ALLEN HAUGRUD

BASIC ESTATE PLANNING CONCEPTS:

The basis estate planning ideas include:

1. Will - Revocable Trust or similar document detailing what happens to your property upon your death.

or similar document detailing what happens to your property upon your death.

2. Power of Attorney (POA) - granting authority for someone to act for you should you become incapacitated. A Power of Attorney gives the attorney-in-fact legal authority to deal with financial matters during the principal's lifetime.

(POA) - granting authority for someone to act for you should you become incapacitated. A Power of Attorney gives the attorney-in-fact legal authority to deal with financial matters during the principal's lifetime.

3. Health Care Directive (HCD) - granting authority for someone to act for you in making end of life decisions regarding your health care.

(HCD) - granting authority for someone to act for you in making end of life decisions regarding your health care.

ABOUT WILLS

A will allows you to determine who will receive your property upon death. You can also select the personal representative (executor - administrator) of your estate.

To be effective, it is recommended that a will be signed in front of two witnesses, with a notary public.

A will can be very important when you and your spouse have children not of your marriage. The will assures your property will be divided among those you want to share from your estate. ABOUT TRUSTS

A trust is a practical and flexible legal device by which one or more people you select (called your "trustees") manage assets for the benefit of others you designate (called your "beneficiaries"). We may recommend that you consider trusts for one or more purposes:

Tax minimization or avoidance;

Spreading or sharing of assets among beneficiaries (for example, spouse as beneficiary for his or her life, then your children as beneficiaries, or spouse and children as co-beneficiaries according to their relative needs over time); or

of assets among beneficiaries (for example, spouse as beneficiary for his or her life, then your children as beneficiaries, or spouse and children as co-beneficiaries according to their relative needs over time); or

Management of assets for the convenience of beneficiaries or to protect beneficiaries from their immaturity, inexperience, or the frailties of advancing age or impaired health.

of assets for the convenience of beneficiaries or to protect beneficiaries from their immaturity, inexperience, or the frailties of advancing age or impaired health.

Saving expenses of probate for example when you own real estate in two or more states. If you do, probate proceedings may be necessary in each state.

expenses of probate for example when you own real estate in two or more states. If you do, probate proceedings may be necessary in each state.

Protecting assets from beneficiaries’ creditors. 

Maintaining flexibility with the ownership of assets. 

You can establish a trust either during your lifetime (called a "living trust") or upon your death.

COST COMPARISON.

The benefits, to many people, of the simple living Trust have been exaggerated, as have the problems experienced in probate. Remember, the simple living Trust alone will not save taxes.

While living trusts are not appropriate for everyone, they can and do avoid probate costs, allow control over the assets, maintain flexibility and can be structured to avoid estate taxes as effectively as wills. It is important that you speak with your attorney to understand the pros and cons of living trusts. When it comes to estate planning, One size does not fit all!

Revocable trusts may be appropriate when owning property in more than one state. For example, the probate court in Minnesota can only deal with Minnesota real estate. If you own real property in Arizona, that requires a probate proceeding in Arizona as well.

Keep in mind, too, that the up-front cost is greater than for preparing a simple Will. Also, most property should be transferred, so you will probably need at least one deed prepared, and financial accounts also must be changed to name the Trustee as legal owner. Finally, you should have a pour-over Will done with the living Trust anyway, so that any omitted or subsequently acquired assets are "poured over" into the Trust at death. This Will should be included in the cost of drafting any living Trust.

MINNESOTA DEATH TAXES

The new exemption for federal estate taxes is $5 million dollars. In Minnesota, however, during the exemption for the State of Minnesota estate tax is only $1,000,000; and if you have an estate of $1.5 million, even though you do not owe any federal estate taxes, you will owe substantial death taxes to the state of Minnesota.

The Minnesota tax rate can be as much as 16 percent of the property subject to tax, but is a graduated tax.

WAYS TO AVOID PROBATE:

Remember a will does not mean your estate does not go through probate, a court process. If you want to avoid probate, you should consider:

TRANSFER ON DEATH DEED (TODD): this is for real estate where you still maintain all ownership rights but the transfer takes effect upon your death, avoiding the probate process.

PAYABLE ON DEATH ACCOUNTS (POD or TOD): where you name beneficiaries on the bank accounts, etc. It avoids the probate process.

DO YOU NEED A POWER OF ATTORNEY (POA)?

Some would say you do at any age!

Coupled with a Will, and a Health Care Directive (discussed later), the Durable POA is for many people a good alternative to the simple living Trust in planning for disability or incompetence. These documents are more familiar to folks than the concept of a "Trust," and their total cost is much less than to prepare a Trust.POAs allow one to delegate broad authority over personal financial affairs even - and especially - in case he or she becomes disabled or incompetent. We never know when an accident, stroke, or illness may render any one of us unable to handle our own affairs, at any age. For this, a Durable POA is necessary. It is a very broad and detailed document that also states: "This power of attorney shall continue to be effective if I become incapacitated or incompetent." The basic form includes this language. This makes it "durable" - even if the principal becomes disabled, the power of attorney is in effect.

allow one to delegate broad authority over personal financial affairs . We never know when an accident, stroke, or illness may render any one of us unable to handle our own affairs, at any age. For this, a POA is necessary. It is a very broad and detailed document that also states: "This power of attorney shall continue to be effective if I become incapacitated or incompetent." The basic form includes this language. This makes it "durable" - even if the principal becomes disabled, the power of attorney is in effect.

Guardianships/ConservatorshipsAn unfortunate fact of life for the elderly is the possibility of mental and/or physical incapacity. Guardianship or Conservatorship involves a proceeding in court, and can be the less desirable alternative to advance planning for disability, with a POA or living Trust.  See the Guardianship and Conservatorship page.

For this reason, the process of obtaining court appointment as a guardian or conservator necessarily involves some time and money with an attorney representing the guardian, and one representing the ward. There is also the time and expense involved with filing annual reports with the Court.

DO YOU NEED A HEALTH CARE DIRECTIVE?

Your right to control health care decisions does not end if you become incapable. Putting your wishes in writing is the best way to help make sure your wishes will be known and followed by family, friends, health care provider, and others. We do not know what tomorrow will bring. We are all at risk to injury or illness - a medical catastrophe, at any age. Failing to plan is planning to fail.

Minnesota law allows you to inform others of your health care wishes. A 'living will' or Health Care Directive is a signed and witnessed legal document setting forth our own personal medical ethics, stating clearly how you want to be treated at the end of your life.

Before you prepare or revise your directive, you may want to discuss your health care wishes with your doctor.

It is a good idea to review and update your directive as your needs change. Keep it in a safe place where it is easily found.

Contact me today for a free consultation

 For an option to avoid probate see Transfer on Death Deeds

Areas include:  Wills; Estate Planning; Probate; Will Contest; Contested Probate; Conservator; Guardian; Personal Representative; Deed; Living Trust; Trusts; Beneficiary; Trustee; Executor; Bond; Bequeath; Bequest; Joint Tenancy; Joint Estate; Per Stirpes; By Representation; Transfer on Death Deed; Medical Assistance; Revocable Trust.

Web Hosting Companies