Minneapolis Estate Planning and Probate Lawyer Blog

Monday, November 5, 2012

Minnesota Transfer on Death Deed, Part 4:Can You Cancel a Transfer on Death Deed After It's Filed?


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

Tax Saving Plan: Year End Gifts

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

Minnesota Transfer on Death Deed, Part 3: How Do You Get One?

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

  1. Choose a beneficiary or beneficiaries
  2. Execute a valid deed that expressly states that it is effective only upon your death
  3. Record the deed in the county in which the property is located prior to your death.
  4. 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

Minnesota Transfer on Death Deed, Part 2: Why Should I Get One?

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.

Hypothetical #1

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.

Hypothetical #2

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

Minnesota Transfer on Death Deed, Part 4: Can You Change Your Mind?

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 Transfer on Death Deed: Should I Use it To Transfer My House?

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.
  1. 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.
  2. 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.
  3. 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.
  4. 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).
  5. 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

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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

Making your home senior-proof

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

Preserving and Protecting Documents Is Part of Healthy Estate Planning

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.

Online storage

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.

Other choices

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.

Thursday, August 30, 2012

Minnesota Asks Federal Government for Medicaid Waiver in Attempt to Save Millions m

Gov. Mark Dayton is seeking a waiver from the Federal Government that will allow Minnesota to put into place its own bipartisan plan that should make it easier to connect people to services, steering them out of institutions and into home-based care. In seeking the wavier, the state asserts that instead of paying the astronomical cost of institutional care, the ability to go into a Medicaid recipient's home and install ramps, or bring in home-care workers who could allow the person to stay at home comfortably and will provide services at a more affordable price for the state. Rather than waiting until a worker loses a job because of a disability, the reforms would allow the state to reach out to employers and craft a plan to keep them working.

The Governor feels that this reform could save the state $151 million over the next five years. Minnesota estimates it could save another $9.2 million over the next five years by giving families more options for home-based care, and $15 million by expanding counseling and other support to people faced with a choice between expensive nursing home care and more affordable home care. At the center of the waiver request is the state's plan to offer incentives to health care providers that make preventive care available to Minnesotans on Medicaid.

The U.S. Department of Health and Human Services will respond to the state's proposal after a 30-day public comment period. If approved, the reforms would go into effect in 2014.

Monday, August 13, 2012

Estate Planning for Unmarried Couples

A Minneapolis Estate Planning Attorney Examines the Importance of Estate Planning for Unmarried Couples

Estate planning is important for everyone. We simply don’t know when something tragic could happen such as sudden death or an accident that could leave us incapacitated. With proper planning, families who are dealing with the unexpected experience fewer headaches and less expense associated with managing affairs after incapacity or administering an estate after death.

If a person fails to do any planning and becomes involved in a debilitating accident or passes away, each state has laws that govern who will inherit assets, become guardians of minor children, make medical decisions for an incapacitated person, dispose of a person’s remains, visit the person in the hospital, and more. In some states, the spouse and any children are given top priority for inheritance rights. In the case of incapacity, spouses are normally granted guardianship over incapacitated spouse, though this requires a lengthy and expensive guardianship proceeding.

In today’s world, increasing numbers of couples are choosing to spend their lives together but aren’t getting married, either because they aren’t allowed to under the laws of their state, such as in the case of gay and lesbian couples, or simply because they choose not to. However, most states don’t recognize unmarried partners as spouses. In order to be given legal rights that married couples receive automatically, unmarried couples need to do special planning in order to protect each other.

In general, unmarried individuals need three basic documents to ensure their rights are protected:

  1. A Will – A will tells who should inherit your property when you pass away, who you want your executor to be, and who will become guardians of any minor children. These issues are all especially important for unmarried individuals. In most states, an unmarried partner does not have inheritance rights, so any property owned by his or her deceased partner would go to other family members. Also, in the case of many gay and lesbian couples, the living partner is not necessarily the biological or adoptive parent of any minor children, which could lead to custody disputes in an already very difficult time.  Therefore, it’s critical to nominate guardians for minor children.
  2. A power of attorney – A power of attorney (for financial matters) dictates who is authorized to manage your financial affairs in the event you become incapacitated. Otherwise, it can be very difficult or impossible for the non-disabled partner to manage the disabled partner’s affairs without going through a lengthy guardianship or conservatorship proceeding.
  3. Advance healthcare directives – A power of attorney for healthcare, informs caregivers as to who is responsible for making healthcare decisions for someone in the event that a person cannot make them for himself, such as in the event of a serious accident or a condition like dementia. Another related document is a HIPAA waiver, which allows the persons named to discuss your care with a doctor BUT not to make decisions.

A fourth document to consider is the use of a revocable living trust.  A trust document is nothing more than a set of instructions you leave to instruct your trustee on how, when and to whom to distribute your assets.  There are numerous advantages to a trust that are especially appliable to unmarried couples:

  • Avoids probate
  • It's private unlike a will at probate
  • You can determine where any remaining assets may go at your partner's death
  • Avoids court intervention if you're incapacitated

Beyond these documents, it is also critical that you check your beneficiary designations to ensure that the proceeds of your life insurance, retirement accounds, CDs, moneymarket or bank accounts go to your loved one. While your partner may still be able to inherit even without those designations, it will take time and effort to prove to a court that he/she is entitled to the benefits.

Estate planning is undoubtedly more important for unmarried couples than those who are married, since there aren’t built-in protections in the law to protect them and their loved ones.  It’s imperative that unmarried couples establish proper planning to avoid undue hardship, expense and aggravation.



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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.

9.3Chris Tymchuck

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