This begs the question, how will the authorities know if you gained possession of a shark fin before or after December 31, 2011?  If you’re pulled over and the officer sees the shark fin hanging from your rear view mirror you may be arrested if you cannot prove when you purchased the fin.  You may want to use a permanent marker to mark the fin with the date you gained possession or if you still have the receipt, affix it to the shark fin with a stapler.  You may also want to leave the fin at home.

There are also a few other laws that become effective as of January 1, 2012 in Oregon.  Following is a brief rundown of some new laws and changes to old laws that become effective in 2012:

A.        Drunk Driving:

The most significant change to Oregon’s DUII laws is the requirement that anyone entering the DUII diversion program for a DUII arrest that occurs on or after January 1, 2012 will be required to place an ignition interlock device (IID) in their vehicle if they want to drive during the diversion period.

An IID is a small device wired to your vehicle’s ignition which measures whether alcohol is on your breath.  If it detects alcohol then the ignition will not start. This amendment is fairly significant since the costs associated with the installation and maintenance of the device are high.  The IID device is also an inconvenient addition to a car, especially if the vehicle is the main family vehicle.

B.        Cell Phone Usage:

The legislature decided to close a loophole in Oregon’s ban on cell phone usage while driving by eliminating the exemption that allowed drivers to claim that they were using the cell phone for work purposes. Although the exemption was never clear, you can no longer check on the status of your fantasy team while flying down the freeway and claim that you were using the phone for “work” purposes.  In principle the exemption made sense, but in reality it became difficult to enforce.

C.        Estate Planning:

For changes in Oregon’s inheritance tax laws see my earlier post.  Significantly, the new laws will tie Oregon’s inheritance tax laws to 2010 federal estate tax laws.  However, the inheritance tax exemption level remains at $1.0 million rather than the federal exemption level of $5.0 million.   Essentially, the amendments make it easier to calculate Oregon’s inheritance tax.

In addition to changes in the inheritance tax laws, Oregon’s legislature enacted the “Real Property Transfer on Death Act”.  Many other states have enacted similar laws in the past which make it easier for an owner of real property (such as a parent) to transfer real property to a designated beneficiary or beneficiaries when the owner dies.

In the past, property owners frequently add a child or other individual as an owner of the real property as a joint tenant with right of survivorship.  This would give the individual an ownership interest in the property and result in unintended tax consequences and other issues.  By using a “transfer on death deed” the owner avoids transferring an ownership interest in the property during his life and ensures that the property will transfer to a beneficiary, or beneficiaries, automatically without the need for probate.

Although this may be an effective “probate avoidance” technique, individuals should consult with an attorney before deciding to use a transfer on death deed.  The transfer on death deed is not effective in transferring the personal property in the house or on the property and cannot be used for any other assets. Consequently, even if you decide to use a transfer on death deed, additional planning will be necessary.

D.        Divorce and Inheritance or Gifts from Parents

As a tie in to the above, say your dad leaves you a piece of property by transfer on death deed.  After he dies, you and your wife divorce.  During the divorce proceedings, your spouse wants ½ of the value of the property left to you by your father.

The old presumption was that the parties contributed equally to the acquisition of all property acquired during the marriage – including inherited property.  The presumption could be rebutted if the inheriting spouse could prove that the individual making the gift or the bequest did not intend for the other spouse to inherit any portion of the property.  Due to evidentiary rules overcoming this presumption was difficult.

Beginning January 1, 2012 the presumption will now be the opposite – property acquired by a party as a gift, beneficiary designation, or inheritance made to that specific individual will be presumed to be that party’s separate property.  In order for this presumption to apply, the spouse receiving the property must continuously keep the property separate from other marital property.  In other words, depositing your $1.0 million inheritance into the joint checking account or transferring the property to you and your spouse as joint owners destroys this presumption.  The presumption can also be overcome by offering proof that the gift, bequest or inheritance was intended to benefit the marital estate.

Of course, courts still have the ability to divide this property as the court deems “just and proper” depending on the facts of each case.  In its application, it is possible for judges to award a spouse all separately inherited property but reducing that’s spouse’s interest in jointly owned property to make a “just and proper” distribution.

E.         Employment Agreements

Oregon law permits employers to have employees sign employment agreements that require all disputes arising from the employee’s employment to be subject to mandatory arbitration.  Old law required any such employment agreement to be provided to the employee at least 14 days prior to the employee’s first day of employment.  The newly acted law only requires 72 hour notice.  If the agreement also contains a non-competition clause you still will need to provide the agreement to the employee at least 14 days before the employee’s first day of employment.

Due to the complexities associated with employment agreements, employers should consult with an attorney to bring their employment agreements up to compliance with state laws.

This list is a brief overview of some of the laws enacted by Oregon’s legislature.  Every year Oregon’s legislature is busy changing laws and adding new ones. This list is a small sampling of the changes and additions made during the 2011 calendar year.   If you have questions about these or any other changes or would like additional information you should consult with an attorney.

© 12/30/2011 Kevin J. Tillson of Hunt & Associates, P.C.  All rights reserved.

As an example, assume John and Mary are both on their second marriage and are going through a divorce.  John has one minor child.  They have no children from their marriage.  They own their house as husband and wife and it’s free of any encumbrances. During the divorce the property is appraised to be worth $500,000.00.  Before John and Mary were married, John took out a life insurance policy insuring his life with a death benefit of $1,000,000.00. During the marriage, John changed the beneficiary of that policy from his son to Mary.  John owned an investment account in his own name with a balance of $100,000.00 and no payable-on-death beneficiary.  John also has a 401K valued at $400,000.00 which names Mary as the primary beneficiary.

John and Mary were in the process of negotiating the final points of a settlement agreement which gave John sole ownership of his investment account, the life insurance policy and the 401K when John suddenly and unexpectedly died.  John was prepared to change the beneficiary designations on those accounts as soon as the settlement agreement was signed.  At the time of John’s death he did not have a will.

When John dies, the divorce proceedings halt and essentially the divorce proceedings are dismissed.  John’s personal representative (executor) cannot continue the divorce proceedings.  Therefore, at the time of John’s death, he and Mary are married and Mary is John’s “surviving spouse”.

Generally, if one spouse dies during the divorce proceedings, then the surviving spouse will be entitled to receive all of the deceased spouse’s probate estate.   This result occurs if the deceased spouse does not have a will (dies intestate) or if the deceased spouse has a will that leaves all of the spouse’s property to the surviving spouse.  However, since John has a child from a previous marriage, Mary would only receive half of his probate estate and his son would receive the other half of his probate estate.

The deceased spouse may be able to avoid this result if, during the divorce, the deceased spouse changed his will, leaving his probate estate to the couple’s children or a trustee.  There is no statutory prohibition to changing wills, powers of attorney or health care directives during a divorce.

However, since a will can only distribute probate property, a majority of the deceased spouse’s property will most likely be transferred to the surviving spouse since most couples own their property as joint owners.  Non-probate property includes: real property, and financial accounts owned by the couple as husband and wife, joint tenants or tenants by the entirety.  Property with these types of ownership designations will transfer to the surviving spouse automatically upon the death of the first spouse.

Other non-probate assets include life insurance, retirement accounts, and bank and investment accounts that have payable-on-death beneficiaries.  During divorce proceedings, Oregon law prohibits a spouse from changing a beneficiary designation on a life insurance policy if the beneficiary is the other spouse or minor children. Consequently, John’s house, his 401K and the life insurance proceeds are all non-probate assets and are transferred directly to Mary – without probate.

Due to John’s untimely death, Mary will receive the house, John’s 401K, $1,000,000.00 in life insurance proceeds, and $50,000.00 from his investment account.  John’s son will receive $50,000.00 from John’s investment account. Although this result seems unfair, it may have been avoided if John had a prenuptial agreement or had some estate planning in place.

©03/30/2011 Kevin J. Tillson of Hunt & Associates, PC

Washington County has just sent out notices to owners of property abutting NW Bethany Blvd. stating that employees of the County’s contractor for the widening of that road intend to come onto their property to survey and test.  The notice assumes the property owners’ consent to these intrusions.

ORS 35.220 grants a condemning authority, such as Washington County in this case, and its agents the right to enter upon properties which it may condemn for purposes of survey and testing. That statute provides that if the property owner communicates their objection to any such entry, then the condemning authority may file a petition with the court to permit such entry.  In that judicial hearing the court “. . . may enter an order establishing reasonable terms and conditions for entry and for any examination, survey, testing or sampling of the property requested by the condemnor.”  ORS 35.220(2).

In short, if the property owner gives written notice of their objection to entry onto their property, the County must file a petition in court to obtain the right to make such entry.  At the hearing on that petition the property owner will be able to ask the court to limit the entry to reasonable times when the property owner can be present.

Such an objection seems essential to prevent the County from assuming that it and its contractors have permission to enter onto your property any time at their convenience.  Of course, in order to be effective the objection must be in writing and delivered to the County promptly after the property owner receives notice of the intended entry.

© 10/04/2010 Lawrence B. Hunt of Hunt & Associates, PC