Many people believe that trusts are only for millionaires. This is not the case. Most of our clients do not have a million dollars, but they do have specific wishes for how their estate will be managed when they die.
In Oregon, the three most common reasons to establish a trust are 1. Probate avoidance; 2. Privacy; and 3. Reduce estate taxes. The following is a quick overview of these reasons:
A Will Does NOT Avoid Probate
Probate is the court-supervised and public process of transferring assets from a deceased person to their living beneficiaries. When a someone dies the person nominated as executor in the Decedent’s Will files a petition for probate and requests to be appointed as Personal Representative (executor) of the estate. On average probate is a 9–12-month process and will cost between $5,000.00-$8,000.00 in court costs and attorney fees. There are a lot of rules and procedures involved that can make the process seem like it will never end, and this can be frustrating. If done properly, a Trust will avoid probate saving your family thousands of dollars in legal fees and speeding up the process!
A Trust is a Private Transaction
When a petition is filed with the court to appoint an executor, the petition is a matter of public record. This means anyone can see the sensitive information in a probate petition. Information in a petition includes names of beneficiaries, their addresses, and information about assets. This information can and sometimes does get used for nefarious purposes. A Trust does not need to be filed with a court and therefore, your estate and beneficiary information will remain private. When it comes to transferring assets to the next generation, it is best to keep the assets and the parties’ involved private.
The State of Oregon Wants Its Share
Estate taxes are assessed at both the State and Federal levels. The Federal estate tax kicks in when the value of the estate is well over $11 million dollars per spouse. The Oregon estate tax kicks in for estates valued over $1 million. While most of us will not have a federally taxable estate, quite a few of us will have an Oregon estate tax. To find the value of your estate combine the value of your assets, including life insurance policies, less any debts. An estate valued at $1.4 million, could have an estate tax of $40,000.00! However, with the right type of planning the Oregon estate tax can be reduced and even eliminated.
The Tip of the Iceberg
The above is a short list of the reasons you may want a revocable living trust. Additional reasons include planning for a child with a disability or social problem, and the preservation of assets for generations. Taking the time to learn about trusts could save your family thousands of dollars.