Demystifying Estate Planning: Creating the Right Plan for You

undefinedWe recently invited our Associate Attorney, Triston Dallas, to join us for a Facebook Live discussing the different elements of an estate plan. There are droves of misconceptions about estate plans and the various documents that constitute them, so we asked Triston if he could demystify some of the most common documents for those who are trying to determine how to move forward with creating the best plan for their family.

Q: What is an Estate Plan?

A: “The most understood structure of an estate plan is having a will and some other form of document that states your intentions and wishes regarding your estate or property in the event of your passing. That's part of it, but it's definitely not all of it, and it's definitely not the only thing that can be done. In reality, estate planning is a series of documents that are put together by an attorney on behalf of a client to explain those wishes, but also in those documents are things like a power of attorney, or an advanced directive, or a disposition of remains. It's an amalgamation of documents. And it's not just talking about your property, or what happens when you die. It's also explaining who's going to be in what roles in your estate plan. Who are the people that are given roles? How do you want your remains to be processed or disposed of in the event of a death? Who you want to step in if you’ve got young children?”

Q: What is a Will?

A: “The minimum requirements for a will in Oregon are that it needs to be in writing, and then it needs to be signed and witnessed. Those are kind of the bare bones as to what a will could be. You can technically write your own will, but I would never recommend it, because sometimes you can write things in a way in which you don't understand exactly what you've just signed to. When you have an attorney do it, a will is going to explain not just where you want your assets to go in the event of your passing, but like I mentioned before, it'll assign roles and address circumstances such as who you would want to step in as a guardian or custodian for your young children. The will itself, once you've passed away, will go to the court and the court will say ‘Okay, this is valid’, and they're going to adhere to your instructions. The probate, which is the process of administering the will, will go through and make sure all of your assets are together and accounted for, and then the court is going to legally disseminate or disperse those assets according to your wishes.”

Q: Who administers a will, and can it be modified throughout your lifetime?

A: “In the old days, or I say old days, [the person who administered a will] was called the executor or executrix. That's still a term that's used today, but most people like to say, ‘personal representative’. Those terms are synonymous. And that individual is a person you named in your will to state, ‘I want this person to be the individual that deals with the probate attorney, that deals with the probate court, and administers my estate’. So the personal representative, in the event of your passing, is going to be the one that's accounting all of your assets. They're going to go find everything. If you've got vacation homes in Canada, and you got a timeshare in Mexico, they're going to find all those assets, and they're going to bring them together. Digital, paper assets, any of those things. They're going follow your bank accounts, anything you own, and they're going to compile it so they can talk with the attorney, explain what's there, and then provide that information to the court. So it's an important role because you want to be able to find somebody that you trust, that's going to be thorough, and an individual that's going to be detail-oriented so you can make sure that things aren't overlooked. And yes, a will can be changed at any point throughout your lifetime until you pass away.”

Q: What is a trust?

A: “Trusts are another vehicle that can be used in creating an estate plan. The first thing I'll say is the biggest difference between a trust and a will really is just avoiding probate. As long as the trust is funded, you don't necessarily have to go through the probate and court process to disseminate or disperse any assets in the trust, which will based on your guidance or your wishes in the trust. That being said, when you don't have probate, it means you don't have that backing, so to speak.

There are two main types of trusts: you have a revocable living trust, and an irrevocable trust. The biggest differences are just in the name: one can be changed anytime. A revocable living trust is a trust that you've created and funded now, and over the course of your lifetime, you can decide, ‘I want to take something out of the trust, or I want to put more things into the trust, or I don't want to have the trust anymore at all.’

When you have an irrevocable trust, essentially you put all these things in a trust, you've created it, and then it's sealed. Whatever is in there and how it was drafted is done—it's over with, it's in the trust. The trust owns it and you can't take it out at all without court order. This is because technically, under the law, if you put something into an irrevocable trust, it's no longer a part of your estate. You, as an individual, no longer own that asset. When you have a revocable living trust, the trust is just acting as an extension, or arm, to you as the individual, so you can put something into a revocable living trust, and you can go in and take it out. Either way, you still have complete access to use the assets. In an irrevocable trust, you could have some leeway there to have access to the asset, but in reality, you don't technically own it anymore.”

Q: Why choose an irrevocable trust if you lose control of your assets?

A: “Sometimes people want to ‘disclaim’ an asset from their estate, which could have some tax benefits down the road for that individual, or they want to make sure that a creditor can't get to a specific asset. It really just depends, but a lot of it is usually just trying to move money around and save on taxes or any type of debt.”

Q: Who controls a trust?

A: “The trustee is the individual that has the autonomy or discretion as to the assets in the trust, given your instructions of how the trust was drafted. When you have an irrevocable living trust, nine times out of 10 the trustee is the actual person creating the trust. The trustee to a trust is the same as a personal representative to a will. That individual is managing and following the instructions inside the trust and making sure that the trust is administered in the way in which you want it to be.”

What is power of attorney?

“A power of attorney would essentially grant another individual the ability to act as if they were you in the event you became incapacitated, or some other event depending on what you feel is necessary. For example, you could have something which is called a supreme power of attorney. And I've seen things like this with clients who decided they want to go into the Peace Corps, or they want to do a mission and they're going to a ‘third world country’, or a country that's riddled by war. Well clearly there's a danger there and they may be a little bit worried about life. So they create a power of attorney that says, ‘While I'm in this country, this individual has the ability to act on my behalf to make sure that all of my assets or all of my affairs in America are handled.’ In the same way, you can do that if you become incapacitated, for example, if you get in a car accident and you're unconscious for weeks on end. Then an individual who you have listed, and given the power to, can act on your behalf to manage and pay your bills, all your debts, manage all your assets and make sure that your day to day life, so to speak, doesn't stop because you're not able to take action.”

Q: What is a living will, or advanced directive?

A: “An advanced directive is very similar to power of attorney, but there is a clear distinction. A power of attorney is an individual that is handling your financial affairs and assets, whereas a living will, or advanced directive, is a ‘power of attorney’ just for your healthcare. So if you become incapacitated, an advanced directive is going to tend to matters such as: who's going to make the decision as to your treatment? Who is the doctor going to look to, because they can't ask you because you just can't answer any questions. Another part of the advanced directive role is to decide, if you’re in hospice or being kept alive on a ventilator, when to ‘pull the plug’, or take you off ventilation or tube feeding. And within the document, you can actually list if you want to receive those types of treatments at all.”

Q: What is a letter of intent?

A: “Essentially, a letter of intent is a document that explains the minor details of your life that don't get put into your will or your trust. For example, for special needs planning, part of your letter of intent is going to explain the care of the individual's family member who has special needs. So who their doctors are, who their close friends are, where they get treatment and those types of things. Those things aren't really going to be within your will or trust, but they’re important details.”

If you would like to speak with Triston Dallas further regarding creating an estate plan and the various documents involved, please do not hesitate to contact our firm to set up a free phone consultation. Estate plans are an important part of not only planning for your future, but safeguarding your family and their futures as well. Call us today at (503) 227-0200 to get started.

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