A complete estate plan includes the following:
- A Will directing what happens to your worldly goods after you die and possibly creating ongoing trusts for your beneficiaries.
- A Durable Power of Attorney to allow your agent to care for your finances during any period of incapacity;
- A HIPAA Release to allow your loved ones to get information about your physical and medical condition during any period of incapacity;
- An Advance Health Care Directive naming a medical decision-maker for you and outlining your preferences regarding end-of-life care;
- An Advance Directive Addendum/Health Care Power of Attorney expanding the authority of your medical decision-maker to include, hospice or long-term care and disposition of remains; and
- Potential Additions – Guardianship for minor children, Organ Donor Forms, Memorial Instructions, Tax Planning to reduce or eliminate Oregon estate tax, and Charitable Giving.
- Secure online storage of your documents, and 24/7 access to your health care documents. Click here for a short video about the benefits of storing your documents online with Docubank.
Will-based Planning & The Simple Estate
In general, there are two ways to plan: Will-based or Trust-based. A Will-based plan requires fewer adjustments during your lifetime and doesn’t take effect until your death. A Will-based plan may be sufficient for individuals or couples with gross assets of less than $1 million dollars, including proceeds from life insurance policies, who have property in only one state, with simple family dynamics.
In Oregon, a “simple” estate is subject to the Small Estates Proceeding. To qualify, your home must have a fair market value (mortgage is NOT deducted) of less than $200,000 and the balance of your estate subject to probate (without beneficiary designations or survivorship titling) must be less than $75,000. If this describes you, a Will-based plan may suit your needs.
Without careful planning and coordination of beneficiary designations and titles, probate is usually still necessary in a Will-based plan. Probate is the court-supervised transfer of assets to your heirs and typically costs 3-5% of the total value of your estate. Life insurance is included for purposes of estate taxes and probate administration. A $1 million dollar estate could pay $30,000 to $50,000 in probate costs.
Federal and State Estate Tax
Although the federal estate tax doesn’t apply to amounts under $5.49 million (2017 rate), Oregon imposes an estate tax from 10% to 16% of every dollar over $1 million. An individual with a $2 million estate would pay $101,250.
A Trust-based plan may be the better option under the following circumstances:
We find that clients appreciate the freedom a flat fee structure gives us to communicate as much as needed to get the work done properly without worrying about traditional hourly billing. It also allows us to customize without incurring additional costs. A Will-based plan is $800-$1,500 for an individual and $1,000-$2,000 for a married couple. A Trust-based plan is $1,800-$3,500 for an individual and $3000-$4,500 for a married couple. If your plan includes asset protection, tax planning, specialized life insurance trusts or IRA trusts, your fees will be adjusted accordingly. You can read more about fees in our handout.