in property. No Oregon Inheritance Tax, because Taxpayer's property is under the $1M exemption.

2.  Taxpayer dies with $1.49M in real estate, bank accounts, investments, retirement accounts, and life insurance.  Tax is $49,900.  $1M is exempted, and there is a 10% tax on the amount between $1M and $1.5M.

3.  Taxpayer dies with $1.5M in real estate, bank accounts, investments, retirement accounts, and life insurance.  Tax is $50,000, according to the table.

4.  Tax payer dies with $4.4M real estate, bank accounts, investments, retirement accounts, and life insurance.  Tax is $356,500.  The first $3.5M gets taxed $257.5K and the amount between $3.5M and $4.5M is taxed at a rate of 11%.

If your estate value is over $1M, including life insurance, you will want to meet with your estate planning attorney as soon as possible to review the options that may be available to help you to minimize or eliminate taxes for your estate.  Our office has been able to help our clients to reduce and eliminate taxes for their estates, at a cost that is often less than 1% of what their tax would be!

EXISTING AISTON LAW CLIENTS:  You may call us at any time to get your questions answered.  We do not charge hourly fees for our consultations with you.

NON-CLIENTS:  We can take a very limited number of new appointments to review your situation this summer.  Please call us as soon as possible if you wish to make an appointment.  Although we do not charge for initial consultations, we value our initial consultation at $750.00 for the thorough explanations that we go through during the two-hour appointment. 

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.

___

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,

 

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,

5 Surprisingly Safe Investments during the Recession

Many of my clients are not sure where to put money right now! Normally, they'd put money into their retirement account or brokerage accounts, but when they keep seeing the numbers go down, it seems pointless to keep throwing money at those accounts. I won't speak to the legitimacy of these fears. There is plenty of commentary out there about how it's good for you and it's good for everybody if you keep investing. I'm not going to debate that here, but what I will do is show you 5 Surprisingly Safe Investments during the Recession.

1.  Term Life & Disability Insurance

As long as you are working with a company that is conservative in their investments and has not been terribly affected by the recession, you lose nothing by buying new policies now. Every parent needs life insurance. You must make sure your loved ones are going to be taken care of, even if you're not here. Every financial expert from the frugal-minded (Dave Ramsey & Suze Orman) to the entrepreneurial (Alexis Martin Neely) agrees on this one point. While everyone agrees that we need life insurance, the odds that you'll be disabled prematurely are about 4 times higher than the odds that you'll die prematurely. You should be looking into disability insurance at the same time you're looking into life insurance.

2.  Financial Planning

As everyone realizes the need for unbiased financial advice, the fees for financial planners are only going to go up! The value of getting your financial act together and getting a clear direction of where your family is headed financially is never going to be lost. And acting now could save you thousands in the long run and get you headed to financial wealth a lot sooner than if you meander through life without a plan to guide you. A financial planner will tell you what your retirement situation will look like and whether you are paying for any financial products that are unnecessary. They can also develop clear plans to help you see what you need to do to get to where you want to be.

3.  Estate Planning

A lot of smart people are investing in a relationship with an attorney for their family who will be there for their families when they can't be. At the same time, they are having their attorney develop plans that will protect their families if something happens to them. An estate plan that is done right and properly updated by the family's attorney is never going to lose its value. It is an extremely popular time to do estate planning right now, since low real estate and investment values bring certain planning advantages, and so you can expect that attorneys' rates will only increase. Don't wait!

4.  Your Physical Well-Being

Now is a great time to invest in your physical well-being. Take advantage of special offers by gyms and weight-loss centers. Getting healthy now could mean saving money later, by avoiding the health crises that often come as a result of not taking care of one's self. It's also a great time to make that dentist appointment and get that check-up. People don't often think about their health as something to invest in, but you'll be doing your family a huge favor by seeing it that way.

5.  Your Emotional and Mental Well-Being

It's also a great time to invest in your emotional and mental well-being! You could be a busy and overwhelmed Mom who needs a sitter once a week to make it to a much-needed meditation class or knitting circle. You could be an overworked business owner who needs to invest in a coach to help bring the business to the next level. Maybe you need to take a parenting class. Maybe you need to see a therapist to finally rid yourself of baggage from childhood. Now is the time to invest your emotional and mental well-being.

I think the idea behind each of these 5 investments is that they are not traditionally seen as investments, when that's exactly what they are. You put a little bit of time and money into these areas today, and you save a whole lot later on in life.

To your family's health & prosperity,

Candice

Stimulus compromise, here are the key areas affected

Word on the street is that House and Senate legislators have reached a compromise on the long-awaited stimulus package.  The pricetag will reportedly be $789.5 billion.  There are a lot of areas covered, so you should go to CNN Money to read their article on it.

Most of the areas covered involve low-income individuals and families, or those who have been laid off, but a few affect a broad range of people, including higher earners:

[the following from the CNN Money article]

Break for higher income families: The bill includes a one-year provision to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax. The AMT was intended primarily for high-income taxpayers but has in recent years threatened to engulf those lower down the income scale. Estimated cost: $470 billion.

Temporary deduction for car buyers: The bill would let those who buy a new car, light vehicle, recreational vehicle or motorcycle in 2009 deduct state and local sales taxes as well as any excise tax charged in the purchase. The deduction would be available to those earning less than $125,000 ($250,000 for joint filers). Estimated cost: $1.7 billion.

Temporary credit for home buyers: The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit's expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009.

The full credit is available to those making $75,000 or less ($150,000 for joint filers). Estimated cost: $6.6 billion.

New temporary college credit: The bill introduces the American Opportunity Tax Credit, which would be in effect for 2009 and 2010. It expands the existing Hope Scholarship tax credit and would be worth as much as $2,500 for higher education expenses, up from $1,800 currently.

The full credit would be available to those making less than $80,000 ($160,000 for joint filers). Those making between those amounts and $90,000 ($180,000 for joint filers) would get a partial credit. And the break would also be partially refundable, meaning lower income families with little or no tax liability could now claim some of the credit. Estimated cost: $13.9 billion.

So, what do you think?  Is this a good thing or a bad thing?  Will it help our economy?

To your family's health & prosperity,

Candice

Love this! Tax haikus.

I love Taxgirl.com!  She has up a few tax haikus in a post.  My favorite:

Tax Deductions
Kids are pretty cute
Also a great deduction
But a lot of work.

To your family's health & prosperity,

Candice

Excellent idea for parents whose kids are going away to college!

I came across this article and thought, "What a Great Idea!"  Off Campus House - 7 Tips For College Students to Buy Your Own Off Campus House.  I had a friend in law school whose parents bought an apartment near campus for him to live in while in school.  Of course, he seemed so lucky to me!  But it was also an incredibly sound investment on the part of his parents.  They bought the apartment in 2002, I believe, right before the huge real estate boom.  I bet they paid $100,000 for it.  (This is in Hawaii, by the way.)  By the time my friend graduated, I bet the apartment was worth $400,000.

But that's not the point.  If you are going to pay for your child's living expenses anyway, why not make it an investment?  This family was lucky enough to make a huge profit, but breaking even is good too. 

In the article, the author discusses how a college freshman can buy a house.  I don't know about you, but I was definitely not in a position to own property at age 18.  But my parents could have done this and saved a huge amount of money.  They could have bought a house and rented out the other rooms to other college students and completely covered the mortgage.

I'm definitely keeping this in mind.  Eight years until I have to think about this though!

To your family's health & prosperity,

Candice

Tax Changes for 2009

For 2009, personal exemptions and standard deductions will rise and tax brackets will widen because of inflation adjustments.

By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits, affecting virtually every taxpayer, are being adjusted for 2009. Key changes affecting 2009 returns, filed by most taxpayers in early 2010, include the following:

• The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.

• The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

• Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.

• The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.

• Of particular interest to those of us in the estates field is that the annual gift exclusion rises to $13,000, up from $12,000 in 2008.

• The most important thing for estate and gift tax planning - the 2009 exemption is $3.5 million, up from $ 2 million in 2008. Obama's announced plan is to hold to the $3.5 milllion. We shall see.

Obama's plans for our economy

 

I have been in la-la-land, celebrating the election results.  I am terribly hungry for change in this country.  Personally, I believe that Obama was the only choice when it comes to a President who can deal with our economic crisis with an even-tempered sense of sanity.  I think we can expect a President who listens to differing opinions and takes in sound advice, whether it be from a Democrat, a Republican, a Libertarian, or a Green.  I think we'll be having a level of bi-partisan collectiveness that we have never seen before.

I thought that I would link to Obama's economic plan, since I'm sure everyone is eagerly awaiting some sort of action! 

Economy. 

The economic plan addresses many important issues to families, including family medical leave.  We'll see an emergency energy rebate paid for by a windfall tax on oil companies.  We'll also see tax cuts for working families, and an elimination of taxes for seniors making under $50K per year.  Obama also plans to create new jobs by investing in "green" technology and by ending tax breaks to companies that ship jobs overseas. 

There is a lot more on his website, so be sure to check it out!