Wealth Law Blog : Oregon Asset Protection Lawyers & Attorneys : Samuels Yoelin Kantor Seymour & Spinrad Law Firm : OR Estate Planning, Fiduciary Litigation

On October 22^nd, a bill to permanently extend the federal estate tax for 2010 and beyond was introduced by a bipartisan group of Congressional Representatives. All four Representatives are also members of the House Ways and Means Committee – the tax-writing committee in the House. The bill would rescind 2010’s scheduled repeal of the estate tax. In addition, over the next ten years, the bill would increase the federal estate exemption amount and reduce the top estate tax rate as indicated in the table set forth below:

After 2019, the $5 million exemption amount would be indexed for inflation. While the introduction of such legislation is often the last time it sees the light of day, the fact that a bipartisan group (two Democrats and two Republicans) introduced the legislation, combined with their common membership on the Ways and Means Committee, may give the bill some traction. Ultimately, Ways and Means Chairman Charlie Rangel will be instrumental in deciding the nature of any legislation that moves out of the committee. Stay tuned!

I welcome your comments and questions!

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  From time to time we will publish local cases and legislative bills:

State v. Boyle, -- P.3d --, 2009 WL 1313755 (Or App)

Background: Fifteen years after the decedent’s death, the state of Oregon opened probate in order to attempt to collect approximately $80,000 worth of medical assistant payments the state made on the decedent’s behalf before his death. The personal representative disallowed the claim as untimely. The state filed a separate action based on the denial of their claim.

Holding: The only statute of limitation that applies to claims by the state against an estate for medical expense reimbursement is ORS 115.005(2)(a). This statutory provision only requires that claims be filed within 4 months of probate opening. Since the state did this, their claim was allowable.

Comment: 15 years? The state sure has a long memory. But if the claim had also been subject to some other statute of limitation (like 6 years for a contract claim), then the claim could be disallowed.
 

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American Family Prepaid Legal Corporation and Heritage Marketing and Insurance Services Inc., with their co-owners, Jeffrey and Stanley Norman, just got nailed with a little under $6.4 million in fines from the Ohio Supreme Court for the illegal practice of law. 

The companies preyed on the elderly through telemarketing and in-person sales calls, with more than 3,800 acts of unauthorized law practice through a "trust mill" operation with overpriced and unnecessary legal plans and annuitities. 

The companies and their co-owners are now permanently barred from business in Ohio. 

TAKE AWAY:  Protect yourselves and your edlerly friends and family from these scams by obtaining qualified and reputable estate planning counsel.  When dealing with your personal and real property, get referrals from those you trust, check out the state bar association for complaints, and screen accordingly.  And as many times as you've heard it, I'll say it again  - if it sounds too good to be true, it probably is. 

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QUESTION:  Does Grandpa have the mental capacity to sign his last will and testament, leaving you his very large estate and disinheriting your ungrateful, meddling, younger brother? 

ANSWER:  Depends on who you ask. 

When Grandpa has peacefully passed, without the ability to confirm his written intentions, you will argue he was as quick as a fox and sharp as a tack, until his very last breath.  Infuriated Brother will argue Grandpa was about two sandwhiches shy of a picnic.

The truth is somewhere in between, often leading to estate litigation. 

 There are generally four requirements for testamentary capacity: 

1. The person must be able to understand the act in which he or she is engaged (the execution of the will);
2. The person must know the nature and extent of his or her property (mind you, it need not be the specific dollar amounts or account numbers);
3. The person must know, without prompting, the claims, if any, of those who are, should be, or might be the natural objects of the person’s bounty (family members); and
4. The person must be cognizant of the scope and reach of the provisions of the document (not the full legalities of each clause - that's why you hire attorneys to prepare them in the first place).

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One of the most surprising revelations that many of my clients experience is the fact that estate/inheritance taxes will be due upon their death, unless they do some planning.  These clients have been convinced that estate/inheritance taxes only affect the rich, and since they do not perceive themselves as rich, they have nothing to worry about.

What these clients don't realize, until our initial meeting, is what all is included in their taxable estate.  The asset most often left out is proceeds from life insurance.  If you have a million dollar life insurance policy, and you also have other assets, you will pay inheritance tax in Oregon, which has only a $1 million exclusion.

The second asset most often forgotten is retirement plans.  These amounts are not only included in your taxable estate, and therefore subject to the estate tax, but they are also, without proper planning, potentially subject to income taxes.

The third asset that people seem to forget when calculating their taxable estate is equity in their real property.  This one may seem more surprising than the others, but it happens quite frequently.

Fourth, there are assets that client's have received from their parent's estate planning, such as family limited partnership interests, that they tend to forget about.

For those who don't relish the idea of paying more taxes than is required (and I have yet to meet someone who does),  I recommend having a long discussion with your estate planning attorney about what is included, and what the estate tax exemptions are currently (see earlier posts about changes in the federal estate tax exemption).

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Were you Just Being Helpful in driving dearly departed mother to her attorney's office to sign her will - or were you Unduly Influencing her to prepare an invalid document? 

That may be just one of the many facts in the long and winding road of undue influence estate litigation where both sides can convincingly argue that the same facts prove their very different cases.

In Oregon, In re Reddaway’s Estate, 214 Or. 410, 421-427, 329 P.2d 886 (1958), identifies seven factors or guidelines that have been raised in undue influence cases:

1. Procurement. The beneficiary participates in preparing the will. This can cut both ways: Was it natural that mother asked the favored son to get estate documents together or was it an example of exerting undue influence?
    
2. Lack of independent advice.  A beneficiary who participates in preparing the will and has a confidential relationship with the testator has a duty to see that the testator receives independent, disinterested advice.  That is, it looks really bad when you take your feeble aunt to your attorney of 35 years, rather than her normal attorney or a truly neutral lawyer. 
3. Secrecy and haste. Was the will kept from family members who might otherwise have been the natural objects of the testator’s bounty, or done in secrecy and/or haste?  Yet again, it can cut both ways when it may be entirely natural that the ne’er-do-well child was not told of changes to the will, but the same child will argue mom "always" told him of her financial decisions.
4. Change in the testator’s attitude following close association with the beneficiary.
5. Change in the testator’s plan of disposing of property. Were there unexplained changes from previous wills or from intestate dispositions?  "Unexplained" is the key word.
6. An unnatural or unjust gift to the beneficiary as compared to those who otherwise would naturally be expected to take.
7. Susceptibility to influence. A testator who is physically sick, emotionally or mentally confused, or becomes dependent on the beneficiary is susceptible to influence.

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  From time to time we will publish recent local cases or legislative bills:

Wilson v. Wilson, 224 Or App 360, 197 P.3d 1141 (2008)

Background: This is a spousal elective share case. The conservator of the decedent’s wife filed a claim for her elective share. Before the court determined whether or not to grant the elective share, the wife died.

Holding: The elective share is personal to the surviving spouse and the right to it extinguishes upon the death of the surviving spouse.

Comment: This past legislative session, the Oregon Legislature amended the surviving spouse elective share statute. A copy of the statute is available here. 

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