Consider these consequences if you die in Minnesota without an estate plan:
- If you and your spouse die while your children are under age 18, the State of Minnesota will select a guardian for them, and you may not like the state’s choice. Solution: A Will enables you to nominate a guardian for your minor children.
- As soon as they turn age 18, your kids will get access to all of the money and property that they inherit from you, and they’ll be able to spend the money however they wish. Solution: A Trust can be written to control the ages at which your children gain access to the money and property that they inherit from you.
- The tax bill for your estate will be as high as possible because no steps were taken to reduce tax liability. Solution: Establish a plan
individualized for your situation. The Minnesota estate tax exemption is $1 million. True, you can give any amount of assets to your spouse without being subject to estate tax, but a key way to capture the $1 million exemption for each of you -- for a total of $2 million -- is by establishing trusts. Otherwise, only the $1 million exemption for the second spouse to die is captured. By the way, life insurance proceeds are counted as part of your estate for purposes of figuring the estate tax even though you had to die for the proceeds to be paid out.
- If your spouse remarries after you’re dead, and then dies before his/her new spouse, your original assets could end up with the new spouse and your kids may get shortchanged. Solution: Establish a Trust that includes language to deal with this potential situation.
- If you’re living with a partner, but not married, blood relatives – rather than your partner – will inherit your assets under Minnesota’s intestate statutes. Solution: Use a Will and/or Trust to pass your assets to your partner.
- If you’re single without a partner, your assets will probably go to your parents rather than to friends or others whom you might like to inherit your assets. Solution: Use a Will and/or Trust to select who will receive your assets.
- Because estate planning and financial planning go hand-in-hand, your failure to undertake estate planning may hamper your ability to provide for loved ones. Solution: Meet with an estate planning attorney and a financial advisor.
- If there’s a fight over family keepsakes, they may be sold rather than divided among family members, and the money from their sale is hardly the same thing as receiving the keepsake. Solution: Minnesota law allows you to add a “separate writing” to your Will for directing who is to receive each family keepsake that you list.
Americans are also tending to live longer, which heightens the probability that you may experience a period of mental incapacity before you die. Creating an estate plan can help here also. Consider these consequences of failing to plan for
your potential mental incapacity:
- You could end up under the care of a guardian appointed by a Minnesota court. Guardians cost money, and they are under court supervision. Solution: For the guardianship of an adult, your appointment of a health care agent in a Health Care Directive is considered a nomination of a guardian for purposes of Minnesota’s Uniform Guardianship and Protective Proceedings Act. Guardians make decisions about the incapacitated person’s “person” whereas conservators are appointed to make decisions about that person’s “property”.
- You could end up under the care of a conservator appointed by a Minnesota court. Conservators cost money, and they are under court supervision. Solution: Establish a Trust, and enable your hand-picked trustee to handle your affairs without court involvement. You can also authorize a Durable Power of Attorney, which continues in effect after you’re incapacitated but terminates at your death. In it you’ve named someone as an “attorney-in-fact” and granted that person certain powers over your financial affairs.
In sum, your estate plan should include a Will, Health Care Directive and Durable Power of Attorney at a minimum. Trusts are also often advisable. An estate planning attorney can help determine the best plan for you.
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