Minneapolis Estate Planning and Probate Lawyer Blog
Monday, November 26, 2012
A Minnesota Estate Planning Attorney Discusses Complex Estate Planning Techniques
If you have a child who is addicted to drugs or alcohol, or who is financially irresponsible, you already know the heartbreak associated with trying to help that child make healthy decisions. Perhaps your other adult children are living independent lives, but this child still turns to you to bail him out – either figuratively or literally – of trouble.
If these are your circumstances, you are probably already worrying about how to continue to help your child once you are gone. You predict that your child will misuse any lump sum of money left to him or her via your will. You don’t want to completely cut this child out of your estate plan, but at the same time, you don’t want to enable destructive behavior or throw good money after bad.
Trusts are an estate planning tool you can use to provide an inheritance to a worrisome heir while maintaining control over how, when, where, and why the heir accesses the funds. This type of trust is sometimes called a spendthrift trust.
As with all trusts, you designate a trustee who controls the funds that will be left to the heir. This trustee can be an independent third party (there are companies that specialize in this type of work) or a member of the family. It is often wise to opt for a third party as a trustee, to prevent accusations among family members about favoritism.
The trust can specify the exact circumstances under which money will be disbursed to the heir. Or, more simply, the trust can specify that the trustee has complete and sole discretion to disburse funds when the heir applies for money. Most parents in these circumstances discover that they wish to impose their own incentives and restrictions, rather than rely on the judgment of an unknown third party.
The types of conditions or incentives that can be used with a trust include:
Drug or alcohol testing before funds are released
Payments directly to landlords, colleges, etc., rather than payment to the heir
Disbursement of a specified lump sum if the heir graduates from university or keeps the same job for a certain time period
Payment only to a drug or alcohol rehab center if the child is in an active period of addiction
Disbursement of a lump sum if the child remains drug free
Payments that match the child’s earned income
If you are considering writing this type of complex trust, it is advisable to seek assistance from a qualified and experienced estate planning attorney who can help you devise a plan that best accomplishes your wishes with respect to your child.
Monday, November 26, 2012
The ‘Sandwich Generation’ – Taking Care of Your Kids While Taking Care of Your Parents
“The sandwich generation” is the term given to adults who are raising children and simultaneously caring for elderly or infirm parents. Your children are one piece of “bread,” your parents are the other piece of “bread,” and you are “sandwiched” into the middle.
Caring for parents at the same time as you care for your children, your spouse and your job is exhausting and will stretch every resource you have. And what about caring for yourself? Not surprisingly, most sandwich generation caregivers let self-care fall to the bottom of the priorities list which may impair your ability to care for others.
Following are several tips for sandwich generation caregivers.
Hold an all-family meeting regarding your parents. Involve your parents, your parents’ siblings, and your own siblings in a detailed conversation about the present and future. If you can, make joint decisions about issues like who can physically care for your parents, who can contribute financially and how much, and who should have legal authority over your parents’ finances and health care decisions if they become unable to make decisions for themselves. Your parents need to share all their financial and health care information with you in order for the family to make informed decisions. Once you have that information, you can make a long-term financial plan.
Hold another all-family meeting with your children and your parents. If you are physically or financially taking care of your parents, talk about this honestly with your children. Involve your parents in the conversation as well. Talk – in an age-appropriate way – about the changes that your children will experience, both positive and challenging.
Prioritize privacy. With multiple family members living under one roof, privacy – for children, parents, and grandparents – is a must. If it is not be feasible for every family member to have his or her own room, then find other ways to give everyone some guaranteed privacy. “The living room is just for Grandma and Grandpa after dinner.” “Our teenage daughter gets the downstairs bathroom for as long as she needs in the mornings.”
Make family plans. There are joys associated with having three generations under one roof. Make the effort to get everyone together for outings and meals. Perhaps each generation can choose an outing once a month.
Make a financial plan, and don’t forget yourself. Are your children headed to college? Are you hoping to move your parents into an assisted living facility? How does your retirement fund look? If you are caring for your parents, your financial plan will almost certainly have to be revised. Don’t leave yourself and your spouse out of the equation. Make sure to set aside some funds for your own retirement while saving for college and elder health care.
Revise your estate plan documents as necessary. If you had named your parents guardians of your children in case of your death, you may need to find other guardians. You may need to set up trusts for your parents as well as for your children. If your parent was your power of attorney, you may have to designate a different person to act on your behalf.
Seek out and accept help. Help for the elderly is well organized in the United States. Here are a few governmental and nonprofit resources:
www.benefitscheckup.org – Hosted by the National Council on Aging, this website is a one-stop shop for determining which federal, state and local benefits your parents may qualify for
www.eldercare.gov – Sponsored by the U.S. Administration on Aging
www.caremanager.org -- National Association of Professional Geriatric Care Managers
www.nadsa.org – National Adult Day Services Association
Monday, November 5, 2012
In this series of posts, we've been discussing transferring a home via a transfer on death deed. You own property in your name alone and want to be sure that it goes to the beneficiary of your choice without the expense and delay of probate. So, after reading these informative blog posts, you decide to use a Transfer on Death Deed (“TODD”) to achieve this purpose.
But what happens if you change your mind after you have executed and filed the deed with the county? Can you cancel or change the TODD?
Yes. The Deed does not do anything to your rights over the property during your lifetime. It only takes affect upon your death. Therefore, nothing is set in stone until after death. You may, at any time, change the beneficiary or cancel the deed altogether. But, you MUST file the transfer on death deed revocation prior to your death.
Wednesday, October 31, 2012
Year End Gifts
If you’re like most people, you want to make sure you and your loved ones pay the least amount of tax possible. Many use year-end gift giving as a way to transfer wealth to younger generations and also reduce the overall potential estate tax that will be due upon their death. Below are some steps you can take to make gifts to your heirs without triggering any gift tax liability. Some of these techniques may also reduce your own income tax liability.
A combination of estate and gift tax exemptions can be used to significantly reduce the overall tax liability of your estate. Upon your death, federal estate tax may be owed. A portion of your estate is exempt from the tax. That exemption amount is set by Congress and can change from year to year. For deaths that occur in 2012, the exemption amount is $5 million and the value of an estate in excess of that amount is subject to estate tax. Beware: That will likely change in 2013 as the current law expires.
Many taxpayers make annual gifts to loved ones during their lifetimes, to reduce the overall value of the estate so that it does not exceed the exemption amount in effect at the time of death. It is important to consider that gifts made during your lifetime are subject to a gift tax (equal to the estate tax). However, certain gifts or transfers are not subject to the gift tax, enabling you to make tax-free gifts that benefit your loved ones and reduce the overall taxable value of your estate upon your death.
The annual gift tax exclusion allows each individual to make annual gifts of up to $13,000 to each recipient. There is no limit to the number of recipients who may each receive up to $13,000 totally tax-free. Married couples may gift up to $26,000 to each recipient without triggering any tax liability. This annual exclusion expires on December 31 of each year, and larger gifts may be made by splitting it up into two payments. By making a payment in December and one the following January, you can take advantage of the gift tax exclusion for both years. Keeping annual gifts below $13,000 per recipient ensures that no gift tax return must be filed, and that there is no reduction in the estate tax exemption amount available upon your death.
Annual gifts may also be made in the form of contributions to a §529 College Savings Plan. These, too, are subject to the $13,000 annual gift tax exclusion. Additionally, such contributions may afford the giver with a state tax deduction.
Payment of a beneficiary’s medical expenses is also excluded from the gift tax. There is no limit to the amount of medical expense payments that may be excluded from tax. To qualify, the payment must be made directly to the health care provider and must be the type of expenses that would qualify for an income tax deduction.
If you have a large estate that may be subject to taxes upon your death, making annual gifts during your lifetime can be a simple way to reduce the size of your estate while avoiding negative tax consequences.
Monday, October 29, 2012
Twin Cities Estate Planning Attorney Explains the Steps Necessary to Use a Minnesota Transfer on Death Deed
If you are a property owner and wish to use a transfer on death deed (“TODD”) to transfer that property without the hassle of probate, you must
Choose a beneficiary or beneficiaries
Execute a valid deed that expressly states that it is effective only upon your death
Record the deed in the county in which the property is located prior to your death.
Pay the filing fee.
A few things to note. If the property is jointly owned then all owners must sign the deed. And as #3 above states, it is not enough to execute the deed - you must also record it with the proper county before your death.
Monday, October 22, 2012
A Minneapolis Attorney Explains How to Get a Valid Transfer on Death Deed
In my series on the use of the Minnesota Transfer on Death Deed, I've been explaining the benefits of using the TODD. It is a simple - and relatively inexpensive - process to draft and record a transfer on death deed. If you are still asking "Why should I get one?" let me provide you with a couple of real world examples of the use of a Transfer on Death Deed.
I have a gay couple, Jeff and Nathan, as clients who have been together for 5 years and came to see me about protecting each other in case of tragedy. Jeff owns their home alone as he bought it before he got together with Nathan. Jeff is, of course, concerned that Nathan get the home if anything happens to him.
Can't Jeff Just Add Nathan to the Title of the Home?
Yes. This is a common answer given to people like Jeff, especially by nonlawyer advisors. BUT JEFF MUST EXERCISE CAUTION: If Jeff puts Nathan on the deed to the home, he has given him a gift, which can have current tax implications. Also, Nathan loses the beneficial tax treatment - called a "step up" - received upon inheriting an asset. The tax imlications of this method are covered in other posts but suffice it to say that gifting the home could cause Nathan and Jeff money and hassle.
Another issue no client ever wants to consider? What if Jeff and Nathan break up? Now they still jointly own the home so must deal with it in their dissolution. Does one buy the other out or are they forced to sell the home and split the proceeds?
What about a will?
But, if Jeff merely states in his will that Nathan will get the home, Nathan will be forced to incur the expense, and suffer the delay, of going through the probate process.
What is the solution?
You guessed it. By properly executing and filing a Minnesota Transfer on Death Deed, Jeff can state that, upon his death, the home is to go outright to Nathan. Because the transfer does not happen until after Jeff's death, there is no gift during his life so no worries about gift tax issues. And, Nathan inherits the home so receives the full benefit of the step up in basis for the value of the home - allowing him to avoid increase captial gains taxes. Last, Nathan will not need to open the probate to get the deed to their home in his own name. Again, the Transfer on Death Deed will save Jeff and Nathan hassle and money both during life and after death.
Susan and Emily have been together for together for 15 years and own their home jointly. Susan has a 22-year-old daughter, Stephanie, from a prior relationship and whom Emily has not adopted. They are first concerned with caring for each other if someone happens to one of them. Because the home is jointly owned, if one dies, the other will become the full owner. But, what happens at the death of both of them? Who will get the home?
Because they've been together so long, Emily feels that Stephanie is like a daughter to her as well. She never adopted her because there is still another parent in the picture. But, it is important to her that their home eventually go to Stephanie. Of course, Susan agrees with that so how do we get the home to Stephanie at the death of both clients?
Use a Will?
This solution creates the same issues as in hypothetical #1. But, it also has another one. Susan can't use the will to state what will happen to the home at her death as she owns it jointly with Emily. And her will can't really control what happens to her property after it's been inherited by another, in this case Emily.
Does a Transfer on Death Deed Help?
Somewhat. It will avoid an issue if, upon Susan's death, Emily neglects to draft a will and her estate is transferred through the laws of intestacy (no will). Because Stephanie is not legally related to Emily, she will not inherit through intestacy. It will also help if Emily's will leaves everything to her sister as a Transfer on Death Deed takes priority over the will so Emily will still get the house.
But, it does not help if Susan dies and Emily decides to revoke the Transfer on Death Deed. The TODD's are fully revokable by the suriving grantor even for property owned jointly where both owners executed and filed a valid deed prior to the death of the first owner.
So, the Transfer on Death Deed doesn not provide a guarantee that the home will go to Stephanie should Susan die first.
If that is a concern, perhaps the clients should discuss getting a trust.
These are just a couple of examples where a Transfer on Death Deed may provide a fast and inexpensive solution to two different issues related to a personal residence. The next post will provide the short list of requirements to comply with the law on getting a Minnesota Transfer on Death Deed.
Wednesday, October 17, 2012
We've been discussing the benefits of using a Minnesota Transfer on Death Deed to transfer your home to another person at your death. You own property in your name alone and want to be sure that it goes to the beneficiary of your choice without the expense and delay of probate. So, you decide to use a Transfer on Death Deed (“TODD”) to achieve this purpose.
Can you cancel a Minnesota Transfer on Death Deed?
Yes. The Deed does not do anything to your rights over the property during your lifetime. It only takes affect upon your death. Therefore, nothing is set in stone until after death. You may, at any time, change the beneficiary or cancel the deed altogether.
Monday, October 15, 2012
Minnesota Estate Planning Attorney Discusses the Benefits of Using a Transfer on Death Deed to Transfer a Home
Minnesota has a unique tool to for use in avoiding probate known as a Transfer on Death Deed (“TODD”). In 2008 Minnesota’s legislature passed a law that allows the owner of real estate to execute a deed naming a beneficiary who, upon the current owner’s death, will succeed to ownership of that property.
There are several benefits to using a Transfer on Death Deed to transfer real property to someone.
You Retain Your Ownership Interests. The property is not transferred until the your death. So, you retain full ownership of the property during your life. So, you may choose to remain living in the home, sell it, borrow against it or give it away without restriction.
Your Home Is Still Protected. The finanacial obligations of the beneficiary will not affect your rights to the property. This is because the beneificary does NOT have any "present interest" in the property so if he/she has any legal actions such as bankruptcy, lawsuits, or divorce that are brought against the beneficiary won’t affect the property. This offers you a lot of protection in leaving the property to someone who may not be the best at managing money as a creditor may NOT file a lien against property subject to a transfer on death deed.
Your Heirs Will Avoid Probate For That Home. Again, this is probably the main reason why people choose a Transfer on Death Deed. The real estate won’t be subject to the costs and time of court probate proceedings- the beneficiary simply submits an affidavit and death certificate with the county recorder. This allows the home to transfer to the beneficiary quickly and inexpensively. It allows avoids the "ease of contest" often found in probate procedures.
You Can Revoke It. This means that you can change or delete the beneficiaries named in the document, even without their consent. Names can be deleted or added as the you sees fit. Or, you can revoke the entire document and dispose of the property in another manner (e.g. sell it or put it into a trust).
You Have Not Given a Gift. Because you are not giving the beneficiary a present interest in the home, there is no gift. This avoids issues with having to file a gift tax return or potential problems if you end up needing medicaid (medical assistance) in the future.
As these come up quite often in my practice, whether between partners or parents and children, I will address the different aspects of Transfer on Death Deeds in a series of future posts.
Wednesday, October 10, 2012
Preventing a Will Contest & Preserving Peace in the Family
The purpose of writing a Last Will and Testament is to make sure that you – and not an anonymous probate court judge – have control over the distribution of your property after your death. If one or more family members disputes the instructions in your will, however, then it is possible that a probate court judge may decide how your assets will be distributed.
Protect yourself, your family members and your last wishes by taking steps to prevent a will contest after your death. Will contests (this is the legal term used to describe a family member’s challenge to the contents of a will) can be based on one or more of these claims:
The will was not properly executed
The willmaker was under improper or undue influence from a beneficiary
The willmaker or another person committed fraud
The willmaker lacked the mental capacity to make the will
There are a number of steps that you can take to help prevent will contests based on any of those claims. It is important to remember, though, that different states have different laws regarding wills and probate. What is advisable in one state may be inadvisable in another, which is why the first suggestion for preventing a will contest is:
Obtain qualified legal advice regarding your estate plan. Estate planning has become a popular “do it yourself” legal task, but you should at least consider having your will reviewed – if not written – by a qualified estate planning lawyer. Writing your will with the help of an estate planning attorney will also ensure that your will is a properly executed and valid legal document.
Don’t delay estate planning. Plan your estate while you are in good health – “of sound mind and body.” If you create your will while your physical or mental health is failing, your will becomes vulnerable to claims that it is invalid due to your lack of mental capacity.
Consider a no-contest clause. A no-contest clause (also called an in terroreum clause) in a Last Will and Testament disinherits anyone who contests the will. Keep in mind, though, that no-contest clauses are valid in some states but not in others.
Consider using trusts. Trusts are becoming more widely usedin estate planning , and are useful for various situations. A will is a public document once it is filed in probate court, and the public nature of the document can give rise to disputes and will contests. In contrast, a revocable living trust is a personal and private document that does not have to be filed as a public record. Furthermore, lifetime trusts can be used to provide financially for “troublesome” beneficiaries who might otherwise spend through their inheritance. Lifetime trusts are flexible and can link financial inheritance to the accomplishment of goals that you set forth in the trust documents.
Write your will independently. To avoid claims of undue influence after your death, make sure you write your will in circumstances that are clearly free from interference by family members or other beneficiaries. Avoid having beneficiaries serve as witnesses, for example, and don’t allow beneficiaries to attend your meetings with your estate planning attorney. This is especially important if you are under the care of a family member who is also a beneficiary.
Be of sound mind and body. At the time you write and sign your will, you can ask your physician to perform a physical examination and certify that you are mentally competent to execute your will. Another option is for your attorney to ask you a series of questions before you sign your will and document that the questions were asked and answered. It may also be a good idea to make a video recording of the process of signing your will, as another way to prove mental competency.
Answer your family’s questions. Consider sharing your intentions with your family and other beneficiaries. If you explain the reasons for the decisions you made regarding bequests, you may help prevent will contests after your death. Instead or in addition, you may write a letter to your beneficiaries that will be read at the same time your will is read.
Keep your will dust-free. Once your Last Will and Testament and other estate planning documents are complete, don’t just file and forget them. Review your will with an attorney at least once a year and make any necessary changes in a timely manner.
Monday, September 17, 2012
A Minnesota Elder Law Attorney Discusses Ways to Make Your Home Safe When Caring for an Aging Parent
Let’s face it – it’s tough getting old. The aches, pains, and pills often associated with aging are things that many members of the baby-boomer generation know all too well by now. Though you might not be able to turn back time, you can help an aging loved one enjoy their golden years by giving them a safe, affordable place to call home. If an aging parent is moving in with you and your family, there are many quick fixes for the home that will create a safe environment for seniors.
Start by taking a good look at your floor plan. Are all the bedrooms upstairs? You may want to think about turning a living area on the main floor into a bedroom. Stairs grow difficult with age, especially for seniors with canes or walkers. Try to have everything they need accessible on one floor, including a bed, full bathroom, and kitchen. If the one-floor plan isn’t possible, make sure you have railings installed on both sides of staircases for support. A chair lift is another option for seniors who require walkers or wheelchairs.
Be sure to remove all hazards in hallways and on floors. Get rid of throw rugs – they can pose a serious tripping hazard. Make sure all child or pet toys are kept off the floor. Add nightlights to dark hallways for easy movement during the night when necessary. Also install handrails for support near doorframes and most importantly, in bathrooms.
Handlebars next to toilets and in showers are essential for senior safety. Use traction strips in the shower, which should also be equipped with a seat and removable showerhead. To avoid accidental scalding, set your hot water heater so that temperatures can’t reach boiling. You may also want to consider a raised seat with armrests to place over your toilet, to make sitting and standing easier.
This applies to all other chairs in the house as well. Big, puffy chairs and couches can make it very difficult for seniors to sit and stand. Have living and dining room chairs with stable armrests, and consider an electronic recliner for easy relaxation.
To keep everyone comfortable and help avoid accidents, store all frequently used items in easily accessible places. Keep heavy kitchen items between waist and chest height.
Even with appropriate precautions, not all accidents can be avoided. Purchasing a personal alarm system like Life Alert can be the most important preparation you make for a senior family member. If they are ever left alone, Life Alert provides instant medical attention with the push of a button that they wear at all times.
Amidst all the safety preparations, remember that it’s important to keep the brain healthy, too. Have puzzles, cards, large-print books and magazines, computer games, and simple exercises available to keep seniors of healthy body and mind.
These simple preparations can not only help extend the life of your loved one, but help to make sure their remaining years are happy and healthy.
Tuesday, September 11, 2012
A Twin Cities Estate Planning Attorney Explains How to Store Your Estate Planning Documents
In the unsettled time after a loved one’s death, imagine the added stress on the family if the loved one died without a will or any instructions on distributing his or her assets. Now, imagine the even greater stress to grieving survivors if they know a will exists but they cannot find it! It is not enough to prepare a will and other estate planning documents like trusts, health care directives and powers of attorney. To ensure that your family clearly understands your wishes after death, you must also take good care to preserve and protect all of your estate planning documents.
Did you know that the original, signed version of your will is the only valid version? If your original signed will cannot be found, the probate court may assume that you intended to revoke your will. If the probate court makes that decision, then your assets will be distributed as if you never had a will in the first place.
Where should you keep your original signed will? There are several safe options – the best choice for you depends on your personal circumstances.
Keep it at home
You can keep your will at home, in a fireproof safe. This is the lowest-cost option, since all you need to do is purchase a well-constructed fireproof document safe. Also, keeping your will at home gives you easy access in case you want to make changes to the document. There are two main disadvantages to keeping your will at home:
You may neglect to return your will to the safe after reviewing it at home, which increases the risk it will be destroyed by fire, flood, or someone’s intentional or accidental actions.
Your will could be difficult to find in the event of your death, unless you give clear instructions to several people on how to find it, which then creates a risk of privacy invasion.
Safe deposit box
You can keep your will in a safety deposit box. Most banks have safety deposit boxes of various sizes available to rent for a monthly fee. Banks, of course, tend to be more secure than private homes, which is one primary advantage. Also, if you keep your will in a safety deposit box, then after your death, only the Executor of your estate may access the original will. Thus, the will is strongly protected against alteration or destruction, because family members may have access to a copy but only the Executor will have access to the all-important original.
If you do keep your will and other estate planning documents in a safety deposit box, try to do so at the same bank where you keep your accounts and inform your executor of its location. This will streamline the financial accounting process.
Clients of Unique Estate Law have the option to store their documents online using Legal Vault. If you enroll in Legal Vault, you will receive a wallet card that shows you have executed a valid medical directive. The card also provides hospital personnel with a username and password that will allow them to access your medical directive and other medical information (as stored by you) in order to immediately notify your medical agent.
Further, you may store all of your estate planning documents online with Legal Vault and provide someone with postmortem access. This means that another will have full access to any documents you have uploaded to the site if anything happens to you. Your surviviors will not have to wonder whether you executed a will, or any other estate planning documents. But, keep in mind that online storage “safes” may be an excellent back-up, but you must still find a secure place to store the paper originals.
Store your will with the county
By law, Minnesota courts provide a service allowing you to store your will with them for a nominal fee (the current fee for Hennepin County is $27.00). After death, your surviving family may obtain the will from the county by providing proof of death. This is a great way to store the will that can provide you with inexpensive peace of mind.
Some of my senior clients have a trusted child hold their estate planning documents. Generally, they choose the child who is acting as their medical or financial agent to ensure that the proper person has the documents when needed. It is also common for people to store documents in a freezer bag in the freezer. While I don't recommend this approach, it can work so long as someone knows where they are located.
As you can see, there are many different choices when it comes to storing your estate planning documents. The most important thing to remember is that your survivors must know you have estate planning documents and where you stored them. Please be sure to tell important people that you drafted a plan.
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.