Estate planning can be relatively simple or extremely complex, depending on the financial situation and needs of each individual. Many people simply ignore the task in the hopes that they will live forever. For most people who do engage in estate planning, a sense of accomplishment and peace is achieved upon completion. An attorney knowledgeable in estate planning can be of great assistance in planning for the disposition of property after death, the management of assets during a person’s lifetime, and the carrying out of a person’s wishes for medical treatment, organ donation, and burial.
Many estate planning tools have been available for a long time. Others have become more recently available as a result of the enactment of laws by the Minnesota State Legislature. Picking and choosing among the various options available to a person can be a difficult and complex task.
When most people think about estate planning, they think about their Last Will and Testament (Will). A Will is a legal document which controls the disposition of a person’s assets after their death. Often times, it will have tax savings provisions and appoint a guardian for minor children. It has been said that “a man who dies without a Will has lawyers for his heirs.” More accurately, you must realize that if you do not make your own Will, the state laws of intestacy will in effect make a Will for you. These laws may or may not result in the disposition of your property in accordance with your wishes. It is far better to spend some time and thought to have things done right. This task does not have to be overly burdensome. It just needs a little of your attention.
A Will must be in writing, it must be signed by the person making the Will, that person must be mentally competent and not subject to undue influence by friends, relatives, or others. The signing of the Will must be witnessed by two persons and it is recommended that all of the signatures be notarized.
Minnesota law provides that a person making a Will can dispose of personal property by executing a separate written document directing the disposition of the personal property. This becomes especially important where there is a strong emotional attachment to sentimental items. A person’s jewelry, gun collections, artwork, cars, and other property can lead to hotly-contested disputes among the heirs. Without a Will, there is no way to dispose of these items after death through the use of a written list.
Death is an emotional experience. Many times, people do not act rationally after the death of a loved one. A number of years ago, we were involved in a case where the adult children spent thousands of dollars in legal fees in a dispute over who received items of personal property that had little monetary value but were priceless on an emotional basis. Even after the judge issued an Order directing the disposition of the various items, our client refused to obey the Court Order. Ultimately, we withdrew from the case realizing that our client would not follow our advice and that, as such, we could no longer help our client through this difficult chapter in their life. The Court imposed sanctions and found our former client to be in contempt for their failure to abide by the terms of the Court Order. All of this could have been avoided if a Will had been drawn and a Personal Property List executed. Our experiences have shown that in many situations just like this one, the children would have followed the directions of their parent if their parents had spelled out their wishes in a Will.
Personal property disputes of this sort are not uncommon, although few become as contentious as this. All of these disputes do have the potential to wreak havoc on the surviving family members. Hurt feelings and emotional scars can last for years.
In addition to the disposition of personal property, a simple Will usually provides that all assets be distributed to the surviving spouse, and then equally among the children. If a child is deceased, their share will then be distributed to the deceased child’s descendants. Variations can be made, allowing for distributions to in-laws, charities, or only among surviving children. In other words, if a child dies, that child’s share will not go to his/her descendants, but instead be distributed among the deceased child’s surviving siblings. A person has the right to distribute the assets equally or unequally among the children, even totally omitting a child or all of the children, if so desired.
Where minor children are involved, a Will gives the decedent an opportunity to designate a Guardian. Courts will generally follow the recommendation of a parent in this regard. We also recommend that as a part of a Will, the parents consider establishing a children’s trust to manage the family monies for the benefit of the children beyond the age of eighteen (18). Parents many times like to provide that monies be held in trust to meet the essential needs of their children well beyond their eighteenth (18th) birthday.
In drafting the provisions of a Children’s Trust Will, the selection of a Trustee and an Alternate Trustee to manage the family funds must be given careful consideration. The Trustee must be honest, have good business judgment, and a backbone to say “no” when a child requests funds for an ill-advised expenditure.
A Will oftentimes contains tax-saving clauses. Under present Minnesota law, estates in excess of $1,400,000.00 are subject to estate taxes when there is no surviving spouse. Proper planning can eliminate over $1,400,000.00 of taxes for a married couple with $2,800,000.00 of assets. When the proceeds of life insurance policies and retirement plans are taken into account, it is not unusual for a person’s estate to exceed $1,400,000.00 in value.
The administration of an estate generally takes eighteen (18) to twenty-four (24) months, depending on the nature of the assets (the sale of a house can take quite some time), and the tax issues involved (in large estates, tax clearances might not be completed until 24 months after death). If the estate is relatively uncomplicated, it may be concluded and wrapped up as early as four (4) to six (6) months after the initial filings are made with the Probate Court.
The person in charge of administering an estate and carrying out the provisions of the Will is known as a Personal Representative. This person was formerly known as the “Executor.” The Personal Representative is nominated in the Will and appointed by the Probate Court. Generally, the Court will appoint the person nominated in the Will unless there is an objection or the nominated Personal Representative declines to serve. Most Wills nominate an alternate person to serve as Personal Representative in that event, or alternatively, the Court may appoint a disinterested third party to serve as Personal Representative.
The nomination of a Personal Representative in a Will is of vital importance. Usually the surviving spouse is the first choice. Many people then consider their eldest child as the alternate. However, this is not always the wisest choice. Instead, selection should be based upon who has the time and the ability to get the job done. Often times, someone other than an immediate family member is a better choice.
The Personal Representative has the responsibility to gather and inventory assets, liquidate them or sell them if necessary, pay any outstanding bills, file income tax and estate tax returns if necessary, and distribute the assets to the persons designated in the Will. This requires a person to have basic organizational skills and an ability to follow directions in a timely manner. A Probate Lawyer can be of great assistance in this regard.
If a Personal Representative procrastinates and fails to carry out his/her duties, a home could go into foreclosure and all equity lost to the lender. If bills are not properly and timely reviewed, they may become claims against the estate which cannot be disputed or contested. Taxes which are not timely filed may result in the imposition of penalties. It is absolutely essential that the right person be selected to be the Personal Representative. If a Will is not made, a decedent will have no say in who shall serve as Personal Representative. Where there is no surviving spouse, without a Will all of a decedent’s children will have equal standing to serve as Personal Representative. If agreement cannot be reached, litigation may result and the Court will ultimately decide who shall serve as Personal Representative.
A Will does not avoid Probate. A Judge still must review a Will to make sure that it was properly executed and give interested parties the opportunity to contest the Will for “lack of testamentary capacity” or “undue influence.” Once approved by the Judge and probated, a Will provides an invaluable road map for the orderly administration of a decedent’s estate and distribution of property to the decedent’s designated devisees and/or heirs. There are several other notable and important documents used in estate planning, including: Trusts; Healthcare Directives; Powers of Attorney; and Standby Custodial Agreements.
Ultimately, a Will is an indispensible tool to most any estate plan. Whether you are currently without a Will, have an older Will that needs to be updated, or are simply interested in learning more about what a Will can do for you and your loved ones, please do not hesitate to call us at Gabriel Law Office, PLLC. Let us help make sure that legal issues are not an issue for you and your loved ones.