Minneapolis Estate Planning and Probate Lawyer Blog

We all know the feeling.  You are hired at a new job and show up for your first day all scrubbed up and ready to work.  Then you spend your first day – at least – filling out endless forms.  You are suddenly faced with forms for insurance, retirement, pension, parking permits, sexual harassment policies, dress codes and codes of conduct.

Perhaps you diligently fill out each form in final by the end of that first day and properly turn it into HR.  Perhaps not.  If you fall within the latter category – as many of us do – please be sure that you DO NOT overlook any form that requires a so-called beneficiary designation.  If an employee is married, then her spouse will automatically be listed as the beneficiary on any life insurance or retirement accounts.  But, if the employee is not married or wishes to have a beneficiary other than her spouse, she must be sure to include that persons name as the beneficiary on all such forms.

Any assets with a beneficiary designation will pass to the beneficiary without the hassle, or expense, of going through the probate process.  The intended beneficiary may avoid going to court and proving that the employee intended to leave the account to her.

Caution – your beneficiary designations trump your will.  So if your current partner is listed as the beneficiary  in your will but your life insurance designation still lists someone else (like your ex), guess who gets the insurance money?  That’s right – your ex. A good rule of thumb is to check your designations every year during your open enrollment period.

In a previous post I wrote about how difficult it is for parents to choose guardians for their children; but most parents, even if they are unsure about who they want to serve as guardians, are positive in the knowledge of who they don’t want caring for their children. You hope that creating a nomination of guardians will ensure that your child ends up in loving and capable hands if anything should happen to you, but every once in a while a situation arises where someone unsuitable—or even dangerous—will petition for guardianship.  Luckily, there are steps you can take to prevent you children from falling into the wrong hands.

If you’ve already executed (or are planning to execute) a Nomination of Guardians then you’ve taken the first step. But beyond that, you can execute something called an Exclusion of Guardians (also known as an Anti-Nomination of Guardians). In this document you name the person or people who should under no circumstances receive guardianship of your children. In the document you may want to state the reasons why your child should be kept out of the care of this person, but it is not always necessary.

Oftentimes the excluded guardian is a member of the extended family, and parents fear that executing so strong a document might be hurtful or break the peace. If this is the case then you can request that the Exclusion of Guardians be kept confidential. This means that unless and until the excluded guardian tries to gain guardianship over your children it can be stored privately, and there is no need for anyone except you and your attorney to be aware of its existence.

An Exclusion of Guardians may seem like a drastic measure, but there are many valid reasons to execute an Exclusion of Guardians; a history of abuse, financial irresponsibility, mental illness, alcoholism, or other more personal reasons. How are judges to know if a seemingly stable relative is unfit to serve as guardian unless you tell them? This is exactly what an Exclusion of Guardians does.

If you feel strongly about this issue please call my office for more information. You hope the document will never need to be used—never be seen by any eyes other than your own—but when it comes to your children you are always better safe than sorry.

If you have kids – YOU MUST HAVE A VALID WILL.  A will is where you still have some say in who will raise your child(ren) even after your gone.  You use a will to speak when you are no longer able to in order to tell the court who you believe would be the best choice to act as guardian to your kid(s) if you (and any other parent) are no longer around.

Choosing people to serve as guardians of your children is one of the most difficult decisions you will have to make—but it’s also one of the most important.  This is especially true for nontraditional families, who may not always have the advantage of biological parentage on their side.  Likewise, it is a difficult thing to contemplate if you are a single parent.

Many parents are so paralyzed by the fear of making the wrong choice of guardians for their children that they keep putting it off, hoping that one more day (or one more week, or month) will bring an epiphany of decision.  Further, partners may disagree about whom to choose.  But delaying the process and making no decision can end up being worse than making the wrong decision.

If something happens to you and you have not nominated guardians for your children then it is quite possible that your children could be put in the care of the state Social Services until a judge can appoint guardians for them, and even then there’s no guarantee the judge will place them with the people you would have chosen. This is especially true if you would prefer to pick a guardian that is not related to you by blood or marriage.

Here are few qualities to consider that may make the decision-making process a little easier:

Age: How old do you consider to be too old (or too young) to be a guardian? You might think that your aging parents are an option as guardians—but only as a last resort.

Religion/Politics: Views on religion and politics are often indicative of a moral and world view in general.  You may not find someone whose beliefs match yours exactly, but you probably know which ethical issues are deal-breakers for you and your partner.

Parenting Style: Is a consistent parenting style important?  Perhaps you think that your brother and sister-in-law have a different discipline style than you do, but are loving parents, and are therefore people you are comfortable nominating as back-up guardians.

Location: Do you want your children to remain in their familiar school and city?  If you choose permanent guardians who will have to travel from a distant location consider also naming temporary guardians who live nearby.

Family and Finances: The inheritance you leave will likely help your chosen guardian with the financial aspect of raising your child, but you will still want to consider the family and financial situation of your guardian.  Will your only child suddenly have to adjust to having siblings?  Will your guardians need to move to a new home to accommodate their larger household?

Finding someone to replace you as a parent is impossible, but there are good and loving people in your life who may serve as a close second.  Consider people for each of the above categories and make a list.  After deliberation, you might realize that the people you feel the most comfortable asking to be guardians of your children are your dear friends, the ones you met at the parent’s club, and with whom you spend most weekends and holidays. Hopefully you will also find one or two people to name as back-up guardians as well.  Please know that this nomination isn’t permanent.  You may change your mind at any time by drafting a new will.

Coming up with your list of guardians may be the hardest thing you ever do, but creating a nomination of guardians is the best thing you do for your child.

Of all the discussions surrounding our estate plan, the issue of appointing a guardian has been the most stressful for my partner and me.  We are both attorneys and still had a difficult time working through the estate planning process. because of questions like these.  Family?  Well, our parents are aging and generally not in a position to chase around a 3-year-old.  My siblings are a lot younger and in the process of figuring out their own lives.

Friends?  Most of our friends who actually want children, have toddlers of their own.  And, let’s face it, in these difficult economic times, no one is rolling in money.  How important is location?  If such a catastrophic event occurred, our daughter’s life would be shattered enough, would we want her taken from her home, school and community?  Or is it more important that she be cloaked in the comfort of familiar people and things?  Who will raise her with the beliefs and values that we have worked so hard to instill?

The truth is that no one else can be us.  But, a good estate plan gives the guardians we choose a fighting chance to raise her according to our wishes.  We have spoken to the guardians about what is important to us and we have ensured that our plan leaves instructions, and assets, for her continued care.  As difficult as these questions are, we worked through them and came up with a guardian plan that gave both of us peace of mind that our daughter will be taken good care of in the event of a catastrophe.

UPDATE: The new hospital rules went into effect yesterday.  You can now choose your visitors.

Starting in January you will have the right to choose who can visit you in the hospital.  That’s because the Centers for Medicare & Medicaid Services (CMS) finally responded to a prior Presidential Memorandum by announcing a new rule that would allow patients to determine who may visit them while in any hospital that accepts Medicare or Medicaid.

The new CMS rule states that hospitals are required to explain to patients their right to choose who can visit them during hospital stays, regardless of whether the visitor is a family member, spouse or domestic partner. The rule will be effective 60 days after publication.

This rule offers some relief for anyone wanting to be visited by someone outside the accepted traditional family model. No longer will a disapproving hospital staffer have the power to deny visitation by your unmarried partner, stepchild or best friend. But keep in mind that the new rule only helps if you are able to tell the hospital who you want as a visitor.  It will not:

1. Help if you are unable to speak for yourself
2. Grant anyone the right to make medical decisions on your behalf; or
3. Require hospitals who do not accept Medicare or Medicaid to do anything.

So, if you are unconscious when brought to the hospital, your partner may still be unable to visit. Please ensure that your wishes regarding medical care and visitation are honored – get a Health Care Directive now.

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:

1. In writing
2. Signed by you in front of a notary public
3. Dated appropriately
4. 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.

Durable 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.

Springing POA

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.

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.

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.

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.

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.

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.