Probate: Basic Steps

  • Probate is often consider an insurmountable feat with untenable complexity- however, I jokingly tell my clients that’s California NOT Oregon. Oregon Probate is a series of relatively straight forward steps that must be taken in a particular order. The complexity often comes more from the people involved or the nature of the assets. An attorney’s job is to help you understand the steps, file the proper paperwork at the proper time and make appropriate decisions about the people, property and debts involved. Although I have been working as a probate attorney for over 20 years, I find that each case has unique individuals with different needs and addressing that complexity often results in a simplified probate experience.
  • The general steps for probate are as follows:
    • Secure Decedent’s Assets & Pets Needing Immediate Attention
    • File the Petition to Open Probate
    • Locate and Manage Estate Assets
    • File an Inventory of the Decedent’s Assets with the Court
    • Search for Creditors and Claims Against the Estate
    • Prepare Assets for Distribution, Pay all Approved Estate Claims
    • Prepare and File All Tax Returns, and Pay All Taxes Owed
    • File an Accounting with the Court
    • Distribution to Heirs/Beneficiaries
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Probate: Initial Considerations

After a loved one has died, family often believes they must immediately contact an attorney to start legal proceedings. Although I believe it is important to take a few minutes to talk to people under such circumstance, as an attorney what I often windup telling them is:

  1. Understand that the reason to file probate is to manage the assets of the deceased. If there are no assets, probate may not be needed.
  2. Having a will does not start probate: a will is more like a to-do list that cannot be completed without a judge’s approval to act.
  3. A will nominates a person to act as personal representative- prior to appointment a personal representative (executor) does not have authority to distribute the decedent’s property.
  4. Only a court can appoint you as a personal representative and grant you the power to complete the instructions in the will.

Unless there are pressing concerns with property, asset management, dependents or other emergency situations, probate can be initiated at a measured pace. Immediate tasks may include:

  1. Complete funeral and/or burial process.
  2. Secure personal property of the deceased.
  3. Make sure pets are safe.
  4. Understand the needs of surviving dependents of the deceased.
  5. Locate the deceased’s assets: is there money or property in the decedents name alone?
  6. Consider where probate will be filed? Did the deceased have money or property in Oregon or elsewhere?
  7. Ask yourself: Are prepared to take on the role of personal representative (executor)? It can be time consuming and stressful. Your attorney will help you but you will be doing the leg work.
  8. Make an appointment with an attorney.

In the meantime, take time to grieve. We are sorry for your loss.

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Unfinished Business: The Problems of Procrastination & Estate Planning

According to the court documents, legendary singer Aretha Franklin did not have a will or trust when she died, despite reportedly having a son, Clarence, with special needs. The lack of an estate plan opens up the intensely private singer’s estate to public scrutiny and unnecessary costs, and means that there are no specific provisions to protect Clarence.

When someone dies without a will – called dying “intestate” — the estate goes through probate and is divided according to state law. Although it is often hard to know where to begin, a trusted estate planner could have helped the Queen of Soul create a trust that would have avoided probate. But perhaps more importantly, that estate plan could established a special needs trust to ensure that Clarence would receive proper care for the rest of his life and preserve any public benefits he may be receiving.

Estate planning is important even if you don’t have Aretha Franklin’s assets, and it’s doubly crucial if you have a child with special needs as she did. It allows you, while you are still living, to ensure that your property will go to the people you want, in the way you want, and to create special protections for your child with special needs before it’s too late. If you don’t want your plan for your loved ones to simply be “I Say a Little Prayer” contact your special needs attorney to begin working on your estate plan now. Its not as hard as you think and you will feel better when its done.

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Will your Family have to pay your debts when you Die?

When you die, your debts do not die with you. However, your estate, is usually the first in line to pay any debts you leave behind. Your estate is made up of any money or property left in your name alone or in a trust you have created. If your estate does not have enough money, the debts will often go unpaid unless there is another person listed as a co-signor or co-owner of a secured debt. Co-signors of a particular debt are responsible for that debt ex: credit card debts. Joint owners of property are still responsible for any debts on the joint property ex: real estate or a car. In addition, spouses may be responsible for some debts: particularly medically debts. However, it is rare for your children to have any liability for your debts without co-ownership or co-signing.

Your will or your estate plan will dictate how creditors are paid and how your heirs are protected. Consult with your attorney to determine how your estate can be protected.

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Contribute to ABLE Accounts via a gift card.

Gift certificates can be a convenient and appreciated way to celebrate and mark a special occasion. But until recently, it has been difficult to give gift certificates to individuals with special needs for fear of compromising their SSI, Medicaid or other governmental programs. However, using a Gift of Independence Card, we can now place funds directly into a person’s ABLE Account.   The cards are offered in denominations from $25 to $200. There is no expiration date for redeeming the funds.

ABLE Accounts are a relatively new and growing savings tool for people who experienced disabilities before age 26.  “ABLE” stands for the Achieving a Better Life Experience Act, which Congress enacted in 2014 and patterned after college savings (“529”) accounts.  Funds deposited in ABLE accounts can be used for a wide range of disability related expenses, including expenses related to education, housing, transportation, employment training and support, without compromising most government benefits such as HUD, SSI, or Medicaid.

To learn more about ABLE accounts and whether they are an appropriate option for you or a loved one, contact your special needs planner.

For more information on the Gift of Independence Card click here:

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New National Plan to Support Caregivers

The Recognize, Assist, Include, Support and Engage (“RAISE”) Family Caregivers Act was signed into law on January 22, 2018.  Although no funds have yet been allocated to support this program, the Secretary of the Department of Health and Human Services has been given 18 months to create a national family care-giving strategy.  The Act requires that the care-giving strategy “identify recommended actions” for all levels of government, as well as individual care providers to promote the adoption of “person-centered care,” improve caregiver training and education materials, and enhance financial security and workplace protections for caregivers.  With the official recognition of the unmet needs of care-givers, we hope will come real world tools to improve resources for all.

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Can Special Needs Trusts Reimburse Travel Expenses?

Everyone is familiar with the high cost of travel and the difficulties of staying in touch with distant family.  But families of people with special needs often face high travel expenses from medical emergencies, unforeseen circumstances or constant care taking.

Whether these expenses can be reimbursed and how depends on the type of special needs trust. If the trust was created as a third-party trust, meaning that it is funded with money from someone other than the trust beneficiary,then family members can typically be reimbursed for these expenses if allowed under the trust.  Stricter rules apply, however, where the trust is set up as a first-party trust, meaning that is funded by the beneficiary’s own money.

Distributions from first-party trusts are subject to the “sole benefit” rule, which is meant to ensure that trust distributions are used solely for the benefit of the trust beneficiary.  Prior to 2012, no distinction existed for family members’ travel expenses between first- and third-party trusts – travel to visit the beneficiary was allowed.  But that August, the Social Security Administration (SSA) revised its Program Operations Manual System (POMS), the guidebook that agency employees follow when determining a person’s Supplemental Security Income eligibility, in a way that appeared to interpret the “sole benefit” rule for first-party trusts to bar reimbursement of family members’ travel expenses.

Following an outcry by disability advocates, the SSA rescinded the change and implemented a compromise in May 2013. Although the compromise retained the general prohibition on reimbursement of travel expenses from first-party trusts, it created two, relatively broad, exceptions.The first exception apples to medical treatment. Specifically, the POMS states that trust distributions are allowed for the “payment of third party travel expenses which are necessary in order for the trust beneficiary to obtain medical treatment.”Second, first-party trusts can reimburse travel expenses where the trust beneficiary who lives in an institution, nursing home, or other long-term care facility or  supported living arrangement, and  if the travel is “for the purposes of ensuring the safety and/or medical well-being of the individual.”

To find out more about whether your trust can reimburse family members’ for travel expenses, determine the type of trust you have and investigate how the above rules apply.  For more information on how your trust works, you are welcome to contact our office and make an appointment to speak with the attorney who can review the specifics of your circumstances.

Note: It is expected that the SSA will soon issue new directives broadening the allowable distributions for such expenses.  We will update our readers if and when this occurs.

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Final Tax Bill Expands Medical Deductions

Federal law allowed families with medical expenses exceeding 10 percent of their adjusted gross incomes to deduct certain medical expenses from their income taxes, provided that they itemize their deductions. For the two months leading up to passage of the new tax bill, the entire future of the deduction was in doubt. The version of the tax bill that the House of Representatives passed November 16, 2017, would have scrapped the deduction altogether, prompting an outcry from disability rights advocates.  The Senate version, however, maintained the deduction.

The final version, in fact, expands the number of families eligible for the deduction, at least temporarily.  For the current 2017 tax year and 2018, all families whose medical expenses exceed 7.5 percent of their adjusted gross income will have the option of deducting certain medical expenses. The threshold will, however, revert back to 10 percent for the 2019 tax year.

This 7.5 percent benchmark mirrors regulations that existed prior to the Affordable Care Act (ACA), which had raised it to 10 percent for non-elderly families. For the elderly, the 7.5 percent threshold expired in 2016 and also rose to 10 percent.  According to the IRS, 8.8 million households, or almost 6 percent of tax filers, claimed medical deductions in 2015.



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Announcing Our Fall Lecture Series:

12:15, December 5, 2017
“Top Ten Estate Planning Mistakes to Avoid”

12:15, December 12, 2017
“Trust v. Will – Pros and Cons”

12:15, December 19, 2017
“Incapacity Planning – Taking charge before its too late”

All classes are located at the:
Chintimini Senior & Community Center
2601 NW Tyler Avenue
Corvallis, Oregon 97330
Phone: (541) 766-6959

To register please contact Chintimini.


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Is There a Difference Between “Supplemental” and “Special” Needs Trusts?

Have you heard the terms “special” needs trust and “supplemental” needs trust and wondered what the difference is? The short answer is that there’s no difference. Here’s the long answer:

When the field of special needs planning began more than two decades ago, trusts created for people with disabilities were generally called supplemental needs trusts. The thinking was that the purpose of the trusts was to supplement the assistance provided by Medicaid, Medicare, Social Security, Supplemental Security Income and other public benefit programs whose level of support is often meager.

With passage of legislation in 1993 (“OBRA”) authorizing the creation of self-settled trusts (first-party) under 42 USC 1396p(d)(4)(A), some practitioners called for distinguishing between these new trusts and third-party trusts often created by a parent, by calling the former special needs trusts and continuing to call the latter trusts supplemental needs trusts. But this approach never really caught on.

Instead, over time both types of trusts have come under the rubric of special needs trusts and the term “supplemental needs trust” has fallen away. The term “special needs trust” refers to the purpose of the trust — to pay for the beneficiary’s unique or special needs. In short, the name is focused more on the beneficiary, while the name “supplemental needs trust” addresses the shortfalls of our public benefits programs.

Special needs trusts now encompass both traditional third-party trusts and first-party trusts created under OBRA, which are often known as (d)(4)(A) trusts (referring to the statute), or as pay-back trusts (referring to the feature that any funds remaining in the trust at the beneficiary’s death must be used to reimburse the state Medicaid agency), or as self-settled trusts (referring to the fact that these trusts are created with the Medicaid beneficiary’s own funds).

Special needs trusts created with someone else’s funds, whether a parent, grandparent, or someone else, are often referred to as third-party special needs trusts.

In short, the reference to the trusts as supplemental needs trusts rather than special needs trusts is something of a survival. But what’s in a name? Whether supplemental or special, the trusts serve the same purpose of helping meet the needs of individuals with disabilities while still permitting them to qualify for vital public benefits programs.

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