Why is estate planning so expensive?

Estate planning can be expensive because it involves a number of complex legal and financial issues that require the expertise of professionals such as attorneys, accountants, and financial advisors. The cost of estate planning can vary depending on a number of factors, such as the size and complexity of the estate, the types of assets involved, and the specific estate planning strategies being used.

Here are some of the reasons why estate planning can be expensive:

1. Attorney's fees: The primary cost of estate planning is typically the fees charged by attorneys to draft legal documents such as wills, trusts, and powers of attorney. Attorney's fees can vary depending on the complexity of the estate planning documents and the experience and expertise of the attorney.

2. Appraisal fees: If the estate includes assets such as real estate, business interests, or collectibles, it may be necessary to have these assets appraised to determine their value for tax purposes. Appraisal fees can be significant, especially for unusual assets.

3. Tax preparation fees: Estate planning may involve tax planning strategies to minimize estate and gift taxes. Tax preparation fees can be significant for high-net-worth individuals with complex tax issues.

4. Financial advisor fees: Depending on the estate planning strategies being used, it may be necessary to work with a financial advisor to manage investments, set up trusts, or create other financial instruments.

Despite the potential expense of estate planning, it is important to keep in mind that the cost of not planning can be even greater. Without proper estate planning, your estate may be subject to higher taxes, probate costs, and other expenses that could significantly reduce the value of the estate and burden your loved ones with additional costs and legal hassles.

Can non-residents be subject to the Oregon Estate Tax?

Yes, non-residents can be subject to the Oregon Estate Tax if they own real estate or tangible personal property located in Oregon, or if they have other assets that are deemed to have an Oregon situs, such as a business with a physical presence in the state.

The Oregon Estate Tax applies to the taxable estate of any individual who was a resident of Oregon at the time of their death, as well as to non-residents who have assets located in Oregon that are subject to the tax.

In the case of non-residents, the Oregon Estate Tax applies only to the portion of their estate that is attributable to Oregon assets. The estate tax is calculated based on the value of the taxable estate, which is determined by subtracting the exempt estate amount from the total estate value, and then applying a graduated tax rate to the taxable portion of the estate.

Non-residents who own property or other assets in Oregon may wish to consult with a qualified estate planning attorney or tax professional to understand the potential impact of the Oregon Estate Tax on their estate, and to explore strategies for minimizing their tax liability, such as establishing limited liability companies, credit shelter trust or making gifts during their lifetime to reduce the value of their taxable estate.

How do I sue a personal representative?

A personal representative is a person appointed by the court to administer the estate of a deceased person. The personal representative has a fiduciary duty to act in the best interests of the estate and its beneficiaries. However, sometimes a personal representative may act negligently, dishonestly, or in bad faith, causing harm to the estate or its beneficiaries. In such cases, you may have grounds to sue the personal representative for breach of fiduciary duty. 

 The following steps outline how to sue a personal representative: 

 1. Identify your interest in the estate. You must have standing to sue the personal representative, which means you must be an interested party who is affected by his or her actions. An interested party can be a beneficiary, heir, creditor, or anyone else who has a legal claim against the estate. 

 2. Gather evidence of wrongdoing. You must have proof that the personal representative breached his or her fiduciary duty by acting dishonestly, negligently, or in bad faith. For example, you may have evidence that he or she mismanaged funds, failed to pay taxes or debts, sold assets at an unfair price, favored some beneficiaries over others, or failed to follow the terms of the will. 

 3. File a petition with the probate court. You must file a petition with the probate court that is handling the estate administration and serve a copy on the personal representative and any other interested parties. The petition should state your interest in the estate, your allegations against the personal representative, and your request for relief.  

4. Attend a hearing on your petition. The probate court will schedule a hearing on your petition and notify all parties involved. At the hearing, you will have an opportunity to present your evidence and arguments before a judge who will decide whether to grant your request for relief. Relief may include removing and replacing the personal representative; ordering them to account for their actions; ordering them to pay damages; imposing sanctions; or modifying or terminating their authority. 

 Suing a personal representative can be a complicated and costly process that requires legal knowledge and skills. Therefore, it is advisable that you consult with an experienced probate attorney before taking any action. 

Please let us know if you have any questions and feel free to contact us. 

What are some estate planning steps that can ease financial burdens following the death of a loved one?

Estate planning can be an important step in easing the financial burdens following the death of a loved one. Here are some estate planning steps that can help:

1. Create a will: A will is a legal document that outlines how your assets will be distributed after your death. By having a will, you can ensure that your assets go to the people or organizations you want, rather than leaving it up to the probate court.

2. Consider a trust: A trust can provide additional control over how your assets are distributed after your death. It can also help avoid the probate process, which can be time-consuming and costly.

3. Name beneficiaries: Many financial accounts, such as retirement accounts and life insurance policies, allow you to name beneficiaries. By doing so, you can ensure that these assets go directly to your chosen beneficiaries without going through the probate process.

4. Consider life insurance: Life insurance can provide a source of income for your loved ones after your death. It can help cover expenses such as funeral costs, outstanding debts, and living expenses.

5. Plan for incapacity: In addition to planning for your death, it's important to plan for incapacity. This may include creating a durable power of attorney, which allows someone to make financial decisions on your behalf if you become incapacitated.

6. Work with an estate planning attorney: An estate planning attorney can help you navigate the legal complexities of estate planning and ensure that your wishes are carried out after your death.

Overall, estate planning can provide peace of mind and help ease financial burdens for your loved ones after your death.

What is a credit shelter trust?

A credit shelter trust, also known as a bypass trust, is a type of irrevocable trust that is designed to take advantage of the estate tax exemption. The estate tax exemption is the amount of an estate that is exempt from federal or state estate tax, which can be a significant portion of an individual's estate.

With a credit shelter trust, upon the death of the first spouse, the decedent's assets are transferred to the trust, up to the amount of the estate tax exemption, rather than passing directly to the surviving spouse. This means that the assets held in the trust are not included in the surviving spouse's estate for estate tax purposes, and can be passed on to the couple's heirs tax-free when the surviving spouse eventually passes away.

For example, suppose an individual has an estate worth $10 million and the estate tax exemption is $5 million. If the individual passes away, $5 million of their assets can be transferred to a credit shelter trust, with the remaining $5 million passing to the surviving spouse. Since the assets in the credit shelter trust are not included in the surviving spouse's estate, they can be passed on to the couple's heirs without being subject to estate tax.

Credit shelter trusts can also provide other benefits, such as asset protection, as the assets held in the trust are generally protected from creditors and lawsuits.

It's important to note that the use of credit shelter trusts is subject to federal and state tax laws, which can be complex and can change over time. It's recommended that individuals consult with a qualified estate planning attorney or tax professional to determine whether a credit shelter trust is appropriate for their specific situation.

Who is the personal representative of an intestate estate?

When a person dies without leaving a valid will, they are said to have died intestate. In such a case, their estate must be distributed according to the laws of intestacy of the State of Oregon. But who is responsible for administering the estate and carrying out the legal duties involved? In Oregon, this person is called the administrator or personal representative of the intestate estate.  

A personal representative is an individual who has the authority to act on behalf of the estate of a deceased person.  A personal representative has several responsibilities, such as: 

1. Collecting and inventorying the assets of the estate 

2. Paying any debts, taxes and expenses owed by the estate 

3. Distributing the remaining assets to the heirs according to the laws of intestacy 

4. Filing any required reports and accounts with the court 

A personal representative is usually chosen by the decedent in their will. However, if there is no will or if no one named in the will is willing or able to serve as a personal representative, then a court will appoint one. The court will typically follow a priority order established by law, which may vary by state but in Oregon includes: 

1. The surviving spouse the decedent 

2. The adult children of the decedent 

3. The parents of the decedent 

4. The siblings of the decedent 

5. Other relatives or friends of the decedent 

6. Creditors of the decedent 

Being a personal representative can be a challenging and time-consuming role.  A personal representative may be held liable for any mistakes or misconduct that cause harm to the estate or its beneficiaries.  Before accepting this role, one should carefully consider whether they have enough time, resources and expertise to handle it properly.   

If you have any questions about being a personal representative of an intestate estate or need legal advice on how to handle your own estate planning matters, please contact us today for a consultation. 

How does a probate or personal representative bond work?

A probate bond, also known as an executor bond or fiduciary bond, is a type of insurance bond that is required in certain circumstances to protect the beneficiaries of an estate or trust. It is a legal requirement in many jurisdictions that the person who is appointed as the executor of a will or the trustee of a trust is required to obtain a probate bond as a condition of being appointed.

The purpose of a probate bond is to ensure that the executor or trustee of an estate or trust is financially accountable for any losses or damages that may be caused by their mismanagement or mishandling of the assets in their care. If the executor or trustee fails to fulfill their obligations, the bond will provide financial compensation to the beneficiaries of the estate or trust.

The cost of a probate bond is typically based on the value of the assets in the estate or trust, and the creditworthiness and history of the person who is required to obtain the bond. The executor or trustee must pay an annual premium for the bond, and the cost is typically deducted from the assets of the estate or trust.

If the executor or trustee is found to have mismanaged or mishandled the assets of the estate or trust, the beneficiaries of the estate or trust can make a claim against the probate bond to seek financial compensation. The amount of the compensation is usually limited to the face value of the bond.

Overall, a probate bond is a safeguard that provides assurance to the beneficiaries of an estate or trust that their interests will be protected, and that the executor or trustee will be held financially accountable for any misconduct or negligence.

Does Oregon have a gift tax?

No, Oregon does not have a state-level gift tax. However, gifts that are subject to federal gift tax may also have an impact on an individual's Oregon state income tax liability.

Under federal law, individuals can make gifts up to a certain amount without incurring a gift tax. This is known as the annual exclusion, which is $17,000 per recipient in 2023. For example, if an individual gives $17,000 to their child in 2023, that gift would not be subject to federal gift tax.

As tax laws can be complex and subject to change, it's always a good idea to consult with a qualified tax professional or estate planning attorney to understand the tax implications of gifts and other transfers of property.

How can I leave money to my son but not his wife?

If you have worked hard to accumulate wealth and want to pass it on to your children, you may have some concerns about how your son-in-law or daughter-in-law will handle your inheritance. You may worry that they will squander it, use it for their own benefit, or claim a share of it in case of divorce. You may also have personal reasons for not wanting them to inherit your money.  

Fortunately, there are ways to protect your legacy and ensure that only your children benefit from it. In this blog post, we will discuss some of the estate planning strategies that can help you leave money to your kids but not their spouses.  

Trusts 

 One of the most common and effective ways of shielding your assets from your children's spouses is setting up a trust. A trust is a legal entity that holds and manages property for the benefit of one or more beneficiaries. You can create a trust during your lifetime or through your will and name your child as the beneficiary. You can also appoint a trustee who will be responsible for distributing the trust income and principal according to your instructions. 

A Trust can offer several advantages over leaving money directly to your child. For example: 

1.  A trust can protect your assets from creditors, lawsuits, and bankruptcy claims against your child or their spouse. 

2. A trust can provide income for your child while preserving the principal for future generations. 

3. A trust can specify how and when your child can access the funds, such as for education, health care, or retirement. 

4. A trust can prevent your child's spouse from influencing or interfering with their financial decisions. 

5.  A trust can avoid probate and reduce estate taxes. 

 There are different types of trusts that you can choose from depending on your goals and circumstances. Some of the most common ones include: 

1.  Revocable living trusts: These are trusts that you create during your lifetime and retain control over. You can change or revoke them at any time. They become irrevocable upon your death. 

2. Irrevocable trusts: These are trusts that you create during your lifetime or through your will and cannot change or revoke once they are established. They offer more protection but less flexibility than revocable trusts. 

3. Testamentary trusts: These are trusts that are created by your will after you die. They are subject to probate but allow you to control how your assets are distributed after death. 

4. Spendthrift trusts: These are trusts that prevent beneficiaries from transferring, selling, pledging, or assigning their interest in the trust to anyone else. They also protect beneficiaries from creditors and predators.  

Prenuptial Agreements 

Another way of leaving money to your kids but not their spouses is by having them sign prenuptial agreements before they get married. A prenuptial agreement is a contract between two people who intend to marry that outlines how their assets and debts will be divided in case of divorce or death. 

 A prenuptial agreement can help you protect any inheritance that you plan to give to your child by: 

1. Stating that any gifts or inheritances received by either spouse during marriage remain separate property and not subject to division upon divorce. 

2. Waiving any rights or claims that either spouse may have on the other's separate property. 

3. Establishing how any joint property acquired during marriage will be divided upon divorce 

 A prenuptial agreement must be signed voluntarily by both parties after full disclosure of their financial situation and with independent legal advice. It must also be fair and reasonable at the time of signing and at the time of enforcement.  

Postnuptial Agreements 

If your child is already married but did not sign a prenuptial agreement before tying the knot, they may still be able to sign a postnuptial agreement with their spouse after marriage. A postnuptial agreement is similar to a prenuptial agreement except that it is executed after marriage instead of before. 

 A postnuptial agreement can help you safeguard any inheritance that you plan to give to your child by: 

1.  Confirming that any gifts or inheritances received by either spouse during marriage remain separate property and not subject to division upon divorce. 

2. Modifying any existing rights or claims that either spouse may have on the other's separate property. 

3. Revising how any joint property acquired during marriage will be divided upon divorce 

A postnuptial agreement must also be signed voluntarily by both parties after full disclosure of their financial situation and with independent legal advice. 

If you have any questions, please feel free to contact us or leave us a comment.