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Estate Planning in Minnesota:  Some basic information

Planning your estate is one of the most important things you can do for yourself and for those who depend upon you. It is your opportunity to lay out your wishes with regard to your property, your obligations, and your personal desires.

A person who is planning may also want to consider the issues surrounding health care decisions, tax avoidance, gifts to charity, insurance planning, nursing home expense, and other matters of personal importance. There is no single device that is appropriate for everyone. But, it is possible to select the means of carrying out your plan once you have made the necessary decisions about what you want to achieve.

Your Will
This is the legal document providing authorization and instructions to gather your property, pay outstanding debts, pay expenses of administering your estate, and distribute your property in line with your desires as much as possible. It is the foundation for any plan. If you have minor children or others to care for, you may be able to nominate a guardian and make other arrangements to care for them in the future.

This is also a good time to name your representative and/or attorney and prepare other instructions to be followed in the event of your death or serious injury. Your attorney can help you find alternatives for handling responsibility and achieving your desires. Some things can be handled in a simple Will; others require various amounts of extra planning.

When a person passes on, the Will is available to carry out the instructions by way of a probate procedure. A person (or persons) will be appointed and given official power to do what is necessary and ultimately create a file showing that the wishes have been carried out. In Minnesota, we have a simplified probate process which allows each step to be done with minimum formality and court involvement, as the situation appears to require.

Property can be arranged so that it all transfers under the Will, or arranged so that none would be subject to the terms of a Will. In many situations, a plan will be devised so that some property passes under a Will and some does not.

A will is a very useful and flexible instrument which can be used to handle many issues and achieve a number of typical goals. Everyone should at least have a will.

WILL KITS.  I strongly discourage use of will kits, because they cannot provide the personal attention required for these important matters. When planning, you need to consider many issues in order to determine what to include as well as what not to include. State laws also require various formalities and signing ceremonies in order to make the document legal. Consulting a knowledgeable attorney is the best way to assure this important matter is completed correctly.

Trusts
Many people ask me about avoiding probate and avoiding the need for a will through use of a trust. It is often believed that a trust will save money, time, and complications, compared to writing a will and conducting a probate when the time comes. Many people have also come to believe that a trust will always avoid probate, which is viewed as a crushing burden.

The truth is that a trust can be useful when used for the right reasons and funded at the right time with the right assets. You have to study your own situation very carefully and determine some basic things: 1) what property is available for funding into the trust; 2) what are the tax (and other) ramifications of the various funding alternatives; 3) to what extent is the trust the best means for realizing your particular needs and wishes.

There are many different types of trusts. Some come into existence right away while others do not begin until a person passes away; some can be changed at any time while others cannot; some can provide tax advantages while others will not; some are for married couples only; some are appropriate only for particular kinds of property; some must be designed to interact with other trusts, etc.

In general, setting up a trust requires very in-depth study and planning for your particular situation. All the property must be laid out and studied; appropriate documents are drafted, a trustee (or trustees) named, and some or all property transferred into the name of the trustee. Once created, the trust is a separate legal entity. Further management and transfer of the property is done by the trustee, who is usually paid for the services. A will is usually prepared to transfer remaining property to the trust, and a power of attorney is also prepared in most cases to help manage and transfer the assets.

A trust can be useful to provide for management of your property; it can also be designed to continue automatically should you become incapacitated. The trust can also be useful if you have property outside Minnesota. The issue of trusts is very complicated and not easily covered in a few short paragraphs. There are also many possible hazards, and a trust must be carefully prepared and monitored by professionals.

If you would like to consider use of a trust to fulfill your desires, discuss this with your attorney.

Financial (Property) Power of Attorney
A property power of attorney can be useful where, as part of an overall plan, you need to give someone power to manage, sell, buy, transfer, and otherwise deal with your property. The power of attorney is drafted to play a specific part in the plan. If one is needed, it is drafted to come into existence at a particular time, give an exact amount of authority to a particular person, and cover specific property, for example. Used properly, the power of attorney can be helpful in carrying out a specific plan. Used indiscriminately, the power of attorney can have devastating, unexpected, results. Always contact your attorney about these matters.

"Living Will," Health Care Power of Attorney, or Health Care Directive
These documents have been known by different names over recent years, and often revised by state legislatures. They generally allow you to describe the health care you want to receive, before the need arises. In some instances, they come into force only if you are terminally ill and unable to communicate your wishes; in other instances, they come into force whenever you choose to make them effective.

It is important to consult your own state laws to determine what "living will" planning is available. In Minnesota, our most-recent form is known as the Health Care Directive. It broadly permits a person to express wishes about medical care in writing and/or name another person to make health care decisions, obtain medical records, and perform other services.

Most people want the "living will" to express what medical procedures they would receive in an extreme situation. So, it is important to decide what kind of medical measures you want to receive if this situation should arise.

You should be as specific as possible: in general, if you simply state you do not want "extraordinary measures," then this does not necessarily provide complete guidance. Do you not want to be placed on a respirator, for example? What about artificial hydration or feeding tubes? What if you are pregnant?

Your doctor can help you as you think about this issue. Discuss your desires with your doctor, family, friends, spiritual advisors, and other people you look to for guidance and support. You can name a proxy who is the person you want to make your health care decisions in accordance with your instructions in this kind of situation. The proxy can also serve as guardian or conservator, should this become necessary.

Once you have decided these personal issues, the "Living Will" can be drafted to express your wishes and comply with your state's laws.

Taxes
Minnesota and the U.S. Government impose various taxes that affect income and property involved in your estate plan. It is important that any plan consider taxes and ways they can be legally avoided. Always arrange for a professional tax opinion before finalizing any plan.

How to Begin
To begin the planning process, first list your assets. Be complete. Include everything you have any interest in as part owner, sole owner, life estate, and so on. Include everything from real estate and insurance to clothing, cash, debts owed to you, and claims in progress. Do you have property or interests in other states or countries? Do you have property in joint ownership? How are your bank accounts and other assets held? Do you have outstanding business agreements or other contracts? What insurance do you have, and who are the beneficiaries? These items and others need to be considered at this time.

Second, list your debts. Again, be complete. Include everything from liens and taxes to personal loans.

Third, lay out your specific desires for each item of property. For example, do you want your representative to sell some items or distribute the items themselves? And do you want the cash or the item to go to a particular person?

Fourth, consider what other items you should take care of at this time, and be prepared to discuss the options with your attorney. People often need to consider nominating a guardian, providing instructions for handling of the body, contributing to charity, establishing trusts for spouse and children, avoiding taxes, planning for anticipated disagreements, voiding old wills, clearing up legal claims, exercising powers, naming successor trustees, changing insurance beneficiaries, executing a power of attorney, making gifts, instructing regarding continuation of businesses or managing property, etc.

Once you have thought about these matters, consult an attorney. Never attempt to handle estate planning without professional assistance.

** ALWAYS HAVE AN ATTORNEY REPRESENT YOU IN THESE IMPORTANT AND COMPLEX MATTERS. **


GERALD HASSELBRINK, Attorney at Law
of the Minnesota Bar and United States District Court

INDEPENDENT, CONFIDENTIAL, LEGAL SERVICES
PRACTICING ESTATE AND LIFE PLANNING IN CENTRAL MINNESOTA
WILLS, TRUSTS, AND ESTATES
CONSERVATOR AND GUARDIAN


St. Cloud - St. Joseph, Minnesota
Phone (320) 251-0222 | (320) 363-0414

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Copyright 2009 Gerald Hasselbrink
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