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

There are three ways that ownership of an asset is transferred at death – by law (a joint tenancy arrangement for example), by bequest (through a will or trust) and by contract (through the use of a beneficiary designation). The Appeals Court of Oregon’s recent decision in the case In re Marriage of Keller (232 Or.App. 341) reminds us that an individual that is planning on transferring assets through the use of beneficiary designations (primarily insurance proceeds and IRA/pension benefits) must make sure that the beneficiaries stated on the plan or the policy match up with his or her planning objectives.

In Keller, the court was presented with a complicated (but not uncommon) family situation. A man and his wife agreed to a divorce decree in which the husband retained ownership of a number of assets, including several insurance policies. The divorce agreement contained a provision which read, in part, “each party releases and relinquishes any and all claims or rights which he or she may now have, may have had, or may have in the future against the other as a result of the marriage of the parties, including but not limited to spousal support.”

After the husband’s death, the executor of his estate determined that the decedent’s ex-spouse was still listed as a beneficiary on one insurance policy. The executor asked the ex-spouse to disclaim the insurance proceeds, the ex-spouse refused, and the executor sued the ex-spouse for violating the clause spelled out above. Three-and-a-half years later, the parties have received two judgments and are still fighting. The trial court ruled in favor of the ex-spouse and the Appeals Court of Oregon recently remanded the trial court decision and sent the case back to the lower court for a more detailed analysis of the divorce agreement entered into by the parties.

The moral of the story? When developing (and revising) an estate plan, it is important to pay particular attention to the individuals that you have named as beneficiaries on insurance policies, IRA accounts and pension plans. Incorrectly naming the beneficiaries on these accounts can leave to prolonged court battles and unexpected (and expensive) results.

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We are pleased to announce a new seminar series that will keep our clients and colleagues informed on recent developments and industry best practices. The seminars take place in our beautiful, state-of-the-art conference room on the 38th floor of the US Bancorp Tower. Seminars are complimentary and include a boxed lunch.

To register, contact events@samuelslaw.com or call us at 503-226-2966. Seating is limited, so be sure to contact us soon!
 

VIRTUAL ASSETS
WEDNESDAY JUNE 1, 2011, 12 NOON - 1:30 P.M.

Presented by Victoria D. Blachly and Michael D. Walker, P.C.

Virtual assets include emails, digital images, electronic financial statements, social media accounts, web sites, and e‐banking related accounts, among others. Many of these assets are assets that are generally transferred through a client’s will or trust.

As more of our population goes online, we have seen a rising number of cases surrounding the use (and abuse) of these assets.

This seminar will outline the policies employed by some common email and media providers, talk about where these assets fit in our clients’ estate plans and point out some specific areas of concern. We will conclude by talking about the pros and cons of some of the different “online vaults” that are available to clients.

ASSET PROTECTION
WEDNESDAY JUNE 8, 2011, 12 NOON - 1:30 P.M.

Presented by Edward "Ted" L. Simpson

The legal landscape across which creditors chase debtors is ever changing. What worked 10 years ago does not necessarily work today.

This has resulted in three categories of asset protection strategies: those that are readily identifiable and either do or do not work according to established law; those that are promoted as asset protection strategies, but about which the law is not settled; and those that are new and unique, have not been identified as asset protection strategies, and which have not been the subject of studied attempts to pierce. In this seminar we will take a thoughtful and practical look at how asset protection planning is approached and how strategies are developed, both broadly and in specific situations.

INCLUDING PETS IN YOUR ESTATE PLAN
WEDNESDAY JUNE 29, 2011, 12 NOON - 1:30 P.M.

Presented by Glen Goland

This seminar will discuss Oregon’s long history on the forefront of animal rights and will cover the short and long‐term questions that pet owners should consider when preparing their estate plans.

To register for any of these seminars, contact events@samuelslaw.com or call us at 503-226-2966. Seating is limited, so be sure to contact us soon! 

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As an estate planning attorney, I often help people plan for the distribution of their assets when they are gone. I talk with my clients about what will happen to the house, the stamp collection, the bank accounts, etc. One question that usually provokes a strong response is, “What would you like to have happen to your pets?” Unfortunately, this is a question that goes unanswered far too often. In the United States, close to 500,000 pets end up in shelters every year when their owners die or become disabled. In these shelters, five out of ten dogs and seven out of ten cats are euthanized because there is no one to adopt them. If we plan ahead for these things, we can help our pets live the way that we want them to when we are gone. We can also make sure they never become statistics.

The American Society for the Prevention of Cruelty to Animals estimates that the average annual cost of basic food, supplies, medical care and training for a dog or cat is $700-875. The cost of our dog’s day care expenses, food, training, teeth cleaning and vet check-ups is considerably higher than this projection, while the cost of caring for our cat is significantly lower. The actual costs will depend on the pet. Who will pay this bill when we are gone? Will our pets live a life similar to the one they have now? Will our dog still get his raw diet or will he be fed generic kibble? Will our cat still go to the same vet? Will they be moved away from our current neighborhood and city? Will they go to a shelter? These are some of the questions we should be thinking about.

This article will be divided into three separate blog posts. This week I’ll talk about Oregon’s rich history on the forefront of animal rights and mention some of Oregon’s judicial and legislative decisions that affect the planning we do for our pets. In my next post I’ll talk about short-term planning for periods of emergency. In my final entry I will discuss the questions that pet owners should think about when preparing their estate plans.

Oregon’s courts recognized something over 100 years ago that is evident if you walk down any street in any town in Oregon today: We have a special attachment to our pets. They are friends, companions and family. In the 1914 case McCallister v. Sappingfield, an Oregon court ruled that when an animal was hurt or killed, its owner should receive more than just the market value of the animal. This “Special Value” law recognized that our dog is worth more to my family than the $80 adoption fee we paid at the shelter.

More recently, Oregon’s legislature made animal cruelty a felony in 1995 and ORS § 130.185 became law in 2005 – allowing Oregon residents to create legally binding pet trusts. Forty-three states now categorize animal cruelty as a felony and forty-four of them recognize pet trusts. Additionally, ORS § 114.215(3) provides for a unique procedure to care for an animal immediately following the death of its owner – even if the owner has left behind no will or other planning documents. This statute allows friends and/or family members to take immediate possession of the animal and be reimbursed for any reasonable expenses incurred in caring for the pet during the probate of the owner’s estate.

The Oregon State Bar is one of the few in the country that has an entire section devoted to animal law. Oregon’s Lewis & Clark Law School was the first college in the country to publish an animal law review and its students were the first to organize a chapter of the Animal Legal Defense Fund. Oregon's judges, legislative bodies, attorneys and law students recognize that our animals have certain rights and values that must be protected under the law. In part two of this article, I'll talk about how these protections affect the planning process. 

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 -- But Not The Tax Due Date

As a result of Congress passing the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 in December 2010, the Oregon Legislature had to act expeditiously to determine which 2010 federal tax changes Oregon would adopt. As part of this review the 2010 Oregon Inheritance Tax return (“OIT return”) filing requirements for some 2010 decedents were changed to follow the federal filing requirements. Thus, if a decedent died after December 31, 2009, and before December 17, 2010, with property taxable in Oregon and a federal estate tax return is required, the due date for the OIT return is extended to the same date the federal estate tax is due.

Generally, this means that for 2010 decedents who died before December 17, 2010 with gross estates valued over $5 million, the extended filing deadline is September 19, 2011, for an OIT return (Form IT-1), plus six additional months if a timely extension request is applied for. For 2010 decedents with gross estates under $5 million, the 2010 OIT return remains due nine months after the date of decedent’s death. For 2010 decedents dying after December 16, 2010, the filing requirements remain unchanged and the OIT returns are due nine months following the date of decedent’s death.

Because of the revenue shortfalls, the Oregon Legislature did not extend the Oregon Inheritance Tax due date. Oregon Inheritance Taxes remain due and payable nine months after the date of the decedent’s death. Also, any penalties and interest must be calculated based on nine months after the date of the decedent’s death irrespective of the filing extension. The filing extension provision, tax due date, penalty and interest changes are contained in Section 33 of SB 301. (http://www.leg.state.or.us/11reg/measpdf/sb0300.dir/sb0301.en.pdf)

The Governor signed SB 301 on March 9, 2011, but it will not become law until the 91st day after the close of the legislative session. After SB 301 becomes law, Section 33 will be retroactive to estates of decedents who died after December 31, 2009. A representative from the Oregon Department of Revenue has confirmed that the Department will currently follow the intent of the new law and allow the filing deadline extension for 2010 returns.

If you are working with an estate that may be eligible for this filing extension, consider contacting the Oregon Department of Revenue to confirm the estate’s eligibility for these changes. Please note these changes in the law do not address the filing deadline for estates over $5 million that elect not to pay any federal estate tax and instead elect a modified carryover basis and file the Form 8939 information return in lieu of the federal estate tax return.
 

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