Cheri Elson has been licensed to practice law in California since 2001 and was certified by the State Bar of California Board of Legal Specialization as a Certified Specialist in Estate Planning, Probate, and Trust Law. Cheri is delighted to announce that she has begun practicing law once again!
Cheri is honored to have been chosen by Allen Drescher to carry on his practice, which is one of the most respected in the Rogue Valley and has been serving this great community for over 40 years. As well as providing legal counsel in the areas of Estate Planning and Elder Law, Cheri will be able to handle many other areas of law, serving the legal needs of both her existing clients and Allen’s clients as Allen has in the past.
Cheri’s service and commitment to her clients will not change. What will change are the resources she has to offer, the ability to fully represent her clients, and the opportunity to assist you in a wide range of legal issues.
I am often asked to explain the difference between a probate and a trust administration and why I generally prefer the latter to the former.
Probate is a legal process that takes place after someone dies. It includes identifying and inventorying the deceased person’s property, paying debts and taxes, and distributing the remaining property as the Will directs. If there is no Will, State law will dictate how the assets are distributed.
In Oregon, a probate is triggered if an estate is worth over $200,000 in real property, or $75,000 in personal property. Chances are, if you own a home a probate will be required at your death.
Probates can add unnecessary cost and time. Typically, probates involve paperwork and court appearances by lawyers, resulting in filing fees and attorney fees for drafting the necessary petitions. These fees are paid from estate property, which would otherwise go to those receiving the decedent’s property. It can take 6-8 weeks from the time a decision is made to petition the court to take a particular action and receipt of the signed Order allowing that action, so probates can really slow things down. The result can be frustrating for all involved and more expensive than necessary.
Trusts, on the other hand, can avoid the need for a probate. A Trust is a legal arrangement in which a Settlor transfers property to the Trustee, who holds legal title to the property for a Beneficiary. In a revocable living Trust, the Settlor, Trustee, and Beneficiary are initially the same person, so we are in effect, transferring our property to ourselves to hold and manage for our own benefit. As long as the Settlor is alive and has the legal capacity to make changes, they may amend the Trust as often as they like. At the Settlor’s death, the Trust becomes irrevocable and cannot be changed.
Because legal title to the property is held by the Trust, rather than by the individual, there are no assets in the person’s name at their death and no probate is triggered. This is a subtle, but very important, technicality in avoiding probate. When the Settlor dies, the Trust must be administered, requiring many of the same duties as in a probate such as paying off expenses, debts, and taxes, liquidating assets and distributing the Trust to the remainder beneficiaries. However, because Trust administrations happen outside of court, they tend to be simpler, faster and less expensive than probates.
The Trust only controls what it owns, so it is very important that title to the assets are changed correctly. Anything (other than retirement plans, annuities, and life insurance) remaining in the decedent’s individual could trigger a probate.
Work with a professional who specializes in estate planning so that you are confident the estate plan is comprehensive and fits your needs. A well-crafted estate plan goes far in easing your loved ones stress and ensuring your estate is passed on to them in the most cost- and time-effective manner.
Most people think of an estate plan as something only effective at death and that, without a sizeable estate, an estate plan is not needed at all. This could not be further from the truth.
Estate plans are important tools both during life and at death. If a person becomes unable to manage their own finances, due to dementia or other cognitive decline, a well-crafted estate plan can be the difference between a fairly simple and easy transition of control over the finances, and expensive and time-consuming court proceedings. What that estate plan may look like will vary depending on the person’s financial situation; however, some kind of estate plan should always be in place.
A Durable Power of Attorney for Finances(DPA) is a good place to start. This document names someone responsible for managing your finances if you are unable to manage them yourself. The DPA should have a clear definition of “incapacity” so that those relying on it know when it becomes effective. Even in a Trust-centered estate plan (see below), the DPA plays an important role, governing the assets held outside the Trust.
With a smaller estate, a Willcan effectively address distribution of the assets after death. It is important to note that a Will does not avoid probate; however, it will ensure your assets are distributed to the people and in the manner you desire.
With a larger estate, a Trust-centered plan may be appropriate. A Trust is a legal arrangement in which a Trustee holds legal title to property for a Beneficiary. Typically, the Settlor, Beneficiary, and Trustee are initially the same person. The Settlor creates the Trust and is the only person who can make changes to the Trust document. If the Settlor becomes unable to handle his or her own financial affairs, a successor Trustee (named by the Settlor in the Trust) takes over the management of the Trust for the Settlor’s benefit. As with the DPA, “incapacity” should be defined clearly. The Trust assets are to be used for the benefit of the Settlor, with the remainder beneficiaries receiving their interest only after the Settlor’s death, much as a person’s estate passes to their beneficiaries under a Will, but without a probate. As you can see, a Trust plays a part both during a person’s life and at their death.
When properly drafted, an estate plan is a powerful tool not only in the event of a person’s death, but also during life. Estate plans are designed to grow and develop as we do and should be reviewed periodically.06
When deciding on a professional to assist you in drawing up your estate plan, be sure to choose someone who specializes in this area of law. An estate planning attorney in California since 2001, and in Oregon since 2017, I am uniquely qualified to review your current plan with you and help you make any changes which may be desired.