Monday, December 12, 2011
6 Events Which May Require a Change in Your Estate Plan
6 Events Which May Require a Change in Your Estate Plan
Creating a Will 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, has changed. As 2011 winds to a close, 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 to be revised, including:
Change in Marital Status: If you have gotten married or divorced, it is imperative that you review and modify your Will. With a new marriage, you must determine which assets you want to pass to your new spouse or step-children, and how that may relate to the beneficiary interest of your own children. During a divorce it is a good practice to revise your Will, to formally remove your soon-to-be ex spouse as a beneficiary. Under Minnesota law, a divorce will remove your ex spouse as a beneficiary of your will even if you don't actively change your will. The law treats the ex as if he or she predeceased you (insert sarcastic comment here) so you shouldn't worry that your ex will inherit via your will once the divorce is complete. But what about during the divorce? Most clients with whom I've worked on these matters do not want their spouse to inherit while the divorce is pending, but that does not happen by law or inaction. If you are going through a divorce, you must take active steps to ensure that the spouse you are divorcing will no longer inherit through a will that hasn't been updated to reflect your current status. While you’re at it, you should also change your beneficiary on any life insurance policies, pensions, or retirement accounts as these trump even your will. You may have disinherited your spouse from your will but if you forgot to change your life insurance policy he or she will still received the proceeds of that policy until you state otherwise. Estate planning is complicated when there are children from multiple marriages, and an attorney can help you ensure everyone is protected, which may include establishing a trust in addition to the revised Will.
If one of your Will’s beneficiaries experiences a change in marital status, that may also trigger a need to revise your Will.
Change in Relationship Status: If you enter or end a serious relationship in which you plan(ned) to leave your unmarried partner assets, you should meet with an estate-planning attorney who is well versed in the complexities of planning for unmarried couples. I handle many unmarried clients who have planned their estates together and if they ever break up, they will need to take active steps to revise their plans. Unlike for legally married couples, there is no law to automatically disinherit a partner after a breakup. While I do carefully draft these plans to include such provisioins, they will still be interpreted in court, which may lead to a lengthy and expensive court battle over those assets. This is the exact situation these couples attempted to avoid by coming to me in the first place. If you are entering a relationship that is not legally recognized, you should also meet with an attorney upon deciding to leave assets to each other OR if you want that person to handle medical or financial decisions on your behalf. I have experience handling nontraditional estate planning and can help you draft the right plan to protect your family.
Births: Upon the birth of a new child, the parents should amend their Wills immediately, to include the names of the guardians who will care for the child if both parents die. Also, parents or grandparents may wish to modify the distribution of assets provided in their Wills, to include the new addition to the family.
Deaths or Incapacitation: If any of the named executors or beneficiaries of a Will, or the named guardians for your children, pass away or become incapacitated, your Will should be revised accordingly.
Change in Assets: Your Will may need to be changed if the value of your assets has significantly increased or decreased, or if you dispose of an asset. You may want to modify the distribution of other assets in your estate, to account for the changed value or disposition of the asset. Further, you may wish to set up a trust to handle some of your assets to as to avoid probate or leave them to a minor.
Change in Employment: A change in the amount and/or source of income means your Will should be examined to see if any changes must be made to that document. Retirement or changing jobs could entail moving to another state, thus subjecting your estate to the laws of that state when you die. If the change in income modifies your investing, saving or spending habits, it may be time to review your Will and make sure the distribution to your beneficiaries will be as you intended.
Changes in Probate or Tax Laws: Wills should be drafted to maximize tax benefits, and to ensure the decedent’s wishes are carried out. If the laws regarding taxation of the estate, distribution of assets, or provisions for minor children have changed, you should have your Will reviewed by an estate planning attorney to ensure your family is fully protected and your wishes will be fully carried out.
Monday, June 06, 2011
What's in a Name, Part 2: Introducing Unique Estate Law
You may have noticed a slight change in my firm name. Unique Family Law is now known as Unique Estate Law.
I have always focused on unique families and continue that passion. My new firm name better explains what I do for your unique family. I focus on estate planning, probate and adoption – building and protecting families.
I am proud to specialize in this important and ever-changing area and my new name reflects that focus.
I want to be sure that you, my clients, know where my expertise lies.
Welcome to Unique Estate Law.
Thursday, January 06, 2011
The Power of Attorney, Part 2: How It Works
My prior post explained what a Power of Attorney is and how it works. But you need to know more about this powerful tool. For instance, how do you create one? And what powers does it grant to your agent? Whom should you choose as your agent?
How do you create a power of attorney?
Under Minnesota law a valid POA must be:
Signed by you in front of a notary public
Clear on what powers are being granted.
By following the requirements above, you will create a limited power of attorney. But you also have the ability to grant more or less power to your agent and control the duration and how the POA becomes effective by using a durable or springing POA.
A durable power of attorney remains in effect after you become incapacitated so that your agent may continue to act on your behalf. In order to create a durable power of attorney, the document must include a statement such as: “This power of attorney shall not be affected by incapacity or incompetence of the principal.” In other words, the POA must be clear that the powers granted to your agent continue upon incapacity.
Alternatively, you may create a springing power of attorney, which doesn’t take affect until after you become incapacitated. This is a safe choice if you do not want to give your agent the immediate power to handle your matters but you want to be sure that you have someone to take care of things if you are incapacitated. For instance, single parents may not have someone to whom they want to grant the immediate power to write checks or withdraw money but whom they do trust to handle these matters upon incapacitation. To be a springing POA, the document must state that it is effective only in the event that you are incapacitated.
What powers can you grant to your agent?
In Minnesota there are two primary POA options: 1) the form created by statute, known as the ‘statutory short form power of attorney’; or 2) the common law power of attorney. The difference between the two mainly comes down to the type and amount of power you want to give to your agent over your financial matters.
Minnesota Statutory Short Form POA
Under Minnesota’s statutory short form power of attorney you simply complete the form “as is” and check a box next to the specific power listed to allow your agent to handle any or all of your financial matters related to a limited list of financial matters.
You still have the power to restrict the duration, powers granted and way in which the POA becomes effective. And, of course, you do not need to check all the boxes.
But, Minnesota’s short form has its limits, especially for those who are unmarried and wish to be sure their needs are taken care of in the event of incapacity. For instance, the short form does not give your agent the power to create, amend or terminate a trust. For these expanded powers you need to have your attorney draft a common law POA.
Common Law POA
The term “common law power of attorney” merely refers to any POA that does not conform to the statutory short form. In other words, there is the statutory short form and then there is everything else. Due to the limited flexibility of the statutory short form, I always use a common law form, especially for my nontraditional families who are unable to rely on the law to protect their interests. As explained in prior posts, persons who are unrelated by blood or marriage may find it impossible to obtain court approval to handle matters for their loved ones.
Keep in mind that being married does not give couples the automatic right to handle all of their spouse’s financial affairs. If one of you is incapacitated, the other spouse will need a POA to access information related to your 401k or to sell jointly held real estate. Whether married or not, be sure that if you become incapacitated, your matters will be handled by someone you trust – get a POA now.
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.
Wednesday, October 13, 2010
Unable To Marry
I read an article today explaining how Jennifer and her boyfriend live together but can’t get married. Why? Not for the reasons you may think. According to the Current Population Survey released in September, Minnesota – and the nation – saw a dramatic increase in unmarried couples who live together. The data shows an increase nationally from 6.7 million unmarried couples living together in 2009 to 7.5 million couples in 2010. Why are so many more couples living together but not getting married?
According to today’s article, it’s the economy’s fault as more couples are moving in together to avoid paying for two households despite wanting to remain unmarried. While this certainly saves money, remaining unmarried may expose the couples to other negative consequences. These potential consequences vary depending upon whether a couple breaks up or stays together.
The article then quoted? Sheela Kennedy, a University of Minnesota demographer who studies cohabitation?, as saying that most unmarried couples living together will split up or get married within two years and only 14 percent are unmarried and living together five years later.
Living together does not grant you any rights with regard to each other. So, if you move in with your loved one but decide not to – or can’t – get married, please be sure you protect yourselves by having a cohabitation agreement. A cohabitation agreement is an understanding between two unmarried persons who live together concerning everything that relates to their individual assets. These agreements offer protection for each person in the event of a breakup and grant the couple some of the same protections and rights given to married couples. In Minnesota, a valid cohabitation agreement must be written and signed by both parties and is enforceable regardless of the sex of the parties.
Even if you remain together, you are not out of legal hot water. Under Minnesota law, your partner does not have the ability to speak on your behalf for medical decisions, act on your behalf for financial matters or assist in making decisions in the event of your incapacity or death. So, be sure that ?while you are happily living in unmarried bliss you have an up-to-date estate plan.
Thursday, May 20, 2010
Minnesota has a “Cohabitation Statute” (Minn. Stat. s. 513.075) stating that a contract between a man and a women who are living together out of wedlock may be enforced as it deals with property and financial issues so long as the contract is
Signed by the parties
The parties seek enforcement after the relationship ends.
If the parties fail to properly execute a written agreement, the courts may not hear any disputes related to any financial or property disputes that may arise out of a claim based on the fact that the parties lived together in a sexual relationship and out of wedlock. The statutes specifically address cohabitation agreements between opposite-sex couples. So, what may a same-sex couple do to protect property and assets upon contemplation of moving in together?
From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.