Do You Need a Revocable Living Trust? Expert Insight from an Oregon Probate Attorney

Basic estate planning usually starts with a will, which deals not only with your property but also with important decisions like who will care for minor children if both parents are deceased. However, there are additional tools out available to manage your estate in a more expedient manner.

Learn what expert estate plannning and probate lawyers in the Beaverton and greater Portland area have to say about revocable living trusts.

Q: Who could benefit from a trust?

Audrey: Most people will benefit from a trust for future cost savings and ease of transfer from avoiding probate. This is especially true in Oregon, where probate is expensive and time-consuming. Morover, a trust allows you to be very specific about when and how you want your assets to be distributed.

For example, you can put in provisions to incentize the pursuit of higher education/trade as a requirement to receiving trust funds. If you're concerned about future health incapacity, you can specify the standard of care you want for yourself and even select which healthcare facility you wish to be treated. If you have children and you're concerned about protecting their interests in the event of divorce and remarriage, you can structure trusts so that their inheritance is protected and irrevocable.

Generally, a trust provides greater flexibility and control over how and when your assets are distributed. Trusts are a great component of the modern estate plan.

Q: If I have a Trust, do I still need a Will?

Audrey:  Even if someone has a living trust that owns all of the assets subject to probate, they still need a will. Here are two reasons why you still need a Will even if you have a trust.

1. A will helps your trust function properly. One of the downsides to a trust is that it only controls what it owns. Sometimes mistakes happen and people sometimes mistakenly leave assets out of a trust. As a safe-guard, we prepare what's called a "pour-over will" in case you forget to move something to your trust.

2. A Will is where you name a guardian of your minor children. If you have minor children, you need a will so that you can name a guardian to care for them if you and the other parent pass away. This can only be done through a Will.

Q: Why not just create a Will instead?

Audrey:  Estate planning is really a collection of documents that work together to accomplish your goals. A Will is subject to probate, which is a public legal process. It also does not become effective until you die. You must also wait for the court-supervised probate process to conclude before you can distribute the assets to the beneficiaries.

Here's an example of this being problematic: A couple owns two investment properties. They relied on income from those properties to live. Unfortunately, one spouse passes away. It turns out the property was only owned in the deceased spouse's name. Now the surviving spouse must go through probate to transfer ownership. Rental income needs to deposited into the estate account and requires court approval to distribute money for the surviving spouse's living expenses during that time. All of this could have been avoided with guidance from an estate planning attorney.

Q. Do I still need an advance medical directive or durable power of attorney if I have a Trust?

Audrey: Yes. Your trust only has authority to act on assets owned in the trust. Certain financial assets that should not be transferred to trust are not within the scope of a trustee's authority. Likewise, your advance medical directive allows you to make very specific wishes regarding your healthcare under certain situations. It guides your healthcare representative to make decisions on your behalf.

A trust is also useful for when you are incapacitated and also grants authority for your successor trustee to act when you die. The trust can be structured to direct living expenses to the surviving spouse as well. These documents are parts of your greater Estate Plan and work together to accomplish your goals.

Q. How does Hernandez and Associates help clients with their estate planning needs?

Audrey: We're a boutique law firm and we focus on matters related to estate planning, probate, and small business matters. We're subject matter experts in this area and we educate our clients about the estate planning process and provide insight and recommendations to help them achieve their goals. We're are not a high volume law firm by choice. We take the time to get to know our clients. It's through these face-to-face connections where we really understand the heart of your wishes.

Q. How is small business law related to estate planning?

Audrey: Great question. It's easy to register a business in the State of Oregon. You can fill out paperwork online, pay the fee, and you're done. However, what happens to your business when the owner dies? Most companies, be it a sole proprietorship, LLC, or corporation, do not have business formation documents that direct how the business is to be managed at the death of an owner, member or shareholder. When a business owner dies, what happens next depends on the type of business and whether there is a business succession or business continuity plan. Our small business practice helps business owners prepare the neccessary documents in the event of death or incapacity, so while it seems like a standalone practice of law, it all connects.

Whether you have a trust in place or are thinking about establishing one, it’s important to meet regularly with your legal, tax and financial advisors to ensure your strategy and estate planning documents not only reflect changing state and federal tax laws, but changes in your goals and circumstances. To learn more, contact us at www.handallc.com.