An estate is your life’s financial accomplishment. You want to pass your success on to your loved ones. A successful estate plan distributes what you own at your death according to your wishes while preserving family harmony. Karen has extensive experience working with clients on a broad range of issues including estate and gift tax issues, blended families, and designing trusts. Karen understands all of the legal aspects of trusts, and can assist you with the creation of a trust, transferring assets to a trust and representing trustees who are responsible for managing trust assets. Karen listens to clients and strives to explain complex legal issues in a way that is understandable. She will create the right plan to accomplish your goals in the most efficient and effective manner.
Your Will is a signed, written document that passes your property to specific individuals after your death. It can provide for specific gifts of personal items as well as guardians and trusts for minor children. In Oregon, anyone at least 18 years of age can make a Will. There are certain important formalities that must be followed for a Will to be valid. A handwritten Will that does not meet the formal requirements is not valid. It is important to review your Will every three to five years to keep pace with any changes in your life such as the birth of a child, marriage, divorce or a significant change in assets. It is especially important to have your Will reviewed if you get married or divorced because a Will is automatically revoked by a subsequent marriage and partially revoked by a divorce. In addition, it may be important to update your Power of Attorney or Advance Directive at the same time.
Revocable Living Trust
A Revocable Living Trust is an estate planning document that allows your assets to be managed and distributed in the manner you desire, both during your lifetime and upon death. These trusts are used to avoid probate or to reduce or eliminate potential estate taxes. Your assets are placed in the Trust while you are alive allowing an effective way to plan for incapacity. You are the initial trustee of the Trust and continue to manage your own income and assets much the same as you have always done. The trust specifies a successor trustee who will take over management of the assets when you are deceased or if you become incapacitated. The trust specifies under what circumstances and how incapacity will be established, typically a letter from a physician. You can revoke or amend the Trust at any time as your circumstances change.
The Oregon Estate Tax: Every individual residing in Oregon at the time of his/her death has a $1,000,000 exemption from Oregon estate tax. If an individual dies owning assets in excess of $1,000,000, an Oregon estate tax return must be filed. The tax rates for the Oregon estate tax start at 10% and gradually increase to 16%. There is a 100% deduction for any assets that are left to: (1) a tax-exempt organization; or (2) a surviving spouse outright (or in a qualifying trust).
The Federal Estate Tax: Every U.S. individual has a combined $11.70 million (2021) (adjusted each year for a cost of living increase) exemption from federal estate and gift tax. If an individual dies with a taxable estate in excess of $11.70million, a Federal estate tax return must be filed. The federal estate tax is a rate of 18% up to 40%. Again, there is a 100% deduction for any assets that are left to: (1) a tax-exempt organization; or(2) a surviving spouse outright (or in a qualifying trust). Additionally, under the “portability” rules, the estate of a surviving spouse may use the unused portion of a predeceased spouse ́s federal exemption if a proper election is made.
If you have a taxable estate, there are estate planning techniques that you may use to minimize the taxes owed or to “fund” the payment of those taxes. If you wish to discuss these techniques, please make an appointment to speak with Karen Misfeldt.
IRS Circular 230: Under U.S. Treasury regulations we are required to inform you that any tax advice contained in this communication is not intended to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code.
Durable Power of Attorney
This is a legal document giving another person (your 'agent' or 'attorney-in-fact') the authority to handle your finances and assets. A “durable” power of attorney grants your agent the power to act on your behalf, even if you should become incapacitated in the future. A power of attorney becomes effective when you sign it, although you may indicate that it is not to be used unless you ask your agent to use it, or unless you become incapacitated. The power of attorney describes the powers you are giving to your agent, and your agent does not have any authority to act on your behalf outside the scope of such powers. A limited power of attorney only allows the agent to deal with a specific matter, such as the sale of a particular piece of real estate. A general power of attorney gives your agent very broad authority to deal with your assets and finances.