Ed LangloisMarsha Murray-Lusby has six secrets to share when it comes to estate planning. A veteran of 26 years in the field, she is an attorney and partner in the Portland firm of Dunn Carney Allen Higgens & Tongue. Mount Angel Abbey invited her to speak at a personal planning forum set for this week.
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• First, explains Murray-Lusby, estate planning is not all about death. We all should choose a trusted person to handle finances or medical matters should we become disabled.
“Sometimes, people say, ‘Estate planning. OK, that’s for when I die,’” Murray-Lusby says. “But most people are incapacitated for some time before they die. We need to plan for life.”
If death is stressful for loved ones, incapacity is in some ways even more trying, she reports. Having a plan — there are many legal options for healthcare at the end of life — will make it easier on your loved ones.
• Distributing your estate at death involves more than just a will. The majority of assets actually gets passed on via right of survivorship — houses and bank accounts included. It is important to pay close attention to things like life insurance and retirement savings plans to see who the beneficiaries are. Murray-Lusby urges people to review their beneficiaries and find out the tax advantages of having certain kinds of beneficiaries for certains kinds of holdings.
“Understanding how all the methods work together helps you make sure you have the right asset passing to the right person,” she says.
• Simple is fine. “A well-executed simple plan will beat a poorly executed complex plan every time,” Murray-Lusby says. She has clients who worry that their estate plan is too spare. For example, some folks get convinced that they must have a revocable trust in place as opposed to a will. It depends on the person, she explains.
• With apologies to Mark Twain, the rumor that estate taxes are gone is greatly exaggerated.
Though the federal tax may be gone, Oregon still has an estate tax for estates greater than $1 million. So, having some cash as part of your estate is essential so the tax can be paid simply.
“Tax officials don’t want your beach house,” Murray-Lusby says.
• Charitable giving is still important — it’s not only the call of the gospel, it also reduces taxes for your survivors. And it pays to consider what kind of assets are best given to whom.
For example, imagine someone has $100,000 to pass by will and $100,000 in an IRA and wants to give money to survivors and to charity.
By all means, says Murray-Lusby, give the charity the IRA because the charity will not need to pay taxes because of their not-for-profit status. Not so if relatives get the IRA.
“Wise planning can mean more goes to charity and more goes to family.”
Charities also do not need to pay tax on capital gains, so stocks may be the thing to donate to them.
• Last, good estate planning is a gift you give your family and the people you love. “You can minimize fighting if you plan well,” Murray-Lusby explains. “Make it as easy as possible. Have a good plan with up-to-date documents. Don’t let them sit for 20 or 30 years.”
No need to tell everyone the details, but it’s good to communicate your wishes to loved ones ahead of time so they feel like part of the process, not like an outsider.
“There are almost never good things about surprises when it comes to estate planning,” Murray-Lusby says. “Surprises usually run amok.”