Making a living trust

Website note: In Oregon, a living trust is something different. A living trust is actually an “Advanced Medical Directive”. However, the term is so often confused with Trust (and is used interchangeably), so we’ve left the term the same as originally written, for purposes of this article. Call us with your questions.

What is a living trust?
A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.

A “living trust” (also called an “inter vivos” trust by lawyers who can’t give up Latin) is simply a trust you create while you’re alive, rather than one that is created at your death under the terms of your will. The beneficiaries you name in your living trust receive the trust property when you die.

In contrast to revocable trusts, irrevocable trusts cannot be revoked or modified after they are signed. Irrevocable trusts can be useful tools for specific goals, like reducing taxes, but they require giving up ownership and control of trust property.

Do I need a living trust in Oregon?
The main advantage of making a living trust is to spare your family the expense and delay of probate court proceedings after your death. But do you really need a trust?

Oregon does not use the Uniform Probate Code, which simplifies the probate process, so it may be a good idea for you to make a living trust to avoid Oregon’s complex probate process.

In Oregon, summary probate is available if the fair market value of the estate is $275,000 or less, and not more than $200,000 of that value is real estate. (See Or. Rev. Stat. § § 114.525.)

In Oregon, if I make a living trust, do I still need a will?
Yes, you always need a will. A will provides a backup plan for any property that doesn’t make it into your trust. For example, if you acquire new property and don’t add it to your trust before you die, that property won’t pass under the terms of the trust document. You can use a will to name someone to inherit property that you haven’t left to a particular person or entity in your trust.

If you don’t have a will, any property that isn’t transferred by your living trust or other method (such as joint tenancy) will go to your closest relatives as determined by Oregon state law.

Can writing a living trust reduce estate tax in Oregon?
Probably not. Most people do not need to worry about estate taxes because the federal estate tax is levied only on estates worth close to $12 million.

That said, if your estate is close to $12 million (or close to the threshold for Oregon’s estate tax), then you may be able to use a more complicated trust (such as an AB trust) to reduce or avoid estate taxes.

How do I make a living trust in Oregon?
To make a living trust in Oregon, you:

Choose whether to make an individual or shared trust.
-Decide what property to include in the trust.
-Choose a successor trustee.
-Decide who will be the trust’s beneficiaries – who will get the trust property.
-Create the trust document. You can get help from an attorney.
-Sign the document in front of a notary public.
-Change the title of any trust property that has a title document—such as your house or car—to reflect that you now own the property as trustee of the trust.