By Suzanne McVicker of Two Spruce Law The duty of loyalty means that a trustee must administer a trust solely in the interests of the trust beneficiaries. Any self-dealing or transactions that benefit the trustee above the interests of the trust beneficiaries are prohibited. Absent court authorization or beneficiary consent, generally, the trust beneficiaries can void a transaction that is for the trustee’s own personal benefit, unless that transaction was entered into prior to the trustee becoming or contemplating becoming, the trustee. There is a presumption of a conflict if the trustee enters into a transaction with a spouse, other family member, their agent or lawyer, or a company in which the trustee holds an interest that might affect the trustee’s best judgment. However, such transactions may stand if the trustee can establish that the transaction was fair, the terms are similar to those of an independent party, and the transaction was not affected by the conflict. A transaction is voidable by trust beneficiaries if the trustee obtains an advantage from the transaction, or if the transaction is outside of the ordinary course of the trustee’s business, or on terms and conditions substantially less favorable than those the trustee would offer to similar customers. If a trust has two or more beneficiaries, the trustee has a duty to act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries’ respective interests. A trustee cannot prefer one beneficiary over another unless the trust document specifies that the trustee is to favor one beneficiary or a class of beneficiaries over another. For example, the trust may specify that the needs of a surviving spouse shall take precedence over the interests of the remainder beneficiaries, often the couple’s children. Or a trust for minor children might state that distributions do not need to be equal. As part of the duty of loyalty, the trustee must be mindful of the Oregon Uniform Principal and Income Act. For example, certain tax elections may benefit the trust as a whole while at the same time have an unequal impact on the trust beneficiaries, in which case the trustee may be under a duty to adjust the impact to fairly balance the treatment of the trust beneficiaries. Via https://twosprucelaw.com/videos/trustees-duty-of-loyalty-and-impartiality
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Guest Blog ExchangeReasons To Have An Estate Plan Life is unpredictable. And while no one wants to reflect on their mortality, the fact is that everyone will pass away eventually. This means that our assets and finances will have to be distributed to someone else, and by having an estate plan, we can leave behind instructions on what assets we want to give to whom. Without an estate plan in place, how your legacy is handled after you have passed on, may be at risk. Here are reasons to take the time now to prepare for the future. Assets go to the right beneficiaries. If you do not have an estate plan, then your assets may go through probate, which means that your assets may not be given to beneficiaries quickly. If you die without a will, the court is likely to handle your assets based on intestate succession rules and law, not necessarily what your personal preferences would have been. So essentially, without an estate plan, the assets you would have wanted to go to certain loved ones may not happen. If you want to ensure specific assets are transferred to the right beneficiaries, then having an estate plan is a must. Guardianship for minors will be arranged. If you have children that are under the age of 18 and are your dependents, an estate plan can help prepare for their future as well if the unexpected were to occur. If you do not have an estate plan before you die, your kids may be placed into the foster care system if you and their other parent passes away. Through an estate plan, you can make sure that your kids are properly cared for by a designated guardian or family member that you trust. You have plans for healthcare decisions. Estate plans offer so much more than distributing assets when you have passed on. They can be useful by providing end-of-life requests with a healthcare power of attorney or health care proxy. Such documents outline what your end-of-life treatment wishes would be should you become incapacitated and cannot communicate them at the time. As a medical mistake lawyer from Cohen & Cohen, P.C. explains, if something were to go awry with your medical care, such as a doctor or other medical professional committing a grave mistake, then if your estate plan is sound, at least you have plans that can not be changed in the unfortunate event something goes terribly wrong. Your assets are protected from creditors. If you die with debt, creditors may pursue payment through obtaining your assets. But with an estate plan, you can arrange for asset protection through different strategies, such as establishing offshore trusts. By taking precautions now, you can rest more easily knowing that your family will not lose possessions in the event of an unrelenting creditor who is aggressively seeking payment. Everyone can benefit from having an estate plan, whether their assets are expansive or more modest. By taking preventative steps now and establishing an estate plan, you can have peace of mind that everything is taken care of in the event of your early departure. It does not matter how young or old you are, if you do not have an estate plan already in place, contact a reliable estate planning attorney today. Via https://twosprucelaw.com/videos/cohen-amp-cohen-reasons-to-have-an-estate-plan Beware of Inheritance Advance Companies By Patricia Louise Nelson of Two Spruce Law P.C.
In many of our probate matters lately, the beneficiaries are receiving advances on their inheritances from companies that offer such advances. I ask you not to do this. I also encourage you to ask the beneficiaries of the estate you are administering not to take an advance. As I understand it, the advance company will give the beneficiary about half of what the advance company expects the beneficiary to repay the advance company. So, for example, if the inheritance advance company gives the beneficiary $10,000, they will expect to be paid $20,000 from that beneficiary’s share of the estate. The time it takes for an estate to be ready for distribution is about 7-9 months. That’s over a 100% rate of interest for a fairly short-term investment by the advance company. Not only are advances expensive to the beneficiary, they are also expensive for the estate, reducing the funds available for distribution to all the beneficiaries. Advance companies contact our office. I have had advance companies tell me things that I allegedly said to them when I said no such thing. I do not want my paralegals to get caught in a “he said, she said” situation. So, in our office only attorneys are allowed to speak with inheritance advance companies. We charge our hourly rate for all communications with the inheritance advance companies, including reviewing documents and potentially preparing documents as a result of the advance. All of these activities result in time expended for the estate and therefore attorney fees payable by the estate. Avoid the expense. Wait up to 9 months. Receive your full inheritance without sharing it with an inheritance advance company. Via https://twosprucelaw.com/videos/beware-of-inheritance-advance-companies ACT FAST as the Claiming Successor of an Estate! By Patricia Louise Nelson of Two Spruce Law P.C. So, You’ve filled an Affidavit of Claiming Successor with the court so you are now in charge of administering a small estate in Oregon. Please act quickly! The filing of that affidavit starts a 4-month timeline by which the estate must be administered. At the end of that 4 months, your authority as the claiming successor disappears. Sell estate assets. Access the deceased person’s bank accounts. Access his or her investment accounts. Pay all the money they owed to anyone. Do not make distribution before the end of the 4 months. Once the 4 months is up, you may make distribution of the remaining estate assets. Avoid delay. Get the job of claiming successor done in the allowed 4-month timeline or we may be forced to convert the small estate into a full probate, resulting in more expense and delay. Via https://twosprucelaw.com/videos/act-fast-as-the-claiming-successor By Patricia Nelson of Two Spruce Law If you own real property in Oregon and don’t live in Oregon, and wish to avoid a probate in Oregon.. you need to know about Oregon’s Estate Tax! You may want to know about Oregon’s Estate Tax and how to avoid it. Under Oregon law, if an out-of-state resident owns real property in Oregon AND their gross estate everywhere (everything, including the death benefit value of life insurance, fair market value of real property, retirement accounts, investment accounts – everything) is in excess of $1,000,000, a portion of their estate is subject to Oregon’s Estate Tax. If this $1,000,000 minimum doesn’t apply to you, simply transferring your OR real property into a trust may be the correct move! Of course, if you no longer own the Oregon real property when you die, there is no Oregon Estate Tax owed. So, selling the Oregon real property is an option. Alternatively, if you plan to retain the Oregon real property long-term, you can “convert” it from real property to intangible personal property by placing it in an LLC. Of course, there are business and tax reasons why you may want to or not want to do that, other than just the Oregon Estate Tax issue. Please confer with your accountant and let us know if you believe that you want to form an LLC. It can be an out-of-state LLC, in which case we could prepare a deed into your LLC – but you would need an attorney from your state to prepare the LLC. Also confer with your accountant. Your accountant may determine that the cost of an LLC exceeds the cost of the possible Oregon Estate Tax… Have questions, give us a call to find out more! Via https://twosprucelaw.com/videos/non-oregon-residents-with-oregon-real-estate-beware Estate Planning Considerations for Blended Families By Suzanne McVicker of Two Spruce Law In blended family situations where spouses are in a second marriage with children from prior marriages or relationships, it is very common for the children of the first spouse to die to be effectively disinherited. Often we see this with assets that pass by right of survivorship, beneficiary designation, transfer on death designation, or payable on death designation, such as real property, bank and brokerage accounts, retirement accounts, and life insurance. With real property, commonly spouses own their residence with rights of survivorship, meaning the entire interest in the property automatically goes to the surviving spouse, giving the surviving spouse the opportunity to gift the property to whomever they designate, with no requirement to benefit the children of the deceased spouse. Similarly, bank accounts and brokerage accounts are typically held in a joint ownership with rights of survivorship. Again, the surviving spouse would automatically receive the entirety of these accounts and can then gift these accounts to beneficiaries of their own choosing, without including the children of the deceased spouse. Retirement accounts and Life insurance pass by beneficiary designation directly to the named beneficiary. The recipient of a retirement account would then designate their own beneficiaries to receive the account upon death of the surviving spouse, again, with no obligation to include the children of the deceased spouse. Life insurance is typically paid out in a cash lump sum, and the recipient surviving spouse is under no obligation to gift any of those funds to the children of the deceased spouse. Establishing a trust can provide for more control over the assets, and gives the children as the remainder beneficiaries of the trust the right to receive annual trustee reports regarding the trust activity. However, a trust cannot guarantee that there will be any assets left to pass to the children of the deceased spouse. Typically, a trust would provide benefits for the surviving spouse for their lifetime, with the remainder to the children of both spouses. However, the surviving spouse may completely deplete the trust assets, leaving nothing to the children. Or, if the trust allows for it, the surviving spouse may be able to change who receives the trust assets. Another consideration is the choice of Fiduciary in your estate planning documents (such as the Personal Representative, Trustee, or Agent). Consider the family dynamics, and whether it would be better to appoint a professional fiduciary to serve instead of a son-in-law or one child over another, or one child from each spouse as co-trustees. Via https://twosprucelaw.com/videos/blended-families By Patricia Louise Nelson of Two Spruce Law In addition to many other duties, trustees have the duty to use any special skills or expertise for the benefit of the trust. When a trustee who has special skills or expertise, or is named trustee in reliance upon the trustee’s representation that the trustee has special skills or expertise, that trustee must use those special skills in administering the trust. For example, a CPA is serving as the trustee could be expected to know about and use all tactics available to the minimize the trust’s tax liability. Also, trustees are allowed to delegate duties and powers that a “prudent trustee of comparable skills” could properly delegate under the circumstances. Of course, that leaves a couple of big questions. Like what is a prudent trustee of comparable skills? And under what circumstances could such a person delegate? This rule is applied on a case-by-case basis. So, if the trustee wants to take a weekend and go drinking on a fishing boat, she may be allowed to delegate her duties for that weekend but probably not to one of her drinking buddies. In making delegation decisions, the trustee must exercise reasonable care, skill, and caution in: selecting the person to whom they are delegating; establishing the scope and terms of delegation, consistent with the terms of the trust; and review the agent’s actions from time to time in order to make sure they are doing a good job with the scope of the delegation. Note that the person to whom the trustee delegates duties owes a duty to the trust to exercise reasonable care to comply with the terms of the delegation. Via https://twosprucelaw.com/videos/trustees-duty-to-use-special-skills-or-expertise By Suzanne McVicker
When accepting the position as Trustee of a trust, it is important to be familiar with the legal duties of a Trustee. A Trustee has a duty to administer a trust as a prudent person would, in good faith, in accordance with the terms, purpose, and circumstances of the trust, in the interests of the trust beneficiaries, in accordance with applicable laws, exercising reasonable care, skill and caution. A Trustee has a duty to keep the qualified beneficiaries of the trust reasonably informed about the administration of the trust and the material facts necessary for the beneficiaries to protect their interests. One of the first duties of a Trustee is providing notice to the trust beneficiaries regarding the trust administration. It is generally advisable for all such notices to be in writing, and the notice must contain specific details. The Trustee has a duty of recordkeeping, and should always keep detailed records of every transaction of trust activity. The Trustee generally must provide the beneficiaries with a report (sometimes referred to as an accounting) detailing all of the trust activity and may need to petition the court for approval of the report. The Trustee has a duty to take reasonable steps to collect, control, and protect trust property. Commonly, a Trustee will need to retitle bank accounts, secure a residence, file insurance claims, and maintain insurance on trust assets. The Trustee should never commingle trust assets with their own personal assets, or assets of another trust. There will be costs in administering the trust, and those costs must be reasonable in relation to the trust property, the purpose of the trust, and the skills of the trustee. The Trustee has a duty to enforce and defend claims. If the Trust is owed money, or if there is a pending lawsuit, the Trustee must takes steps to collect the money owed, and defend or pursue lawsuits, as the case may be. The Trustee has a duty to comply with the Prudent Investor Rule, which requires the Trustee to invest and manage trust assets as prudent person would, by considering the purposes, terms, distribution requirements and other circumstances of the trust, exercising reasonable care, skill, and caution. Occasionally, exceptions to the prudent investor rule are written into the trust document for assets such as stock in a family owned or closely-held business. Via https://twosprucelaw.com/videos/duties-of-trust-administration What is Probate? By Patricia Louise Nelson of Two Spruce Law P.C. I am often asked “What is probate?” Probate is the court implementation of an estate when someone dies. I want to answer several common questions about probate. The most frequently asked question is “Just a second. The person who died had a will. Doesn’t that avoid probate?” Unfortunately, it does not. A will can specify who receives assets, but it has no ability to implement itself. A will needs probate to implement it. On the other hand, a revocable living trust – if it is properly managed – does work to avoid probate So why avoid probate? Well, there are three primary reasons to avoid probate in my mind. One, it is public, anyone can go to the courthouse and access the probate file. That file will include information about heirs and devisees, assets, and other private information. For many people, that alone is enough of a reason to avoid probate. Another drawback of probate is that it is time consuming. Even with a firm like Two Spruce Law that does a lot of work in probate, it takes 7-9 months to complete the process. Most of that time is caused by required notice periods in the Oregon Probate Code. The third drawback of probate is that it is expensive. It very frequently costs $6-8,000 in attorney fees plus another $1,350 in other costs such as court filing fees, publication costs, and recording fees, to complete the probate process. In certain limited circumstances, subjecting an estate to probate is worth doing despite the drawbacks of probate. Specifically, probate has the effect of “cutting of claims of unknown creditors.” Say what? Because part of the probate process is publishing notice of the probate in the tiny print in the back of the newspaper, all creditors about which we may not be aware of are limited to presenting their claims within 4 months of the date of first publication or they are limited to the insurance the deceased person had; they cannot expect payment from the deceased person’s assets after that timeline. Bear in mind that these are “unknown” creditors – we cannot ignore creditors we know about and hope they are limited in a similar way. There are other ways of dealing with known creditors and even suspected creditors. So, call us if you know about a creditor you want to avoid in a probate. Do you have to have an attorney to complete a probate? The technical answer is “no.” The practical answer in Oregon is “I think you should.” Oregon’s probate code is not simple or easy to comply with without an attorney. We do not charge for initial calls about probates, so give us a call to see if we might be a good fit for you and your situation. Via https://twosprucelaw.com/videos/what-is-probate-1 By Patricia Louise Nelson of Two Spruce Law There are a couple of times you when being divorced and being in the process of getting divorce justifies updating your estate plan. One situation is if you are getting divorced and you want to avoid your soon-to-be-ex-spouse from receiving any of your assets. The other situation is if you get divorced after putting in place an estate plan that benefits your former spouse. During the process of divorcing, you are allowed to prepare a new estate plan intentionally giving your spouse nothing, if you are no longer living together as a married couple. If you need to live together as a couple, your soon-to-be-former spouse is entitled to an “elective share” under Oregon law. The elective share is a portion of your assets. It is a sliding scale, which depends on the length of the marriage. The longer the marriage, the higher percent of your assets to which your spouse is entitled. Give us a call so we can help you figure out how the Oregon elective share impacts your situation. Of course, if you have a prenuptial agreement, you are likely allowed to leave nothing to your former spouse, depending on the terms of the prenuptial agreement. The second situation is if you get divorced after your estate plan is in place. In this situation, the provisions in the estate plan naming the now-former spouse as a fiduciary or giving the now-former spouse assets are revoked by the divorce process. The estate planning documents do not need to be changed unless you want some other terms changed – the spouse is removed by the divorce paperwork. Often, the estate plan needs to be updated for other reasons, so if you are not sure then call us to discuss the terms of your estate plan in light of your divorce. Via https://twosprucelaw.com/videos/how-to-deal-with-a-divorce-in-your-estate-plan |
About UsIf you need gentle, supportive guidance to deal with planning for your death or the death of someone close to you, then you’ve come to the right place. At Two Spruce Law—a Bend, Oregon-based firm that specializes in probate law and estate planning—we practice law in a personal way that honors the integrity of all involved. ArchivesNo Archives Categories |