1. Oregon Advance Health Care Directive. This document enables you to express your health care preference in writing while you are healthy and able to make such decisions for yourself. In this document, you let your physicians know who you want to have speaking on your behalf and making critical decisions regarding your health care if you are unable to make such decisions for yourself. In addition, you are able to inform your representative about your preferences for care choices during times of near fatal illness.

  2. General, Durable Power of Attorney. This instrument is utilized to provide someone of your choosing with the power to act in every manner with respect to your assets. If you become incapacitated, this power will enable your appointed legal representative to conduct your financial and legal affairs in furtherance of your interests and to avoid the need of commencing a public conservatorship proceeding.

  3. Revocable Living Trust. A revocable living trust is a written document which describes the rights and responsibilities of the trustor, trustee, and beneficiary during the trustor’s lifetime and after the trustor’s death. A person who creates a trust is called the trustor (sometimes called the “grantor” or “settlor”). This individual transfers legal title to all of his or her assets to the trustee of the trust. A trustee is the fiduciary who is directed by the terms of the trust agreement to hold and manage the assets for the benefit of someone else, who is called the beneficiary. A living trust may be established by the trustor naming himself or herself as both the trustee and beneficiary. The trust agreement also provides for a successor trustee and includes provisions for the disposition of the trust assets, both during the lifetime of the trustor and upon the death of the trustor. During the trustor’s lifetime the trustor has complete control and use of the assets including the right to amend or revoke the trust. Upon the trustor’s death, the trust acts as a will substitute by describing who is entitled to receive the assets then remaining in the trust. Defined advantages of creating a revocable living trust include: avoiding probate, reducing costs, avoiding delay, maintaining privacy, providing for the management of assets in the event of incapacity, and avoiding probate in other states.

  4. Annual Gift Tax Exclusion. Currently, every individual can give up to $13,000 annually to any one or more persons without any gift or estate tax consequences. This is called the “annual exclusion from gift taxation.” Accordingly, money can be funneled to children or grandchildren by making outright gifts to the individual(s) over a period of years. However, it must be noted that such gifts must be made with “no strings attached,” meaning that such gifts will be used in accordance with your desires only if the recipient agrees to use the gift for such purposes. Gifts such as these are frequently made to custodial accounts.

  5. Children’s or Grandchildren’s Education Trust. If it is important to you to leave a legacy for your family by ensuring that your children and grandchildren have a means to ensure they will have access to a college education, you can establish a trust during your lifetime for this purpose. An individual can create an irrevocable trust for the benefit of any number of individuals and direct the trustee of the trust to make distributions from the trust only for specified purposes (e.g., tuition and other educational expenses). For such a trust, the annual exclusion from gift taxation is available by following certain rules requiring additional documentation (this annual exclusion is currently the amount of $13,000.00). To the extent a gift to a trust beneficiary exceeds the annual exclusion amount during any calendar year (or twice that amount for gifts made by spouses), the gift is subject to gift tax. However, any gift tax imposed can be offset by the donor’s lifetime exemption equivalent amount.

  6. Irrevocable Life Insurance Trust. In the event the value of your life insurance will cause the total overall value of your estate to near or exceed the amount upon which an estate and/or inheritance tax would be levied upon the event of your death, an irrevocable life insurance trust may be utilized to completely eliminate the proceeds of the policy from the total value of your estate.

  7. Charitable Remainder Trust. Generally, charitable remainder trusts (CRT) are created because of the tax advantages that they offer. The grantor may be eligible for charitable income, gift and estate tax deductions. In addition, a CRT is exempt from income tax and is not taxed on any gain realized from selling appreciated trust assets. Therefore, assets yielding low earnings but subject to high capital gains if sold, may be placed in trust, sold by the trustee and reinvested. In so doing, the grantor avoids any capital gains tax and may pass on increased earnings to the beneficiaries of the CRT. There are two fundamental requirements that must be met in order for a trust to qualify as a CRT.

    First, a grantor, the trust creator, must designate certain assets to be held in trust for charitable or public purposes. Upon termination of the trust, the remaining trust assets must either be held in continuing trust for charitable purposes or paid to or for the use of a qualified charitable organization. The remaining trust assets must be at least 10 percent of the initial fair market value of the trust assets.

    Second, the grantor must assign one or more beneficiaries the right to receive the income from trust assets. One of the beneficiaries must be a non-charitable beneficiary and payments to the beneficiaries must be made at least annually. The payments may be made for the life of the beneficiary or for a term not to exceed 20 years. If a beneficiary is a corporation or other entity, the term of payment cannot exceed 20 years. Payments to the beneficiaries may not be less than 5 percent or more than 50 percent of the initial fair market value (FMV) of the trust assets. There are various methods used to determine the annual amount paid to the beneficiaries. CRTs are characterized as either charitable remainder annuity trusts (annuity) or a charitable remainder unitrusts (unitrust) based upon the method used to determine beneficiary payments.

  8. Family Limited Partnership or Limited Liability Company. The Internal Revenue Code imposes a tax on all transfers made during the life and on the value of all property owned at death. There are exceptions to this imposition of tax for gifts valued at not more than $13,000 per donee per year for property given away during life and for the first $5,000,000 of property given away at death. There are also unlimited deductions for transfers to a spouse or to a charity. Given these rules, many often attempt to reduce or avoid the imposition of these taxes by reducing the value of their property and by giving it away. Family limited partnerships or limited liability companies (“LLCs”) allow individuals to accomplish these goals by allowing them to transfer economic wealth to their children (or others) while retaining significant control over the business’ assets and by further providing valuation discounts, which serve to accelerate the rate at which wealth is transferred out of an estate and also the rate at which estate tax is reduced. To begin this process, you simply form an LLC and transfer selected property to it. By making annual gifts of interests in the LLC, you can maintain control over the property, while taking advantage of the annual gift tax exclusion, thus diminishing the ultimate estate tax burden. Overall, family LLCs provide asset protection for partnership property from the creditors of a partner, provide protection for limited partners from creditors, and they enable you to make gifts to children while maintaining significant management and control over the assets, while at the same time reducing the transfer tax value of property.

  9. Fractional Interest Gifts. A “fractional interest gift” is a gift of a partial ownership interest in an asset, such as a parcel of real property. By making a gift of a partial interest in a real property holding, the donor can obtain a “fractional interest discount” for estate and gift tax purposes. In essence, you are able to convey a percentage interest in the subject property which exceeds the proportion of that same property equal to $13,000 of its fair market value, because the transferee (e.g., your child) will not have the power to control or liquidate the asset. This strategy is a good strategy to utilize in certain circumstances to leverage the amount of gifts which can be made during any single calendar year.

  10. Private Foundation. A “private foundation” is typically an entity created by higher wealth families to receive any otherwise taxable property so as to eliminate estate taxes on the death of a surviving spouse. Foundations can be nonprofit corporations or trusts and are formed to administer assets for the benefit of a particular group, cause, or organization. A foundation’s endowment can provide stability and continuity for the groups and organizations it serves. If used properly, a foundation can create incentives for community members to make charitable gifts and bequests by: (i) giving a family name a place in the philanthropic history of the community; (ii) providing efficient management of investment funds; (iii) providing income tax benefits associated with making charitable gifts; and (iv) providing flexibility to meet the income and other important needs of donors.