What a Will Can & Can’t Do
When a person dies without a will, their assets go into intestacy. Oregon law follows a rigid step-by-step process to determine who will inherit your estate.
The intestacy laws are well-intentioned — they put your spouse, and then your children, at the head of the inheritance line. For those who do not have a spouse or children, the intestacy process makes every effort to go to siblings, cousins, and anyone else with a connection to you.
Intestacy is unfortunately not designed to understand the nuances of relationships and how that impacts the distribution of assets after death. For example, what if you have a caregiver who’s like family, and you want to leave them some money after your passing? What if you have a nephew you want to help go to college, but aren’t entirely confident in how his parents will handle the money? Intestacy laws won’t address these situations and countless others like them, but a will can.
What a Trust Can Do
The first thing a trust can do is keep your heirs out of probate court. The reason for this is that a probate court can only deal with assets that are considered yours. From a legal perspective, a trust is an entity unto itself. Whatever wealth is in the trust is owned by the trust. You will still need a will, but the will can be structured to put all your remaining assets into the trust at your passing.
A trust is either revocable or irrevocable. There are significant implications in this decision for both your beneficiaries and for tax purposes.
A revocable trust allows you to change the beneficiaries. There are good reasons to keep this flexibility. The passage of time will involve events that may impact how you want to distribute your assets.
Revocable trusts give you the flexibility to make changes, but the flexibility comes with a price. The assets within the trust will not avoid taxation. An irrevocable trust is required to keep your assets safe from the Internal Revenue Service. The terms of an irrevocable trust cannot be altered.
Distributing Your Assets
You can set up your trust to distribute assets in three different ways:
Outright distribution is the most straightforward of the three. Your assets go straight to your heirs and the trust dissolves. It’s neat, clean, and easy. But it might not be the best for your particular situation.
What if you have a special needs child that requires ongoing care? Putting all the money into the hands of their caregiver at once is not a long-term solution. What is a long-term solution is to grant your trustee — the person who will manage your trust after your passing — to distribute money to the caregiver as needed. This would be an example of discretionary distribution.
Staggered distribution is often set up to coincide with certain events in a person’s life. Perhaps your children are still in high school when you set up the trust, and you want to be sure they graduate college before inheriting any substantial share. You may further set up the trust to give them more money at the time they get married.
The ongoing distribution of assets, be it staggered or discretionary, requires having a person you trust oversee the estate after you’ve passed. Perhaps that will be a family member or a close friend. Your lawyer can also manage this role.
Contact Us Today
Lexemy Law, LLC can help you structure your trust in the way that makes the most sense for you and your family. Creative thinking and attention to detail are a hallmark of sound estate planning, and Lexemy Law, LLC brings both to the table.