At the same time we want to welcome Kevin Tillson back to our office in his new role as “of counsel” to our firm. Kevin will continue to meet with our clients in our downtown Portland office to provide his expertise and help in estate planning, probate and protective proceedings.

In short, even as we’re saying good bye, we’re also saying hello to Kevin.

© 7/21/2014 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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Hunt & Associates, PC

is pleased to announce that

Nathan Piers-VanderPloeg

has joined the firm

as an Associate Attorney

Nathan is a native Oregonian. He earned his law degree from the University of Oregon School of Law in 2011, and graduated from Linfield College with a BA in Political Science in 2005.

Nathan was admitted to the Oregon Bar in 2011. Since then he has successfully handled a broad range of legal matters encompassing a broad range of legal issues including questions of employment and labor law, personal injury and insurance, construction defects, criminal law, contracts and education law. He welcomes referrals of cases concerning these and other issues.

We look forward to Nathan’s help as our firm strives to continue providing the highest quality of general legal representation to our clients in both Oregon and Washington.

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© 4/15/2014 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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As Marc Fisher recently reported in the Washington Post here, since 2011 when the federal government repealed the ten year statute of limitations applicable to governmental claims for overpayments of benefits, the government has enthusiastically pursued collection of old debts; often seizing tax refunds from children for overpayments the feds claim were made to their parents more than thirty years ago.  The Social Security Administration, for instance, has identified more than 400,000 tax payers who supposedly owe more than $714 million on debts more than ten years old.   The report is also noted here and here.

© 4/14/2014 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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Usually when people tell me they want to avoid probate, they mean that they want to avoid having their estate administered through a court process, whether or not the person has a will.  The exact definition of probate is not that important.  Essentially, the administration of a probate estate (if there is a will) or intestate estate (if there is not a will) is the legal process for gathering a deceased individual’s property; paying off the deceased individual’s creditors; and passing any remaining assets to the individual’s heirs (if there is no will) or to his devisees or beneficiaries (if there is a will).

The process is more appropriately called estate administration, but since people tend to consider both of these processes as probate, I will continue to use that term throughout this post.  The probate process generally consists of three time periods: (1) commencement; (2) administration; and, (3) closing.  Rather than one long post, I will break this post up starting with commencement and events leading up to commencement.

1.         What property makes up my probate estate?

Before discussing commencement it’s important to figure what makes up a probate estate.  Any property that is owned by the decedent on the date of his death and that does not automatically transfer to a named individual will be included in your probate estate.  For example a bank account with payable on death beneficiary will pass automatically to the named beneficiary, without probate.   Additionally, property owned by a trust created by the decedent will not be a part of the decedent’s probate estate since the decedent did not technically own the property at the time of his death.

Common probate property includes real property, stocks and bonds, vehicles, bank and brokerage accounts, and various items of personal property.  Retirement accounts and life insurance generally are not probate property since they typically have named beneficiaries. However, if a beneficiary is not named, or dies before the owner/insured, then the owner/insured’s estate is typically the default beneficiary.

2.         Is full blown probate necessary?

Full blown probate proceedings may be unnecessary if: you have a small enough estate when you pass away; you only own assets that have payable on death designations or are owned jointly with survivorship rights; or, you have transferred your property to a trust.

In Oregon, if a decedent’s estate consists of real property valued under $200,000.00 and personal property valued under $75,000.00 then small estate proceedings may be used to transfer the decedent’s property to his heirs or beneficiaries, if he has will.  The process is relatively easy and much less expensive and time consuming than a full probate.  An attorney is probably necessary to ensure that the various statutes are followed.  People often ask me, “Can I use a small estate affidavit if my dad’s house is valued at $300,000.00 but it has a $150,000.00 loan encumbering it?”  The answer is no because the limits are based on gross values, not net values.  Since the gross value of the real property is in excess of $200,000.00, probate is necessary.

Husbands and wives frequently own their homes, bank accounts and other property as “husband and wife”, so when the first spouse dies, the surviving spouse will be the sole owner of the property. No probate is necessary.  When the wife dies probate probably will be necessary to transfer the property to her kids or other named beneficiaries.

As another example, assume that after husband died wife transferred her house to a revocable living trust. She maintained a brokerage account with $78,000.00 in her name with her children as the payable on death beneficiaries. She also had a savings account with $5,000.00 that she forgot about and never transferred to her trust but that account does not have a payable on death beneficiary.

When she dies, can her children utilize the small estate process? The answer is yes.  Although her overall estate consists of personal property over $75,000.00 the amount subject to probate is well under that threshold since the brokerage account transfers directly to the named beneficiaries and her house is owned by her trust.

Small estate proceedings will need to be utilized to transfer the savings account to the wife’s heirs but a full blown probate is avoided.

3.         Probate is necessary; what’s next?

Assume that wife had a will and her daughter is named as personal representative.  She will be responsible for administering her mother’s probate estate.  Her father passed away a few years ago and the daughter has two brothers.

At this point she may have a vague understanding of her mother’s estate and has searched for a will, trust and other estate planning documents.  If she’s lucky, her mother followed her attorney’s advice and placed the original documents in a safe or safe deposit box.

Since probate is a complicated and confusing process, daughter will need an attorney to help her navigate the probate waters.  She can use any attorney that she feels comfortable with.

At her initial appointment with her attorney she will bring the will, her mother’s death certificate, various documents identifying her mother’s property, and her siblings’ contact information.  She may also bring in information concerning any creditors of her mother’s estate (credit card companies, unpaid medical providers, and etcetera).   Based on the information provided, the attorney will draft a petition for probate or a petition for administration of an intestate estate depending on whether or not a will exists.

Generally, the individual named as personal representative in the will petitions the court to administer the estate. What happens if a will does not exist, or the personal representative does not want to serve and there’s no named successor?  The court gives preference to a surviving spouse, then a child or the nearest next of kin.

If there is no surviving spouse and no next of kin, then, in the event the state has provided public assistance to the decedent, the Director of Human Services or Director of Oregon Health Authority may appoint an attorney to serve as personal representative if the decedent does not have a surviving spouse or next of kin.  The Department of Veteran Affairs falls next in line; followed up by any other person.  These are merely statutory preferences.  The individual still needs to qualify as personal representative.

4.         The petition is filed, what happens next?

The petition is essentially a request to the court to admit the will filed along with the petition for probate and to appoint the individual named in the petition as personal representative.  Notice of filing the petition will have to be given to various government entitles, to the decedent’s heirs, to the beneficiaries named in the will, and other interested persons.  These individuals will have the opportunity to object to the appointment of the personal representative and to request future pleadings from the attorney representing the personal representative.

The next post will discuss what happens once the petition has been filed and the initial steps associated with administering Oregon estates.  As with all of the posts on our blog, these posts are informational only and the circumstances surrounding your case or legal matter are unique. These posts do not constitute legal advice and should in no way be relied upon without consulting with a licensed legal professional.

© 3/18/2014 Kevin J. Tillson of Hunt & Associates, P.C.  All rights reserved.

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• Who Receives your Property?

Initially this question is easy to answer: my kids will receive all of my property.  That’s easy.  But what happens if one of your children passes away before you?  Does that child have kids? What about that child’s spouse? Do you want the spouse to receive anything?

What happens if after executing your will or trust, one of your children becomes disabled and is receiving government benefits?  Do you want that child to receive his share of your estate outright, thus disqualifying him for government benefits?

Do you want to write one of your children out of your will or trust? Would it be more advisable to leave that child something but restrict her access to what you leave her?

A will or trust can be drafted to include answers to these questions but the answers require the client to provide thoughtful input.

Rather than asking who you would want to receive your property, I will sometimes ask who you don’t want to receive your property.  If you don’t want your son-in-law to get his slippery fingers on your inheritance to waste on his gambling habits, you’re probably going to need to put your daughter’s share of your estate in some sort of a sub-trust for her and your grandchildren’s benefit.

• What Property does Each Beneficiary Receive?

A common probate dispute involves which beneficiary gets what.  This isn’t always just a fight over worthless trinkets (although very common), it can also be fights over numerous parcels of real estate.   A recent dispute we handled involved an estate that consisted of the decedent’s house and a couple parcels of commercial real estate.  The will provided that all of the children receive equals shares of the estate.

All of the children did not get along and the thought of having these kids own property together seemed impossible.  A fight erupted over the distribution of the estate. One child didn’t want to be in business with her siblings or co-own numerous properties.

The decedent had a simple will in a situation where she needed something more complex that identified the specific property each child should have received or that distributed the properties to a trust to be managed by a professional trustee.  Specific language as to who would receive what specific property, or what would happen to all of the property if the children disagreed on the distribution would have possibly saved everyone substantial attorney fees.

• When Does the Beneficiary Receive the Property?

The timing of a distribution can be extremely important.  Do you want a beneficiary to receive the beneficiary’s share of your estate immediately following your death, or years down the road – if ever?  Many beneficiaries benefit from having their inheritance left in a trust throughout their lifetime.

If a beneficiary is disabled you will most likely want to leave that beneficiary’s share of your estate in a supplemental needs trust (sometimes referred to as special needs trust) in which the beneficiary never receives his inheritance.  Rather it’s held in trust for his lifetime.

If you have younger children you most likely don’t want them to receive their share of your estate until they turn a certain age, like 25, 30, 35 or 40.  However, without proper planning Oregon says that once a child turns 18, they can receive their share of your estate once they turn 18 (except under limited circumstances). Most people don’t like this result and include a trust for minor children in their will or trust to prevent this situation from occurring.   Utilizing a trust for minors, a trustee (who you appoint in your will or trust) will manage the trust assets for the child’s benefit and can use the trust assets to pay for your child’s healthcare, education, housing, etc.  When the child reaches the stated age, he will receive whatever property remains.

Also, you may want to leave something to a beneficiary that has spending problems, gambles, or drinks excessively but you don’t want that individual beneficiary to ever have control over the property you leave for him.   You can utilize a trust set up for the beneficiary’s lifetime in which the trustee of the trust has absolute discretion over the distribution of trust assets.   Utilizing a trust prevents you from having to disinherit a trouble child but also allows you some level of control over how he uses your property after you pass away.

You may also have a child that is a doctor, lawyer or in another profession where potential malpractice or negligence claims could wipe out that child’s estate.  By leaving that child’s share of your estate in a trust for the child and his family’s benefit (with an independent trustee) you may be able to prevent his creditors from receiving his inheritance.

• Conclusion

Just like making the decision whether to use a will or trust and who to name as your trustee or personal representative, choosing your beneficiaries needs to be a well thought out answer.  There is no single answer and what works for one client may not work for the next since families are unique.

© 2/20/2014 Kevin J. Tillson of Hunt & Associates, P.C.  All rights reserved.

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James Moss has a good summary in the Federal Lawyer here.  As his article points out, an employer’s right to terminate even non-union employees who publicly criticize their employer or complain about their working conditions is now tightly restricted under federal labor law.

© 2/20/2014 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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In Blachana the court interpreted a state statute to impose liability on a company for the unpaid wages a wholly different company owed to its employees.  The Oregon Bureau of Labor and Industries (“BOLI”) had paid those wages from Oregon’s Wage Security Fund maintained for that purpose pursuant to ORS 652.414(1).  In the case BOLI was seeking reimbursement for the wages it had paid and statutory penalties against Blachana LLC as a successor to the original employer.

The court’s opinion in the case begins with the factual misstatement that:  “The employees had worked for NW Sportsbar Inc. (NW Sportsbar) before that corporation went out of business and surrendered its property and the business to Blachana.”  Id. at 678.  In fact, another company, “CPU”, had taken back the business assets it had sold to NW Sportsbar just 16 months after its sale.  After CPU’s repossession of the business assets it sold, one of CPU’s principals formed Blachana, LLC as a limited liability company to conduct the same business operations on the premises that NW Sportsbar, CPU, and several antecedent entities had run on those premises over the past 50 years.

The court relied on two Oregon statutes, ORS 652.310(1) and 652.414(3) to impose liability for NW Sportsbar’s unpaid wages and statutory penalties on Blachana as a “successor” because BOLI had determined that it was “essentially the same business” regardless of the fact that there was no identity of ownership and the business assets had only been acquired by repossession due to NW Sportsbar’s default on its contractual obligations to CPU and its principals.  In this particular case the court’s conclusion essentially makes the seller of a business who takes back the sold assets on their buyer’s default the successor of that defaulting buyer responsible for the debts of the same debtor that stiffed them.   In short, the court now adds insult to injury.

The court’s opinion is riddled with supposition, projection and fantasy with statements justifying its strained statutory interpretation such as “The legislature may have intended to include. . . “; “. . . such an entity might . . . obtain the business property of the predecessor by repossession, or it might obtain the predecessor’s stock or legal interest in the business . . .”; the legislature could have considered it appropriate . . .”; “[t]he legislature could have reasoned . . . “; “it may have intended to ensure that. . .  ,” which all appear in a single paragraph.  Id. at 693.  After saying that it doesn’t even need such speculations to reach its conclusion, the court then says that it reaches just the conclusion that it used such fantasies to justify.  Ibid. 

The court’s opinion ultimately makes no sense.  Its logic takes value from an established business name used in a particular location and increases the potential costs to a creditor trying to mitigate their damages from a buyer’s default in ways that are neither statutorily justified nor fair.

© 2/12/2014 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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Now the companies contend with some success that states haven’t always kept up their side of the bargain. Thus, the companies argue, by the terms of their settlement agreement some states aren’t entitled to as much in payments as promised if those states had protected the companies as promised. In response the states are sometimes even hiring outside lawyers to defend their records protecting the major cigarette producers’ market share and profits and thus their right to the larger share of those profits from cigarette sales.  See this piece about the state of Pennsylvania’s efforts.

Unfortunately, few if any of those who argue for the states or who share the pleasure of spending the monies received from the settlement seem to think that there’s any humor or incongruity in extolling their efforts to protect the cigarette manufacturers’ market share and profits even as they virtuously proclaim “even one preventable cancer is too many”.

© 1/21/2014 Lawrence B. Hunt of Hunt & Associates, P.C.  All rights reserved.

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For the most party anyone can serve as a trustee.  In addition to family and friends you can select a professional trust company to administer your trust when you no longer have the ability to do so.  Many banks have trust departments that provide trustee services.  Attorneys and accountants frequently will agree to serve as trustee of their clients’ trusts.

Parents will frequently select their children to serve as trustee by default.  For individuals with one child, that decision seems like a no-brainer – “John’s going to receive our entire estate so why not name him trustee?”  This seems logical and oftentimes it is the right decision.

For parents with multiple children the decision becomes more complicated – “if we choose Suzy will John think that we are playing favorites?”  The selection of a trustee becomes more difficult when you have blended families or parents that are divorced.  I can’t tell you the number of divorced clients that ask me if their ex-spouse will have access to the client’s money if they pass away before their children reach 18.  Without a properly drafted will or trust, the answer is probably.

The trustee owes the beneficiaries of your trust the fiduciary duty to act impartial and for the benefit of all of the beneficiaries of your trust.  Selecting an individual that can fulfill this duty and many other fiduciary duties is difficult.  In selecting a trustee, a number of factors should be considered.  Below is a short list of the general factors that I ask people to consider in selecting a trustee:

1.         Do you trust the person you are naming trustee?

If you answer no, or you hesitate, then the person probably isn’t a good choice to serve as trustee.   If your son has a gambling problem you may want to avoid naming him trustee.  Most trusts name the same person to serve as successor trustee following your death and if you become incapacitated during your lifetime.  In addition to squandering away his inheritance he may waste your estate away during your lifetime if you become incapacitated.

2.         Do the trustee and beneficiaries get along?

Although death can bring families together, it can tear families apart too.  If you have two children that are at each other’s throats during your lives, or don’t talk to each other at all, it’s generally a bad idea to name them as co-trustees.  In general, serving as co-trustees will not bring your children together.

Additionally, naming one sibling trustee over the other will further resentment and create conflict between the trustee-sibling and the beneficiary-sibling.  Conflict equals attorney fees after your death.

Many parents want to name their children as co-trustees since they get along great and the parents can’t imagine their children fighting over money.  Although children can serve as co-trustees, you need to realize, and think about, the fact that the great relationship that your kids had during your life can deteriorate quickly when money is involved.  For example, your daughter thinks that you should be buried in the family plot – an expensive endeavor.  Your son wants you to become a member of the Neptune Society because the expensive burial will eat away his inheritance.  These fights over money can destroy any goodwill built up during your lifetime.

3.         Do you have children from multiple relationships?

The successor trustee in these situations needs to have a solid relationship with the stepchildren or half brothers and sisters.  Will the trustee play favorites or make decisions that tend to impact your children versus your stepchildren?  Couples that have children from previous marriages will attempt to resolve this issue by naming a child from each relationship as co-trustees.   Essentially, the couple hopes that each child will represent the interest of the child’s siblings.

This is not always the case and a couple in this situation should consider naming a professional trustee to eliminate issues of favoritism and bias.

4.         Is your estate plan complex?

A complex trust that has many sub-trusts set up for the various beneficiaries can be confusing for a lay person to manage.  Each trust may require the trustee to make different decisions concerning asset investment and distribution such that keeping track of those standards can be confusing and overly burdensome.

You may establish a supplemental needs trust for one of your children, a spendthrift trust for another and then minor beneficiary trusts for your grandchildren.  The trustee will need to manage the assets in these trusts by applying different investment strategies and distinct distribution schemes.

5.         What is the value of your overall estate?

The value of your estate is important since some professional trust companies and banks will only serve as trustee for larger estates ($1.0 million in assets) but there are some that will serve as trustee for smaller estates.

Depending on the family dynamics and the complexities associated with your trust, a smaller estate may need a professional trustee to ensure that the trust assets are properly managed and distributed.  If the estate’s not large enough for a bank or trust company to serve as trustee, an attorney, CPA or financial planner may be willing to step in and serve as trustee to ensure the trust is managed by a neutral third party.

These are just some of the factors that you want to consider in selecting a trustee.  Unfortunately you will never know if you made the correct decision until it’s too late.

© 1/17/2014 Kevin J. Tillson of Hunt & Associates, P.C.  All rights reserved.

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