Minneapolis Estate Planning and Probate Lawyer Blog

Tuesday, October 06, 2015

6 Events Which May Require You to Revise Your Estate Plan
Creating an Estate Plan is not a one-time event. You should review your will periodically, to ensure it is up to date, and make necessary changes if your personal situation, or that of your executor or beneficiaries, changed. As the weather cools and we head toward the end of 2015, it's a great time to reflect back on the changes in your life.  Keep in mind that there are a number of life-changing events that require your Will, and other estate planning documents, to be revised.

Read more . . .

Monday, August 24, 2015

13 Costly Misconceptions About Planning for Your Senior Years

A Minneapolis Estate Planning Lawyer Dispels 13 Myths About Planning for Your Twilight Years

Misconception #1: Most seniors move into nursing homes as a result of minor physical ailments that make it hard for them to get around.  Wrong!  A large number of admissions to nursing homes are actually due to serious health, behavior, and safety issues caused by Alzheimer’s disease and dementia.

Read more . . .

Monday, August 10, 2015

My Business is Small. Do I Need a Succession Plan?

A Minneapolis Estate Planning Attorney Explains the Value of Drafting a Business Succession Plan for Small Business Owners 

Business succession planning is a practice or set of estate planning practices used by business owners to ensure that a small business can run successfully in the event of their death or in the unfortunate circumstance where they are unable to manage or operate the business.   I receive a lot of inquiries on this topic.  People want to know if they need a business succession plan or if they are somehow covered by wills and living trusts.  I usually walk people through a basic set of questions such as:

Read more . . .

Sunday, July 26, 2015

I Just Moved to Minnesota. Do I Need a New Will?

A Minneapolis Estate Planning Attorney Discusses How Moving to Minnesota Affects Your Estate Plan

Minnesota’s economy is booming with one of the lowest unemployment rates in the country and this means that people are moving here to take advantage of our great standard of living. As a result, I often receive calls from people asking if they need to update their estate plans due to the move.

In general, wills or living trusts that are valid in one state should be valid in all states. However, if you’ve recently moved to Minnesota, it’s highly recommended that you consult a Minnesota estate planning attorney. This is because states can have very different laws regarding all aspects of estate planning. For example, some allow you to use a handwritten will, but Minnesota does not.

And, as a practical matter, you want to ensure that the proper people are able to get their hands on your legal documents. This may prove difficult if they are all still located in another state.

Another event that can cause problems with moving and estate planning is moving from a community property state to a common law state, such as Minnesota. In community property states, all property earned or acquired during marriage is generally owned in equal halves by each spouse, with some exceptions, such as any property received by only one of them through gift or inheritance. The property that is considered community property includes income, anything acquired with income during the marriage, and any separate property that is transformed into community property. Separate property includes anything owned by either spouse before marriage, property received by only one spouse by gift or inheritance, and any property earned by one spouse after permanent separation. One spouse is not required in community property states to leave his or her half of the community property to another spouse, although many do.

In common law states, property acquired during a marriage is not automatically owned by both spouses. In common law states, the spouse who earns money and acquires property owns it by himself or herself, unless he or she chooses to share it with his or her spouse. Common law states usually have rules to protect a surviving spouse from being disinherited.

You will also want to make sure that your Health Care Directive and Power of Attorney are valid in Minnesota. Minnesota law is very specific about the form of your Power of Attorney so you should have this redone to match. Otherwise, you risk having a bank, or other institution, reject it.

As you can see, the laws of different states vary significantly with respect to incapacity planning, estate planning and inheritance rights. Therefore, it’s important to contact an estate planning attorney in your new area, especially if you are moving from a community property state to a common law state.

New to Minnesota? Contact an experienced estate planning attorney now!

Monday, June 22, 2015

Is There a Way to Disinherit a Child?

A Minnesota Estate Planning Attorney Explains Possible Ways to Disinherit a Child From Your Estate 

I have had numerous clients ask about disinheriting a child from their estate. There are many reasons why you may want to disinherit a child, but you need to take careful steps to ensure your wishes are honored.  

If your estate plan and related documents are properly and carefully drafted, it is highly unlikely that the court will disregard your wishes and award the excluded child an inheritance.  As unlikely as it may be, there are certain situations where this child could end up receiving an inheritance depending upon a variety of factors.

To understand how a disinherited child could benefit, you must understand how assets pass after death.  How a particular asset passes at death depends upon the type of asset and how it is titled. For example, a jointly titled asset will pass to the surviving joint owner regardless of what a will or a trust says. So, in the unlikely event that the disinherited child is a joint owner, that child will still inherit the asset because of how it's titled.

Similarly, if the child you want to disinherit is listed as a named beneficiary on a life insurance policy or retirement plan asset, such as an IRA or 401k, that child will still receive those benefits as the named beneficiary even if your will specifically left that child out. Another way such a "disinherited" child might receive a benefit is if all other named beneficiaries died before you.

So, assume you have three children and you wish to disinherit one of them. You draft the will to state that all of your assets should go to the other two, and if they are not alive, then to their descendants.  If those other two children die before you and do not have any descendants, there may be a provision that in such a case your "heirs at law" are to take your entire estate and that would include the child you intended to disinherit. In order to disinherit a child, your estate plan must be carefully drafted to ensure he/she is left out of each part of the plan.

If you wish to disinherit a child, or anyone else, all of these issues can be addressed with proper and careful drafting by a qualified estate planning lawyer. You have the right to determine who is entitled to your assets after your death.

Contact an experienced and knowledgeable Minnesota estate planning attorney now to act on your wishes.

Monday, June 08, 2015

A Minneapolis Estate Planning Attorney Explains Why You Should Add Your Spouse to the Deed to Your House

A Minneapolis Estate Planning Attorney Explains the Pros of Adding Your Spouse to the Deed to Your House

Many people erroneously assume that when one spouse dies, the other spouse receives all of the remaining assets; this is often not true and frequently results in unintentional disinheritance of the surviving spouse.

In cases where a couple shares a home but only one spouse’s name is on it, the home will not automatically pass to the surviving pass, if his or her name is not on the title. Take, for example, a case of a husband and wife where the husband purchased a home prior to his marriage, and consequently only his name is on the title (although both parties resided there, and shared expenses, during the marriage). Should the husband pass away before his wife, the home will not automatically pass to her by “right of survivorship”. Instead, it will become part of his probate estate.

This means that there will need to be a court probate case opened and a personal representative (executor) appointed. If the husband had a will, this would be the person he nominated in his will to carry out his instructions regarding disposition of the assets. If he did not have a will, Minnesota probate law states who has priority to serve as personal representative AND inherit the assets.

Take our above example; if the husband died without a will, Minnesota probate law determines who is entitled to the home. Under Minnesota law, if the husband in our example had children, even if they are the children from the current marriage, the surviving spouse is only entitled to a life estate in the home. The “remainder interest” goes to the kids. If this is a second marriage, children from the prior marriage may be entitled to more of the estate. A life estate with a remainder interest means the surviving spouse has strict limitations on what she can do with the home. For instance, she can’t sell the home.

I am currently handling several probate matters where the surviving spouse was not on the house deed.

Laws of inheritance are complex, and without proper planning, surviving loved ones may be subjected to unintended expense, delays and legal hardships. If you share a residence with a significant other or spouse, you should consult with an attorney to determine the best course of action after taking into account your unique personal situation and goals. There may be simple ways to ensure your wishes are carried out and avoid having to probate your spouse’s estate at death.

Contact a Minnesota Estate Planning Lawyer today to assist with adding your spouse to the deed to your home.

Monday, June 01, 2015

What [Not] To Do After a Death: Seven things personal representatives should never do

A Minnesota Probate Lawyer Cautions Against Certain Actions When You Act as a Personal Representative (Executor)

1. NEVER distribute estate assets until there has been a full assessment of potential claims against the estate.

Minnesota statutes require that probates remain open for at least four months. This gives creditors adequate time to notify the personal representative of potential claims. Distributing assets before the expiration of this four-month creditors’ claims period opens the personal representative to liability if there is not enough money to pay the claims.

2. NEVER use the estate’s funds for personal expenses.

The personal representative has a duty to act in the best interests of the estate. “Borrowing” the estate’s funds or misappropriating the funds is the same as stealing someone else’s money. It’s better to start clean and immediately open an estate bank account and run all the estate money through it.

3. NEVER neglect tax issues.

Ordinarily it is the responsibility of the personal representative to file the estate’s tax returns. Failure to do so could cause penalties and expose the personal representative to liability.

4. NEVER ignore a court order.

As a condition to being appointed, the personal representative agrees to submit to the jurisdiction of the court. This means obeying court orders and local rules and following Minnesota probate statutes. Disobeying the court could result in personal liability against the personal representative, or worse, the court ordering the personal representative to appear before it to explain why you disobeyed the court. It is within the court’s power order jail time or a fine for a personal representative who disobeys a court order.

5. NEVER distribute the last of the funds in the estate until a full final accounting has been done and all debts paid. I handled a probate where the only asset was the decedent’s home. The home was sold and a check issued to each beneficiary for the full amount of the sale price. At the end of the probate, the personal representative did not have enough cash on had to reimburse himself the full amount of legal fees paid to handle the probate.

It’s much more difficult (almost impossible) to get money back from someone once it’s been paid out. Far easier, 

6. NEVER ignore a claim.

Minnesota probate law requires creditors to submit a claim against the estate in order to get paid. The creditors will notify the personal representative of potential claims. The personal representative should carefully review each claim. If he/she doesn’t think it’s legitimate (or owed) the PR MUST notify the creditor of the disallowance of the claim within 2 months of receipt of the claim.

I had a client who ignored a claim (despite my repeated warnings) and the two months passed without him filing a notice of disallowance. He then asked if he could dispute the claim. Unfortunately, it was too late to dispute the claim even though he had a good case for disallowance. He was then forced to work with the creditor to settle the claim.

I know it’s a difficult time working through a probate after the death of a loved one, but please don’t simply ignore issues. It’s my job to help you tackle these problems, so work with me.

7. NEVER proceed without counsel.

Minnesota’s probate laws are complex even for seasoned attorneys. Making mistakes can be costly to the estate and can even cause the personal representative to become personally liable for the mistakes. Even before a probate proceeding is commenced, there are many issues that need to be dealt with, including how to handle creditor claims, deciding on the right place to open the probate, choosing the appropriate type of probate proceeding, and interpreting the decedent’s Will correctly in light of Minnesota probate law.

Because of the risks involved, probate is not the kind of legal proceeding that should be done “on the cheap.” I have met with numerous personal representatives who originally thought they could handle it on their own then hit a wall and had to seek immediate help to fix something. You should work with an experienced Minnesota probate lawyer to ensure you don’t make a costly mistake.

Hire a knowledgeable and experienced Minnesota probate attorney before you start a probate to be sure it’s handled properly from the very beginning.

Download a copy of this document: Five Things Personal Representatives Should Never Do.

Monday, May 25, 2015

What’s Involved in Serving as a Personal Representative in a Minnesota Probate?

A Minneapolis Probate Lawyer Explains Some of the Tasks Associated With Acting as a Personal Representative for an Estate

The personal representative is the person designated in a Will as the individual who is responsible for performing a number of tasks necessary to wind down the decedent’s affairs. [While a will merely nominates someone to act as personal representative subject to approval by the court, this post uses the term “personal representative” to refer both to the nominated and appointed personal representative.] Generally, the personal representative’s responsibilities involve taking charge of the deceased person’s assets, notifying beneficiaries and creditors, paying the estate’s debts and distributing the property to the beneficiaries. The personal representative may also be a beneficiary of the Will, though he or she must treat all beneficiaries fairly and in accordance with the provisions of the Will.

The first priority for a personal representative is to find out if the deceased had a valid Will.  Then the personal representative should locate the original Will.  The personal representative should also be sure to order certified copies of the Death Certificate if that hasn’t already been done.  The personal representative will be responsible for notifying all persons who have an interest in the estate, including those who are named as beneficiaries in the Will and any known creditors. A list of all assets must be compiled, including value at the date of death.

The personal representative must take steps to secure all assets, whether by taking possession of them, or by obtaining adequate insurance. Assets of the estate include all real and personal property owned by the decedent; overlooked assets sometimes include stocks, bonds, pension funds, bank accounts, safety deposit boxes, annuity payments, holiday pay, and work-related life insurance or survivor benefits. The personal representative must also compile a list of the decedent’s debts, including, credit card accounts, loan payments, mortgages, home utilities, tax arrears, alimony and outstanding leases.

Whether the Will must be probated depends on a variety of factors, including size of the estate and how the decedent’s assets were titled. An experienced probate or estate planning attorney can help determine whether probate is required, and assist with carrying out the personal representative’s duties. If the estate must go through probate, the personal representative must file the appropriate documents with the probate court in order to be appointed legal representative. Upon approval of the appointment, the court will issue a document called Letters Testamentary authorizing the personal representative to act on behalf of the estate to pay all of the decedent’s outstanding debts, provided there are sufficient assets in the estate. After debts have been paid, the personal representative must distribute the remaining real and personal property to the beneficiaries, in accordance with the wishes set forth in the Will. Because the personal representative is accountable to the beneficiaries of the estate, it is extremely important to keep complete, accurate records of all expenditures, correspondence, asset distribution, and filings with the court and government agencies.

The personal representative is also responsible for filing all tax returns for the deceased person including federal and state income tax returns and estate tax filings, if applicable. Please note that Minnesota law entitles a personal representative to reasonable compensation for his or her services.  Unfortunately, there is no guidance offered on the appropriate amount of this fee so it’s a good idea to discuss compensation with other family members to avoid later disputes.  I find it helpful to spell out the compensation in the will so that others know and understand that the deceased intended to offer payment to the personal representative.

Monday, May 18, 2015

Expenses of the Estate, Part IV: Fees Received as Personal Representative (Executor) are Taxable!

A Minnesota Probate Attorney Explains That Fees Received for Acting as a Personal Representative (Executor) Are Taxable

Serving as a personal representative takes a lot of time. As a result, some personal representatives consider charging the estate for their time as permitted under Minnesota law.

As appealing as that can be, the attorney should help the personal representative consider all the consequences of that decision. One consequence that is often overlooked is that fees paid to the personal representative are taxable and must be included in their gross income. As a result, the estate may be required to generate a 1099.

Contact a Minnesota Probate Lawyer to discuss your rights and obligations as executor.

Monday, May 11, 2015

Expenses of the Estate, Part III: D0 I Get Paid To Act As Personal Representative (Executor)?

Minnesota Probate Attorney Explains Compensation for a Personal Representative 

You are nominated as a personal representative to handle someone’s estate. Can you get paid for handling these matters? In a word, yes.

Your fee is dictated by Minnesota probate law. Unfortunately, Minnesota law doesn’t provide much guidance as the probate law simply says, “[a] personal representative is entitled to reasonable compensation for services.”

What does that mean?

It’s not really clear. The courts have generally stated that they know an unreasonable fee when they see one. But, they have failed to provide guidance on what constitutes a reasonable fee.

A personal representative is always entitled to be reimbursed for any expenses related to the probate. For instance, paying for filing fees, copies of the death certificate, publishing fees, attorney’s fees, accountant fees etc.…

I often suggest to clients that they state the fee they want to get up front to the rest of the family so there is no argument later.  This can be a flat amount of the estate ($5,000) or an hourly fee and the PR can simply track their time spent working on the probate.

Are fees received for acting as personal representative taxable?  See the next post for the answer.

Work with a Minnesota probate lawyer to ensure that you are getting paid a fair amount for the work you put in to handling an estate.

Monday, May 04, 2015

The Expenses of Probate, Part II: What Are The Fees for Handling an Estate (Probate)?

A Minneapolis Probate Attorney Explains the Fees Associated with Handling a Probate

In Part I of this series, I explained who is responsible for paying the fees to start a probate. This post discusses the different types of fees involved.

• Court Fees

These fees are dictated by Minnesota probate law and cover the court filing fee, publishing and copy fees. In Minnesota, this generally amounts to about $500-$1000.

 Attorney's Fees

Naturally, these fees vary by attorney. Be sure to ask the Minnesota probate lawyer about these fees before signing anything. At Unique Estate Law, we list our fees up front AND provide our probate clients with a knowledgeable quote based on what we think will be involved in handling the estate.

• Accounting Fees

These fees will vary depending upon the overall value of the estate and the type of assets owned. For instance, a small estate that nonetheless owns 25 different stocks and bonds may generate more accounting fees than a larger estate that owns a primary residence, a bank account and a CD. Of course, if the estate is taxable at the state and/or federal level, then the accounting fees may include the preparation and filing of the state and/or federal estate tax returns if the attorney for the estate doesn't prepare and file the returns.

• Appraisal and Business Valuation Fees

These fees will be necessary to determine the date of death values of real estate, personal property (including jewelry, antiques, art work, boats, cars and the like), and business interests. Appraisal fees for personal property can range anywhere from a few hundred to a few thousand dollars, while business valuation fees will run several thousand dollars.

I had a probate client who owned several racehorses. We had to hire someone to conduct an appraisal done of the horses so we could value them for the probate. The Personal Representative was lucky in that case as his father had opened a joint bank account and deposited funds for the sole purpose of funding probate fees. So, he did not need to pay for these things out of his own pocket and then wait to get reimbursed later.

• Bond Fees

If you don't have a Last Will and Testament that waives the posting of a bond by your Personal Representative, then before your Personal Representative can be appointed he or she may need to pay for and post a bond in an amount determined by the probate judge. I've also run into situations where the probate judge has required a bond to be posted even though the Last Will and Testament waived the posting of a bond simply because minor children - or charitable - beneficiaries were involved.

 Miscellaneous Fees

There are almost always other fees involved in a probate.  The following are a few examples of such fees:

  1. Postage to mail notices and documents to interested persons or governmental authorities
  2. Insuring and storing personal property;
  3. Shipping personal property;
  4. Moving personal property
  5. Paying the decedent’s mortgage
  6. Paying for property/casualty insurance on a residence
  7. Lawn care services
  8. House repairs (I had a client who had to pay to fix an ice dam on his father’s home during probate)
  9. Car insurance
  10. Utilities

As you can see, there are many fees involved in handling a probate. These fees can amount to several thousand dollars just to get assets/items to the beneficiaries. There are ways around paying the fees for probate. While that discussion is beyond the scope of this post, I do discuss it in other posts.

Contact a Minneapolis probate lawyer now to ask about the fees involved in probate.

I’m the personal representative? Do I get paid for that? See Part III for the answer to this question.

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From within Hennepin County Unique Estate Law represents clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park.

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