All posts by Greg Salyards

Trust Basics

What is a trust?
A trust is a separate legal entity for holding and investing property. One or more persons (the “trustee”) holds property, usually real estate or investments, for the benefit of another or several other people (the “beneficiary”). The person who gives the property for the trust is known as the “donor” or “grantor.” The trustee holds legal title or interest and is responsible for managing, investing, and distributing the assets or property of the trust. The beneficiary holds an equitable or beneficial interest.

What are the benefits of establishing a trust?
Depending on your situation, there can be several advantages to establishing a trust. The most well known benefit is avoiding probate. That is, in a trust that terminates with the death of the donor, any property in the trust prior to the donor’s death passes immediately to the beneficiaries by the terms of the trust without requiring probate. This can save time and money for the beneficiaries. Certain trusts can also result in tax advantages both for the donor and the beneficiary. Or they may be used to protect property from creditors, to help the grantor qualify for Medicaid, or simply to provide for someone else to manage and invest property for the grantor and the named beneficiaries. Trusts are private documents and only those with a direct interest in the trust need know of trust assets and distribution. If well drafted, another advantage of trusts is their continuing effectiveness even if the donor dies or becomes incapacitated.

What kinds of trust are there?
There are several types of trusts, some of the more common of which are discussed below:

• Revocable Trust

A revocable trust is sometimes referred to as a “living” or “inter vivos” trust. Such a trust is created during the life of the donor rather than through a will. With a revocable trust, the donor maintains complete control over the trust and may amend, revoke, or terminate the trust at any time. So, the donor is able to reap the benefits of the trust arrangement while maintaining the ability to change the trust at any time prior to death. The disadvantage of a revocable trust is that the trust assets are countable to the donor for purposes of determining Medicaid eligibility and does not provide protection against creditors or in the event of a divorce.

• Irrevocable Trust

An irrevocable trust is created during the life of the donor, who thereafter may not change or amend the trust. Any property placed into the trust may only be distributed by the trustee as provided for in the trust instrument itself. For instance, the donor can provide that he or she will receive income earned on the trust property. An irrevocable trust that provides for the donor to retain the right to income only is a popular tool for Medicaid planning.

• Testamentary Trust

A testamentary trust is a trust created by a will. Such a trust has no power or effect until the will of the donor is probated upon his or her death. Although a testamentary trust will not avoid the need for probate and will become a public document as it is a part of the will, it can be useful in accomplishing other estate planning goals. For instance, the testamentary trust can be used to provide funds for the surviving spouse in a form that should neither be considered available nor have to be spent down if he or she should seek Medicaid eligibility to pay for long-term care.

• Supplemental Needs Trust

A supplemental needs trust can be created by the donor during life or as part of a will. Its purpose is to enable the donor to provide for the continuing care of a disabled spouse, child, relative or friend. The beneficiary of a well-drafted supplemental needs trust will have access to the trust assets for purposes other than those provided by public benefits programs. Thereby, the beneficiary will not lose eligibility for benefits such as Supplemental Security Income, Medicaid, and low-income housing.

How can I find out if I should have a trust?

As with all estate planning, anyone considering a trust should contact an attorney who is skilled and experienced in this area.  If you want to know more or want to discuss creating a trust, please contact us to set an appointment.

Inheriting a Vehicle

The Oregon DMV has fairly straight forward processes in place for inheriting a vehicle. There are four possible processes:

1. Title has Multiple Owners with Survivorship.
2. Title without Survivorship and Estate is not going to be Probated.
3. Title without Survivorship and Estate is currently being Probated.
4. Title without Survivorship and Estate has been Probated, but is now closed.

For details on these processes, the DMV has a document with links to additional help and forms. The document is here: https://www.oregon.gov/ODOT/DMV/docs/vehicle/inherit.pdf.

Call us for help with your estate planning or probate questions and needs.

Fair Housing Act and Temporary Disabilities

A person with a temporary disability due to an accident or injury is protected by Section 804(f)(3)(A) of the Fair Housing Act. The general rules are:
A Landlord must make reasonable accommodations for disabled persons.

Reasonable Accommodation means: A housing provider must make reasonable accommodations in rules, policies, practices or services, when such accommodations may be necessary to afford a person with a disability equal opportunity to use and enjoy a dwelling. In order to get a change in a rule, policy, practice or service, the tenant must request it.

A housing provider must permit, at the expense of the person with a disability, reasonable modifications of existing premises occupied by such person, if the modifications are necessary to allow the person full enjoyment of the premises.

There are other caveats to the general rules referenced above.

Baby Boomers Drive M&A Market

Now that the economy has hit a certain level of stability, it may be time for baby boomers to revisit selling their companies. At the end of 2012 and with a strong surge in 2013, we saw a rush of baby boomers put their companies up for sale. The general sentiment heard from the baby boomers was that they did not want to go through an economic down turn again while at the helm of a company, especially since they were actively contemplating retirement.

Buyers were also beginning to feel confidence in the improving economy and they were willing to loosen the purse strings a little to accommodate those that wanted to sell, but buyers still wanted fire sale deals.

Two years later we look back and see that 2014 was another great year for selling a company and multiples paid for those companies sold have continued to increase. The year 2015 started even stronger than the year previous for mergers and acquisitions.

One factor that makes this an opportune time for buyers is that interest rates remain low. We have had these low rates for unusual number of years and there are plenty of analysts saying that such low rates can’t continue forever. Many buyers are looking to buy their first company or expand their current business operations while the cost of capital remains low.

Another significant factor driving business sales at the lower end of the market is how the job market continues to lag. Rather than jump from company to company to increase one’s earnings, many are looking at starting a business, buying a franchise, or purchasing an existing business.

All these factors make for a rich market of opportunity for sellers and buyers. If you want to buy or sell a company, let us team up and find the best opportunity for you.

Consumer Price Index – Portland: up 2.3 percent 2014 over 2013

From: http://www.bls.gov/ro9/cpiport.htm

Consumer Price Index, Portland – Second Half 2014

Area prices were up 1.2 percent over the past six months, up 2.3 percent from a year ago

Prices in the Portland Area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), rose 1.2 percent in the second half of 2014, the U.S. Bureau of Labor Statistics reported today.

Regional Commissioner Richard J. Holden noted that the January increase was influenced by higher prices for shelter and food. (Data in this report are not seasonally adjusted. Accordingly, six-month-to-six-month changes may reflect seasonal influences.)

Over the last 12 months, the CPI-U increased 2.3 percent.   Energy prices increased 0.9 percent, largely the result of an increase in the price of electricity. The index for all items less food and energy rose 2.2 percent over the year.

Consumer Price Index – Portland: up 2.6% from 6/2013 to 6/2014

Latest Release: http://www.bls.gov/ro9/cpiport.htm

Area prices up 1.0 percent over the past six months, up 2.6 percent from a year ago

Prices in the greater Portland area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), advanced 1.0 percent in the first half of 2014, the U.S. Bureau of Labor Statistics reported today. (See table A.) Regional Commissioner Richard J. Holden noted that this latest six-month increase was influenced by higher prices for shelter, electricity, and food. (Data in this report are not seasonally adjusted. Accordingly, six-month-to-six-month changes may reflect seasonal influences.)

Over the past 12 months, the CPI-U rose 2.6 percent. (See chart 1.) Energy prices advanced 1.4 percent, mainly due to an increase in the price of electricity. The index for all items less food and energy increased 2.7 percent over the year.

Consumer Price Index – Portland: up 2.1% 1/2012 to 1/2013

From: http://www.bls.gov/ro9/cpiport.htm

Area prices up 0.9 percent over the past six months, up 2.1 percent from a year ago

Prices in the greater Portland area, as measured by the Consumer Price Index for All Urban Consumers (CPI-U), advanced 0.9 percent in the second half of 2012, the U.S. Bureau of Labor Statistics reported today. (See table A.) Regional Commissioner Richard J. Holden noted the latest six-month increase was influenced by higher prices for shelter and medical care. (Data in this report are not seasonally adjusted. Accordingly, month-to-month changes may reflect seasonal influences.)

Over the past 12 months, the CPI-U rose 2.1 percent. (See chart 1.) Energy prices declined 0.3 percent, mainly due to a decrease in the price of natural gas service. The index for all items less food and energy increased 2.5 percent over the year.

Inheriting an IRA Account

IRA accounts are one of the many asset types that one can inherit that are fraught with peril for the unwary.  The inheritance and tax rules for IRA accounts are different for those who are the spouse of the decedent and those that are not.  Spouses can receive special tax status for inherited IRA account funds.

If you are not the spouse you cannot treat the IRA as your own.  The tax rules give several options for how a non-spouse can take distributions from the IRA account.  Despite what one may have read on the internet, you do not have to take the IRA as a lump sum distribution when it is inherited.  The tax rules allow beneficiaries to spread payments over several years.  This is important since IRA funds are not subject to income tax until they are distributed to the beneficiary.

If the person you are inheriting the IRA account from had a basis in that account, that basis will remain with the IRA.  Spouses have some flexibility as to how they treat the inherited IRA, but one must tread carefully.

As with all things related to taxes and IRS, the regulatory landscape is subject to change without notice.

Before accepting any distributions from an inherited IRA, you must talk to an experienced tax professional to insure that you maximize your inheritance and don’t find yourself in an ugly tax situation with the IRS.

Moving Out – A Checklist

Are you  planning to terminate your lease and move out?  There are several things you should do to protect yourself and make your move as stress free as possible.

  1. Make sure you give the proper notice to your landlord.  Review your lease.  Can you terminate early?  Do you need to give a 30 day notice?  A 60 day notice?  If you are renting month-to-month, then you must give a 30 day notice.  Always give your notice in writing.
  2. If you mail the notice, tack on at least 3 days to account for mailing.  ORS 90.150(3).
  3. Clean your apartment and take pictures or video of everything.  Photograph the good as well as the bad.
  4. After the apartment is clean and you have moved everything out, perform a walk-through with your landlord.
  5. Make sure the landlord has your new address.

Once you move out, the landlord has to return your all of your deposit or give you an accounting of your deposit, in writing, within 31 days.

As with all things legal, there are time limits for taking action to enforce your rights.  For most matter related to a rental agreement and the Oregon Residential Landlord Tenant Act, the time limit is one year.  However, there may be shorter time limits involved in some cases.

FREE LANDLORD-TENANT RESOURCES

Legal Aid Services

Legal Aid Services of Oregon has published a guide book titled Landlord Tenant Law in Oregon.  The electronic copy of this document can be found here.

Print copies are often available at Oregon Legal Aid offices.
Go here for office locations:
Legal Aid Services of Oregon
Please call to confirm that they have copies available.

Oregon State Bar

The Oregon State Bar website has a resource page at:

http://www.osbar.org/public/legalinfo/tenant.html