A lot of clients will ask me “What do I need to do to avoid Probate?” and certainly the best tool that we have for probate avoidance is something called a living trust. It is a very common Estate Planning tool. Most of the time we would be talking about something called a revocable living trust which means that you can make changes to it if you want and for all intents and purposes the trust is considered your money and property because you are establishing the trust and you are acting as your own Trustee.

The original idea of a trust is you separate the ownership of an asset and the management of an asset. If you are setting up a trust for your grandchildren who are minor kids then that is how it is going to be. Your grandchildren will be the owner of the assets and a responsible adult will be the trustee and will be in charge of those assets for the benefit of your grandchild. But if it is your trust we are talking about, and here we are talking about revocable living trusts, you are going to establish a trust with your own money and property and you are going to be trustee.

A lot of times it is going to be a husband and wife. For example, Mr. and Mrs. Jones will establish the Jones Trust and Mr. and Mrs. Jones will be the trustees. What you are doing in that example is taking your money and property and converting it to a new legal form where you are still entirely in charge of those assets and the management of those assets. Why are you doing this? Well, because when you pass away the trust continues to give authority to your child or whoever it is you want to manage your affairs when you are gone so that person can transfer your money and property to the people you specify without having to go through this court process called probate.

Probate is the same idea where your money and property goes to the people you specify in your will but the difference is, in order to get there, you have to go through this court process. It is going to take a long time and cost a lot of money because it is driven by attorneys and you’re in the court system. The basic idea is you can have a will that has a set of instructions about who gets what when you pass away. If you do a trust, it will have the exact same instructions. You can put exactly what you are going to put in your will, into your trust. The difference is, how do you get it there? If you are using a trust, your trustee is authorized to carry out those instructions immediately at death. The Trustee isn’t going to have to hire an attorney to go through this whole court process. It is a good idea to have a lawyer involved but you are not in the court system. The trust itself gives legal authority to your Trustee to carry out your instructions. If you’ve got a will, it doesn’t work like that. Your representative is not going to be able to carry out your instructions immediately when you pass away like you will be able to do with a trust.

A question I get from a lot of clients is “I’m concerned about my loved one, (maybe mom or dad), but they are refusing assistance and claiming they don’t need any help. What can I do?” I think the first answer is to always start with non-legal answers. There are legal remedies but I think it is best to start with more practical solutions.

Maybe you can arrange for in-home care for mom and dad. Maybe you can assist them with bill paying where you just help them write out the checks and they actually sign the checks and put them in the envelope. Set up a structure that can help them maximize their independence.

But if those measures fail, it may be time to consult with professionals like doctors, social workers and even a lawyer to talk about the possibility of a Guardianship. A Guardianship is where the court takes away an individual’s decision making rights and gives them to someone else, the Guardian. And then the Guardian would have the authority to make decisions, for example, about where this individual lives and what happens with their money. And that is kind of the answer of last resort but it may reach a point where their behavior is putting themselves in physical or financial danger.

A lot of times I see young couples with kids and they don't really have an idea of what they are supposed to do but they come in knowing they need to get their affairs in order. What we talk about are kind of the basics, the basic estate plan is going to be Wills for both of them, they also need Powers of Attorney and Health Directives.

A Will is a set of instructions about how money and property is to be distributed when you pass away. Typically with young couples what we are talking about is what happens when the second one of them passes away. Because typically they are going to want to set up their estate so that when the first parent passes away, they don't really have to do anything. Unless it is a larger estate, meaning over $1 million in assets, where you have to worry about inheritance taxes. If we are not talking about that, it should be pretty well set up so that when one parent passes away everything is basically owned by the surviving parent and the will wouldn't have to be used at that point. But at the second death, the will needs to have a trust set up for the children that will be in affect until a designated age and typically we are going to recommend that age to be 25. The parents need to designate somebody as a trustee for their minor children or young adults to handle their money or property in the event that both parents pass away until that designated age. The parents are also going to have to designate someone to have custody of the child if they both pass away. If one parent dies that is not an issue because the surviving parent will have custody and won't need a court order in order to obtain that.

Powers of Attorney are documents that give each other the authority to manage financial and legal decisions on behalf of an incapacitated spouse. Just because you are married does not really give you legal decision making when it comes to handling assets. Now, if you own your assets together, like you have both names on a checking account and one of you becomes incapacitated, the healthy spouse will be able to handle that type of an asset because the healthy spouse is an owner of that asset. But you still need a Power of Attorney because for example if you have an incapacitated spouse and you both own the house, you can't sell the house or get a mortgage on the house unless both spouses sign. And that is what a power of attorney does. It allows you to sign for an incapacitated person who can't sign because of incapacity. It is very important to have good Powers of Attorney in place even though you are married because marriage doesn't really give you legal signing authority.

And the last thing is a Health Directive. In Oregon we use a document call an Advance Directive for Health Care. It is going to appoint a spouse as a health care representative to make medical decisions in the event that you can't do that anymore because of incapacity. It is also going to specify your desires for end of life care. So if you are in a coma or final stages of an illness do you want to be allowed to die naturally or do you want to be hooked up to tube feeding or other life sustaining technology. In both of these documents, the Power of Attorney and Advance Directive, you are going to want to name a contingent person to serve in the event that your spouse dies before you or is unable to serve. So it is not enough just to name your spouse, you are going to want to have another person and preferably two, to act in the event that your spouse isn't there for you.