Minneapolis Estate Planning and Probate Lawyer Blog

Monday, December 20, 2010

The Power of Attorney, Part 1: Why You Need One

A will is a critical part of your estate plan, but it is only useful after your death.  To protect yourself in the event that you are unable to speak for yourself, you must do more.

If you are incapacitated there are two main areas in which you need someone else to have the right to speak for you: 1) financial matters and 2) medical decisions.  My next couple of post will address the first area – financial matters – by explaining how you can allow another to conduct financial matters on your behalf through the use of a Power of Attorney (POA).  I will discuss how to handle medical decisions in later posts.

What is a power of attorney?

A POA grants another the authority to act on your behalf as if they were you. The person that you appoint as your agent in the POA essentially stands in your shoes. You may grant your agent the power to handle almost any financial matter on your behalf.

Why do you need a power of attorney?

Without the ability to instruct financial institutions on how to handle your assets and liabilities, you are powerless to control your life.  You will not be able to apply for disability or pay your mortgage, health insurance, credit card bills or taxes.  And no one else has the automatic right to handle these matters for you unless they either 1) incur the time, expense and hassle of going to court to seek the right to act for you; or 2) are appointed as your agent in a POA.

The Conservatorship Process

A person seeking to handle your financial matters must file a petition with the court asking to be appointed as your conservator.  The court will then hold a hearing to determine 1) whether you are incapacitated; and 2) whom should act on your behalf.  Simply put – the primary purpose of incapacity planning is to avoid the court controlled conservatorship process.

It can be a lengthy and expensive process – at a stressful and confusing time – for your best friend, or unmarried partner, to obtain judicial approval to handle your financial matters.  That friend must go to court and ask for permission to act on your behalf.

Minnesota law provides a priority list for those seeking to act as your conservator.  The good news for nontraditional families is that this priority list does include an adult with whom you’ve lived for 6 months prior to filing with the court.  The bad news is that this adult is 7th on the priority list – behind a parent or adult child.

Avoiding the Conservatorship Process with a Power of Attorney

The agent you appoint in your POA generally has the immediate right to act on your behalf.  And, if someone challenges that right, a court will most likely appoint your agent to handle your matters as the person appointed in a POA is at the top of the above-mentioned priority list – before a parent or adult child.

While a POA is important for nontraditional couples, it can be critical for single parents who do not live with a partner or have another “legal backup” to handle matters on behalf of them or their children.

The court resorts to using the priority list because it has no other way of knowing what you want  – unless you put it in writing.  In the face of uncertainty, the court will generally err on the conservative side by granting authority to someone related by blood or marriage.  So, protect yourself – and your minor children – by executing a valid POA to appoint an agent to handle your financial matters at a time when you will be most vulnerable.

Sunday, December 5, 2010

What a Trust Can Do For Your Family

In my last several posts I’ve explained the purpose and definition of a will, who needs one and how to create a valid Minnesota will.  I’ve also discussed the reasons why a will alone does not offer you and your family enough protection.  I’d now like to take a moment to talk about trusts—a subject that will be of special interest to nontraditional families who may be more concerned than most about privacy, disapproval of family members, or even the threat of someone contesting your wishes in court.

What Is A Trust?

A trust is a far more extensive tool than a will. Most trusts created for estate planning purposes are revocable living trusts (or RLTs). An RLT is a document created not simply to distribute your property, but to own your property on your behalf, to be invested and spent for your benefit or the benefit of your named beneficiaries. As such, a trust takes effect as soon as you sign it and your property is protected by and subjected to the trust parameters as soon as you place them in the name of your trust.

What are the Benefits of a Trust?

  1. There is a lot of flexibility available with a trust, and yours can be created to fit your unique situation.
  2. Because the trust is the official owner of the property within it your assets and your wishes concerning your assets remain private.  There is no need to inform your next of kin as is necessary with property going through probate via your will.
  3. Another benefit to bypassing probate is that trusts cut down on post-death legal and probate expenses.
  4. Because most RLTs name the trust creators as the initial trustees you retain complete control over your assets, nominating trusted individuals or banks to take over as trustee when you (the creator) become incapacitated or pass away.
  5. Trusts are enduring. Property in a trust is not merely distributed and that’s the end of it; the creator can instruct the trustee to distribute the money slowly and in any number of ways, even to the extent of creating new trusts for each beneficiary. This is especially important if you have young children who are not yet responsible enough to manage their own money. Trusts can last for generations, as evidenced by the enduring Kennedy trusts.

Wills and trusts are necessary tools in estate planning, each one working in unique situations. I often recommend using both documents in tandem, especially for nontraditional families who can’t count on their assets transferring automatically to partners and loved ones.  We have to take extra steps to ensure our unique families are protected and provided for.

If you have any questions, or would like more information about wills or trusts, contact me today.

Tuesday, November 23, 2010

Grandparents Raising Grandchildren

The number of children living with a grandparent continues to rise. A new Pew Research Center analysis of U.S. Census Bureau data? shows that 2.9 million children – a 6% increase from 2007 to 2008 – now live with a grandparent. About 41% of those children are also being raised primarily by that grandparent.

If a parent retains custody, then grandparents who care for grandchildren may not have the right to make medical, educational or financial decisions on behalf of the children for which they are caring. Further, without a valid will, grandchildren are not entitled to receive a grandparent’s property upon death.

So, grandparents acting as the primary caretaker for a grandchild must be sure to protect that child by:

  1. Executing a trust so that the grandparents’ assets are properly left to the minor child
  2. Naming a trustee to handle the property on behalf of the child after the grandparents are gone
  3. Creating a valid will to be sure all of their property is included in the trust
  4. Having the legal custodian execute a Health Care Directive so that the grandparent can make medical decisions for the minor child

If you are caring for a child without having legal custody, please contact an attorney to protect both your rights and the rights of that child.

Tuesday, November 16, 2010

A Will Is a Good Start But You Need More

When I was 18 my grandfather was admitted to the hospital for a routine operation and never came out. Due to an error committed by a young physician he suffered a brain injury from which he would not recover.  My Mom and her siblings – with his wife (second marriage) – were suddenly forced to decide whether to terminate life support.

My grandfather was an active man who loved the outdoors.  Well into his 60s he was still happiest when camping, hiking or climbing mountains. My most prevalent memory of my grandfather is a picture of him with his pickaxe stuck in the side of a mountain as he crested the summit of his beloved Mt. Hood in Oregon. While this could have been a battle between his current wife and his children from a prior marriage, my grandfather’s love of all things outdoors left little doubt about whether he would have wanted to remain alive with the assistance of machines. My family was able to avoid major conflict over this issue – but we were lucky.  Not all families are able to avoid such conflicts.

If you’ve read my prior posts, you know that a will provides instructions for how to distribute your assets or who will care for your kids after death.  But a will only handles matters after you die.  It doesn’t do anything for you while you’re alive and unable to speak for yourself.  For that you need incapacity planning.

What is incapacity planning?

Incapacity planning is a broad area of law that covers how you are cared for if you become physically or mentally unable to care for yourself. The type of care could range from simple tasks like buying groceries and handling financial matters to more important decisions such as selling real estate, making gifts or, as in the case of my grandfather, making critical medical decisions. Most importantly for those of you with minor children incapacity planning allows you to determine who will care for your children if you are unable – even temporarily – to care for them yourself.

Failure to plan ahead can have tragic consequences for individuals – even those who are legally married – who can no longer speak for themselves.  And if you are in a nontraditional relationship – or simply want to leave these decisions in the hands of anyone not related by blood or marriage – incapacity planning is crucial.  As previously discussed, the State of Minnesota places no legal value on your nontraditional relationship. So, the law will always favor your biological over your chosen family when faced with the task of appointing a guardian or conservator to care for your financial or medical needs and the needs of your kids.

So, you must think about issues such as incapacity and estate planning well ahead of when a traditional client might be pondering these issues. It is essential that you nominate in writing a person to make medical and financial decisions on your behalf in the event of your incapacity.  I will discuss the documents required to make such nominations in my next few blog posts.

Tuesday, November 9, 2010

What If I Use a Napkin?

We’ve all heard the stories.  A dying person writes out a will on a napkin or a piece of wood.  But are wills that are entirely handwritten by the creator, dated, and signed without witnesses valid in Minnesota?  Generally, such wills – called holographic – are not valid here.

As explained in my post on how to create a valid will in Minnesota, your will must be in writing, signed and witnessed by two people.  What does it mean to witness a will?  The two people you select are essentially making a promise to the probate court that they actually saw (witnessed) you sign the will.  In order to make such a promise they must be present at the time, and actually see, you sign the will.

An exception to the rule on holographic wills is that if the handwritten will was validly executed in a state that does allow such wills (e.g. Texas) and the will maker then moves to Minnesota and dies with only the Texas will in place.  But this exception only applies to a small number of people.

Don’t take the risk

I am not saying that you can’t draft your own will.  But if you do, please be sure that your will is going to be valid in probate court. You still need to sign your written will in front of two people who will then sign stating that they witnessed your signature.  Further, you should execute a self-proving affidavit to deter others from contesting the validity of your will.

If your will is held invalid (and you don’t have a prior valid will), the probate court will proceed to distribute your property as if you didn’t have a will.  The court will then turn to the only will you have left – the one the State of Minnesota created for you – and give away your stuff under this new will.  As discussed in prior posts, your Minnesota will does not recognize your nontraditional family.  Take the time to create a valid will to ensure that your loved ones have some protection.

Thursday, November 4, 2010

Notice to Persons of Interest

As discussed in prior posts, your estate may be distributed in a court proceeding known as probate. Under Minnesota law the personal representative must send notice of the probate proceeding “interested persons.”

Who is an interested person?

?In Minnesota, interested persons are defined as “heirs, devisees, children, spouses, creditors, beneficiaries and any others having a property right in or claim against the estate of a decedent” and  “persons having priority for appointment as personal representative.”  So, only those entitled to receive anything from the estate, either as a beneficiary or a creditor, or have priority to be appointed as a personal representative, then you are entitled to notice of probate.

Who is missing from that list? Anyone not related to you by blood or marriage unless named, either as a beneficiary or personal representative, in your will. If you don’t have a will, your partner will not receive notice of the probate and may miss the opportunity to make a claim for the right to receive your property.  Don’t make this process more complicated and costly for your loved ones.  Be sure they are protected – get a will now!

Thursday, November 4, 2010

Minnesota Court: Surrogate Legal Mother But Father Gets Custody

The Minnesota Court of Appeals recently ruled that a woman who entered a surrogacy agreement with two gay men is the legal and biological mother of the child.  But the Court granted sole legal and physical custody to the father whose sperm was used for the pregnancy.

In ruling that the surrogate is the child’s mother, the court relied on the language in Minnesota’s Parentage Act, which states that the parent child relationship “may be established by proof of her having given birth to the child.” While the Act does not allow an egg donor to be deemed the biological or legal parent of the child, it defines egg donor as “[a] type of assisted-reproductive therapy in which eggs are removed from one woman and transplanted into the uterus of another woman who carries and delivers the child.” Because it was undisputed that the surrogate’s egg was fertilized and that she carried the baby and gave birth to her, the surrogate was held to be the biological and legal mother of the child.

But the court also held that the father’s male partner was not the child’s father stating:

“While [the partner] is and will continue to be an important person in the child’s life, he is not a legal or biological parent of [the child] under Minnesota law and is not entitled to custody of the child on the facts of this case.”

The surrogate also attempted to argue that the surrogacy agreement was invalid under Minnesota law. The law is unclear on the status of these agreements because our courts have never ruled on whether or not surrogacy contracts should be honored. The court here did nothing to clarify any confusion surrounding the use of surrogacy agreements as it refused to address the issue.  So, unlike in other states where surrogacy contracts have been deemed valid or void as against public policy, Minnesota continues to fail to provide any direction on the use of these agreements.

So was this a good decision?

That’s difficult to answer. While I am pleased that the court didn’t hesitate to grant sole legal and physical custody of the child to her gay father, it wasn’t a fair fight as the surrogate was clearly unfit to have custody. The surrogate’s own expert witness stated that she was a “mistrustful, immature, narcisstic, and self-indulgent individual”  leading the trial court judge to call into question the surrogate’s “capacity and ability to provide positive guidance” to the child.  Further, it would be “detrimental to the child if [the surrogate] had sole authority over [the child's] upbringing.”

How do the men feel about the decision? Should their attorney appeal the decision? The father who was granted sole physical and legal custody may be satisfied with the decision and decide against rolling the dice with our conservative Supreme Court.  But, his partner can’t be as happy with the outcome as he has no legal relationship to the child.  If anything happens to the father, his partner has no current legal right even to visitation with the child.

It’s difficult to determine whether this decision is a victory.  What’s not difficult to see is that it did nothing to provide direction for the future use of surrogacy contracts. If you plan to use a surrogate, please contact an attorney to be sure of your rights.

Monday, November 1, 2010

Creating a Valid Will in Minnesota: Four Simple Steps

So, you have diligently read my blog and my prior posts explaining the consequences of dying without a will in Minnesota have convinced you to get a will.  Now what?

What are the requirements for a valid will in Minnesota?

The following are the legal requirements for creating a valid will.

  1. You must be at least 18 years old;
  2. You must be of  “sound mind.” This generally means that that you know you are making a will and are familiar with your property and your heirs;
  3. Your will must be in writing, signed by the you and two witnesses.  If you cannot physically sign your name then you may direct another party, who is not a witness, to do so; and
  4. Execute a “Self-Proving Affidavit.” Ok, this is not actually a legal requirement but as a nontraditional family, it is crucial to withstand any challenges to the validity your will. This document must be signed by you, two witnesses and a notary all at the same time (this generally means that you must have 3 other people present at signing). Minnesota law states that the probate court will automatically accept as authentic any will with a properly executed Self-Proving Affidavit.  This can be especially important for nontraditional families who may have legal heirs who, unhappy with the distribution of your property, attempt to challenge the validity of the will. The Affidavit protects your witnesses by allowing them to avoid having to appear in court to testify that your will was validly signed.

Please note that each witness must sign the will in the your presence. It is also a good idea to use witnesses that are  “disinterested”, which means that they are not a beneficiary of your will.  However, the signing of a will by an interested witness does not invalidate your will or any of its provisions. You should still try to avoid having your partner-beneficiary sign as a witness to your will.

Now you know that as a member of a nontraditional family, you must have a will.  And you know that it is not difficult to create a valid will in Minnesota.  So, take control and protect your loved ones – get a will now!

Creative Commons License photo credit: Andy on Flickr

Wednesday, October 27, 2010

What If You Die Without a Will?

My prior posts have explained the probate process and why you need a will. This post will address what may happen if you don’t have a will.  If you do not have a will, your possessions will be distributed by the court, in a probate proceeding, according to the Minnesota law governing intestate succession.

Under current Minnesota law, if you die without a will, your property will go to your closest relatives.  For those in “traditional” relationships (legally married with no prior children), their entire estate will go to their spouse.  But, if you have a blended family – children that are not also your spouse’s – your property will be divided between your spouse and those “other” children.  If you do not have a spouse or children, then your stuff will be distributed in the following order: grandchildren; parents; siblings; and then to distant relatives.

What does all this mean for a nontraditional family?

Let’s look at a hypothetical.

You and your unmarried partner have lived together for 5 years in a home that is in your name alone.  Your parents died a few years ago and have one brother with whom you haven’t spoken in 10  years. Your partner gives birth to a son (your first) but you die before the completion of the second parent adoption process. You have no will.??

Here is how intestate succession will work in this case. Because the adoption of your partner’s son was not finalized prior to death, he is not your son in the eyes of the law.  Therefore, the court will look to see if you have parents to take the estate.  You do not have any living parents so the court will look to the nearest generation to your parents and pay the estate to your brother.

What will happen here? ?Your entire estate will go to your brother.  This means that:

  • Your partner has no right to remain in the home owned only in your name
  • Your partner will not inherit anything from you
  • The child you were trying to adopt will not inherit anything from you
  • Your nontraditional family may be put in a position of fighting for the most basic possession in your home (i.e. proving she is entitled to keep your furniture, car and other personal possessions)

But that’s not all.

Your partner may not even know that the property has been given to your brother because your unmarried partner is not entitled to receive notice of the probate proceeding involving your estate.  Please take care of those you love by drafting an estate plan with an attorney who understands the unique legal needs of nontraditional families.

Sunday, October 24, 2010

What Is Probate?

Probate is the legal process of settling your estate – paying your debts and distributing your property – after you die.  If you have a will then you should have appointed a personal representative to be responsible for handling all the matters of your estate.  But, if you did not have a will, or failed to name a personal representative, the court will appoint one for you following the order of priority established by law.

While having a will is crucial for nontraditional families, please don’t make the mistake of thinking that having a will avoids probate.?  Whether your estate will require probate depends on the type of property you own and how it is titled. The following types of property are not probated:

  1. Jointly owned real estate as it will become the sole property of the surviving title holder
  2. Payable on death accounts instruct the bank tol distribute the funds to the beneficiary listed on the account
  3. Transfer on death accounts provide that the asset will automatically transfer ownership to another upon your death
  4. Jointly held bank accounts are then owned solely by the surviving account holder
  5. Life insurance proceeds are paid according to the beneficiary you designated with the insurance company

Property not in any of the above categories, not in a trust, or that is owned solely in your name is subject to probate.

What happens if you have probate property?

Once it is determined that probate is necessary, your “personal representative” (if there is a will) must first decide whether a formal or informal probate process is required.  Then the personal representative files the appropriate application with the probate court in the county where you lived at death.  Upon determining that the application is complete, the probate registrar officially appoints the personal representative. Your personal representative must send notices of appointment to all interested persons, take possession or control your property, pay creditors, distribute assets and close the estate.

I’ve heard many of my colleagues state that probate in Minnesota is not a big deal as it’s not too expensive and doesn’t take too long.  While this may be true for my “traditional” clients, it is not true for my nontraditional clients.  Current probate laws only protect those considered to be in “traditional” relationships.  So, if you would like to have control over who gets your stuff, please be sure that you 1)? review and update your beneficiary designations on a regular basis; and 2) get a valid will.

Wednesday, October 20, 2010

Wills vs. Trusts: What is a Will?

When it comes to estate planning there are two major vehicles for the distribution of property: A will and a trust. Both are very useful tools and can accomplish specific goals—but how do you know which one is best for your family? Contrary to popular belief, the two are not adversarial concepts, and you don’t have to pick just one or the other.  In many cases the two documents work in tandem, with one document supporting the other.

Which document you will need (or whether you’ll want to have both) depends on a number of factors, some of which may seem completely irrelevant at first: the size of your estate, your goals for that estate, the age of your children, your marital status, your retirement savings, and many, many more. Nontraditional families need to be especially aware of how each document can help them achieve their goals—or in some cases hold them back.  In this post and my next I will go over each document, what it does, and why your family may need it.

What Is A Will?

A will is a formal declaration of your wishes. It is a document you create to declare the extent of your privately held property (it does not cover jointly owned property) and what your wishes are for the distribution of that property. You name an executor to carry out your wishes, and you can even include a nomination of guardian for young children in your will. A will does not go into effect until after you die; before then it is simply a piece of paper containing your private wishes (and as such can be amended at any time.) However, once you have passed away your will no longer remains private, it now becomes a matter of public record, available to anybody who would like to view it, and overseen by the court in a sometimes lengthy and expensive process called probate.

Do You Need a Will?

The easy answer to this question is: Yes—everyone needs a will. If you choose not to create a trust a will is the only way to let everyone know your wishes.  Even if you do choose to create a trust for your family, you’ll want to create a “pour-over” will to go along with it. A pour-over will directs that all of your assets be transferred, or “poured-over” to the trust.  The pour-over will adds a safety net to your estate planning, because any assets that were not included in the trust, for one reason or another, will be poured-over to it by virtue of the will.

My next several posts will dig further into what a will can do for a nontraditional family and, more importantly, what may happen if someone in a nontraditional family dies without a will.

Why do you need a will and a trust? In my next posts I’ll discuss more about what a will entails, and why it is crucial for non-traditional families to have them.  In my final post in the series I will cover the subject of trusts: what a trust is, why your family might need one, and why non-traditional families in particular will want to consider a trust as an option for their family. I hope you’ll check back frequently to learn more!

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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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