WHY YOU NEED ESTATE PLANNING AND A WILL
Death, Taxes, and Wills
At Anderson & Burgett, we have more than 65 years of combined experience assisting our clients as they prepare for the future. This area of law is changing rapidly, and our office is proud of its ability to stay on top of the latest developments in estate and gift tax planning. It is never too early to consider your future and how your passing will impact the ones you love. Anderson & Burgett would be happy to discuss the possibilities an estate plan can offer you.
We live in a tax age. The foreseeable future suggests no material change. Many estates may not have to pay federal or state "death taxes" but, depending on the assets, there can be substantial tax consequences associated with death. After death, little can be done to relieve an estate from adverse tax consequences caused by lack of a will, a trust, or a proper estate plan. Thus, an important purpose of a will can be to reduce the taxes that will have to be paid at your death and at the death of one or more of the beneficiaries of your will. Other important questions to consider regarding Estate Planning and Wills include:
What does a will do?
A will is your way of saying who family, friends, organizations is to receive your estate: the furniture, jewelry, cars, bank accounts, business or real estate that you own. In your will, you can leave particular things to specific people.
In your will, you can also name a guardian for your minor children and a trustee to manage their money. (The same person can do both.)
You can also choose a "personal representative" (sometimes called an executor) to wind up your affairs. This person or institution gathers your property, pays your debts and any taxes due, and delivers the balance of your estate to the people you have chosen.
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How long is a will valid?
A will remains effective until it is changed or revoked. An existing will should be reviewed periodically. If your will is not up to date when you die, important people in your life may not be provided for. Think about changing your will when:
- You marry or divorce
- There is a birth or death in the family
- There is a change in the value and/or kind of property you own
- The person you want to be guardian or executor moves away or dies
- You move to another state
All such changes in circumstance require careful analysis and reconsideration of the provisions of a will.
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What happens if I die without a will?
When you write a will, you choose the people and organizations to inherit your estate. If you die without a will, state laws determine who gets it.
Minnesota law provides first for payment of expenses of administration, funeral, last illness, taxes, debts and family allowances. The balance of the estate is divided among the surviving spouse and your children or other heirs as discussed below.
As of January 1, 1996 the share of your estate that your surviving spouse will get upon your death will depend on (1) if you had descendants and (2) if all of them also were your spouse's descendants. If you and your spouse either had no descendants or all of your descendants are also the descendants of your surviving spouse, then your spouse will get your entire estate. If, however, you have descendants who are not also descendants of your surviving spouse, or if your surviving spouse has descendants who are not also your descendants, then your spouse will take the first $150,000 plus one half of the balance of the intestate property. The other half is divided among your heirs in equal shares.
If no spouse or children survive you (if any of your children have died before you, that child's share passes to his or her living descendants, if any) then your estate goes to your parents. If neither parent is alive, the estate is divided equally among your surviving brothers and sisters, including the descendants of any deceased brother or sister. If there are no brothers, sisters, nieces or nephews, then your estate goes to your grandparents or their descendants. If there is nobody in any of these categories, Minnesota law has further provisions for determining the next of kin.
If you have no living relatives and you have not provided otherwise, your property and possessions will go to the state, even if a close friend survives you. Since the provisions described above are rather complex, it is advisable to consult a lawyer when making out your will. You can help ensure that your will is consistent with the current Minnesota law and avoid many problems for your heirs if you obtain the advice of a qualified attorney.
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Does having a will help avoid probate?
No. If there is property to be administered or taxes to be paid, or both, the existence of a will does not avoid probate, nor does it increase probate expenses. Whenever the owner of property dies, the probate court must either decide that the will is valid or determine who is to receive the property if there is no will. Thus, with or without a will you could end up "in court."
If all of your property is held jointly or in trust, probate may not be necessary after your death. However, probate avoidance may increase expenses and taxes and may not be desirable. The advice of a lawyer can help you decide the best plan for your individual situation.
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Can I dispose of my property however I want to in my will?
Almost, but not quite. A married person cannot completely exclude a spouse without the spouse's consent. A parent may disinherit a child as long as disinheritance is not due to a mistake. There are certain other restrictions which a lawyer can explain. For example, the law does not allow trusts of indefinite duration.
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Are there some kinds of property that are not covered by my will?
Yes. For example:
Life insurance - Money from your life insurance policy will go to the people you've named as beneficiaries on the policy, no matter whom you've chosen as heirs in your will, unless you designate your estate as the beneficiary.
Retirement plans - Money from your retirement plan will go to the people you've named in the plan, with or without a will, unless you fail to name anyone or the person named does not survive you.
Property owned as joint tenants - You may own real estate, cars, bank accounts, or other property with another person(s) as joint tenants. Your co owners will inherit your share, no matter whom you've named as heirs in your will.
Living trusts - Property you have placed in a living trust during your lifetime will go to the trust's beneficiary, with or without a will.
It is advisable to make a will even if your estate consists of the above kinds of property. For example, if you receive a lottery ticket as a birthday present, your will would cover your unexpected winnings. Or, holding property in joint tenancy may, in some circumstances, actually increase taxes and expenses. A lawyer can design a will and estate plan that will save your heirs time and money later.
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What information do I need to bring to my appointment so that the attorney can draft a Will?
The information needed to prepare a Will is:
1. Who do you want to be your personal representative/executor?
2. Who do you want to be the guardians of your children, if any?
3. Who do you want to be the trustees of your children's, if any, estates?
4. Is there personal property that you would like to give to someone specifically?
Example: your diamond ring to your neice.
5. Is there real property that you would like to give to someone specifically? If so, the legal description which can be located on your Abstract of Title and/or Warranty will be needed.
If possible, please also bring the above-people's names and addresses so that they can be put into the document although we understand that that anyone may move before the Will is needed.
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