Getting Started

Planning for the Future, One Step at a Time

Get Started

Planning for the Future, One Step at a Time

Definitions

Use this information to get definitions and details about terms you may encounter when working with Soto Law Firm, P.C.

Advance Directive

In Oregon, many people mistakenly refer to an Advance Directive as a “living will.” An Advance Directive is a document that contains a health care instruction or a power of attorney for health care.

Conservatorship

A conservatorship often becomes necessary if a person has failed to do their estate planning, and that person no longer has the capacity to make their own financial decisions.

A Conservatorship is a legal relationship, in which a competent adult has obtained court-ordered legal authority over another individual (who is no longer capable of managing his or her financial affairs.) A conservator will likely be required to: Take possession of all the protected person’s property and income; Use the protected person’s funds to pay the protected person’s obligations; Make prudent investments with the conservatorship assets; Pay, contest, or settle claims submitted against the conservatorship assets; Make detailed annual accountings to the court.

Guardianship

A guardianship often becomes necessary if a person has failed to do their estate planning, and that person no longer has the capacity to execute legal documents.

A guardianship is a legal relationship, in which a competent adult has obtained court-ordered legal authority over another individual (who is unable to care for or make decisions for him or herself). Incapacity may be caused by illness, mental illness, developmental disability, age, accident, or any other cause. A Guardian’s authority may be restricted to certain areas of decision making for the incompetent individual, but typically includes the power to: Determine where the incapacitated person will live; Provide for the safety, care, comfort, maintenance; and/or Take care of the Protected Person’s clothing, furniture, and personal effects.

A guardianship of an incapacitated person is often done in conjunction with a conservatorship of that person.

Last Will and Testament

A “will” is a statement of intent regarding how you would like your property disposed of after you pass away. A will has no effect during your lifetime, and only “takes effect” after it has been submitted to and approved by the probate court. A will does not avoid probate.

Limited Liability Companies (LLC)

LLCs have become increasingly popular over the last few years, because they offer many advantages over other business forms, such as: asset protection similar to that of a corporation, reducing personal liability, flexibility requiring less on-going paperwork than corporations, and the ability to deduct benefits such as health and life insurance.

Medicaid

Medicaid is a very complex area, but the general rule is (currently), if you need help paying for long-term care, the State of Oregon will pay for your medical costs once you get down to having $2,000.00 in assets, and do not have more than $2,022.00 per month. You cannot give away assets if you think you are going to try to receive Medicaid. You may sell assets, but only at fair market value. If you are married, or have other special circumstances, it may be possible to structure the “spend down” to maximize the amount the spouse will keep. It is best to speak with an attorney at a very early stage, to see if there is anything that can be done.

If you have more income than $2,022.00 per month, you may need something called an Income Cap Trust in order to qualify to receive Medicaid. Please contact us directly with specific questions; also, please note that Medicaid rules are constantly changing, so these figures are purely for example only.

Power of Attorney

A Power of Attorney is a document you create, where you appoint someone else to act for you. The person who creates the document is the “principal” and the person who is appointed is the “agent.” There are several “kinds” of powers of attorney: general, specific, durable, and springing. Powers of attorney can be very helpful if you become incapacitated, because if you have created one, you have already appointed someone to take care of your affairs. However, Powers of Attorney can be misused, so you should be very careful when appointing someone as your “agent.” It is very important to note that you cannot create a valid Power of Attorney if you do not have the capability to understand the document that you are signing.

Premarital Agreement

Before marriage, people may sign an agreement that determines their rights and duties regarding their property and support obligations. The agreement becomes effective when the marriage takes place. It is enforceable if it does not violate public policy or the law. Both parties to a premarital agreement must fully understand the effect of the agreement, including the legal rights they may be giving up. You may wish to ask for the advice of a lawyer before signing a premarital agreement.

Probate

A probate is a court process which aims to settle a deceased person’s estate. Typically, a probate is necessary if a person dies with assets that only he or she could control. For example, Joe passes away owning a house titled solely in his name, and Joe’s only son wants to sell the house. This is a very common situation which may require a probate. Joe’s son cannot sell the house, because he does not own it; Joe does. Joe’s son would need to initiate a probate and be appointed a “personal representative” (which is the same as an “executor”). The Personal Representative is appointed by the court, and then has the authority to settle the estate. Joe’s son needs the court to give him the authority to sell the house. The Personal Representative will likely need to consult with a lawyer, and usually has to do quite a bit of paperwork; it is very common for a probate to last longer than nine months, even if the probate is not complex.

If your estate has less than $75,000 in personal property (including household goods, bank accounts, vehicles, and mobile homes), and $200,000 in real property (house and land), you may be able to file a “small estate” probate, which consists of a shorter process and less paperwork to submit to the courts.

Revocable Living Trust (RLT)

A trust is essentially a contract you create with yourself during your lifetime. A Revocable Trust is a trust that can be revoked or changed by the person who created the trust. A RLT-centered estate plan created can avoid probate, if properly executed. A RLT can be used to deal with estate tax issues, or simply to deal with family issues.

S-Corporations

Upon filing the Articles of Incorporation with the secretary of state, an S-Corporation becomes an official for-profit corporation. All taxable income produced by a for-profit corporation (also known as a ‘C corporation’) must be reported by the Corporation.

Once a corporation has been formed, it may elect “S-Corporation Status” by filing IRS form 2553 with the Internal Revenue Service. Upon filing this document, a corporation is taxed like a partnership or sole proprietorship, rather than as a separate entity. By electing an “S Corporation Status” all income is absorbed by the shareholders for purposes of computing tax liability. Therefore, the profits or losses of an S Corporation are reflected on the individual shareholder’s tax returns.

An S-Corporation is ideal for the individual who prefers the limited liability of a corporation and the tax benefits of a partnership.

The How to Start a Business in Oregon, provided by the Oregon Secretary of State, itemizes the basic considerations and requirements for starting a business in Oregon.