YOUR ESTATE PLANNING QUESTIONS ANSWERED
When it comes to estate planning, probate, and trusts, there are so many different avenues available and variables to consider that it can be hard to know where to start. What options make the most sense for you and your situation? What makes sense for your family’s future? Here are just a few scenarios that you and your family might be wondering about.
When is the best time to get the family together with the attorney to read Dad’s Will?
While Dad is living, Dad gets to decide whether and how he shares the details of his Will and overall estate plan with his family. Dad might decide to bring one or more children along with him to attorney appointments. Dad might decide to meet with the attorney alone, but then share the details of his plan with his children on his own. Or, Dad might choose to meet alone with the attorney and keep the details private from his family. And any attorney who has worked with Dad owes him a duty of confidentiality, meaning the attorney cannot share details about Dad’s plan with anyone without Dad’s permission to do so.
After Dad’s death, there is actually no formal requirement that the family get together with the attorney to read the Will. Instead, any “interested person” may request that the attorney holding Dad’s Will deliver the Will to the probate court. “Interested persons” include Dad’s spouse, children, heirs, and beneficiaries. That being said, many families find it helpful to meet with the attorney to ask questions and to review their rights and responsibilities for Dad’s various assets after his death. Many families find it helpful to have that meeting soon after Dad’s death while the family is all together, but the meeting is not required and it can certainly happen later. There are a few situations, however, when having that meeting right away is very beneficial. If there are questions about who should be in charge of arrangements, if there are assets in danger of being stolen or otherwise dissipated, or if there is conflict in the family, any “interested person” might want to meet with an attorney right away—either alone or with the family.
Mom has a Will. Having a Will means we have to go through an expensive probate after her death, right?
No, not necessarily. Having a Will does not necessarily mean that Mom’s estate needs to be probated. And having a Will does not necessarily mean that handling Mom’s estate needs to be expensive! Many estate plans include a Will but also utilize other planning techniques designed to avoid probate. Naming beneficiaries on investments, filling out “P.O.D” (payable on death) paperwork for accounts, transferring assets into co-ownership before death, transferring real estate but retaining only a life estate, signing a transfer on death deed for real estate, and signing a transfer on death title for vehicles—these are all techniques Mom might have utilized alongside her Will to avoid probate after her death. And even if Mom did not utilize these techniques, if Mom’s probate estate does not include real estate and does not exceed $75,000, then Minnesota law allows Mom’s estate to be distributed according to the terms of Mom’s Will based on some brief attorney paperwork, without a probate court proceeding.
To be sure, some complex probate court proceedings are expensive. But not all probates are complex, and not all probates are expensive. Many probate proceedings are less expensive than the cost of preparing a trust. One thing that keeps the cost of probate manageable in Minnesota is that the attorney and the personal representative are only allowed to bill the probate estate for actual time spent working on the probate estate. Compare this to some states where attorneys and personal representatives are entitled to a percentage of the value of the estate, no matter how much (or little) work they do providing value to the probate estate. In those states, probate can be unnecessarily expensive! But in Minnesota the attorney, personal representative, and other professionals (accountants, appraisers, etc.) who work with a probate estate only bill the probate estate for actual time spent working on the probate estate. We are also fortunate in Minnesota to have a reliable and functioning probate court system that handles probate court matters as quickly and as efficiently as the law allows.
Dad has a trust. Having a trust means we can avoid an expensive probate after his death, right?
No, not necessarily. A trust can be effective to avoid probate. But simply having a trust does not mean Dad is going to avoid probate. And having a trust definitely does not mean Dad and his estate are going to avoid expenses. Simply having a trust does not mean that Dad will avoid probate. To avoid probate, Dad needs to both have a trust and transfer appropriate assets to the trust. (Transferring asses to the trust is called “funding the trust.”) If Dad has a trust, but Dad did not fund the trust, then Dad’s estate will still need to be probated even though he has a trust. But if Dad formed a trust and funded the trust, then, yes, Dad will avoid probate. But having a trust and funding a trust are the most expensive planning technique for avoiding probate. Forming a trust is expensive. Funding a trust is expensive. And after death, the attorney’s fees to manage the trust are expensive all over again.
If Dad’s goal is to avoid probate and avoid expenses, he should consider naming beneficiaries on investments, filling out “P.O.D” paperwork for accounts, transferring assets into co-ownership before death, transferring real estate but retaining only a life estate, signing a transfer on death deed for real estate, and signing a transfer on death title for vehicles. And even if these other probate avoidance techniques are not appropriate for Dad’s situation, Dad should consider the cost of forming, funding, and managing a trust as compared to the cost of probate. Dad might be surprised to find that probate is often the less expensive option!
Mom named me on her Power of Attorney. So am I in charge of family decisions (like funeral arrangements) after her death?
No, not necessarily. By naming you on her Power of Attorney document, Mom gave you the power to manage her financial affairs during her lifetime. But that power ends at Mom’s death. At death, whoever Mom named as her personal representative in her Will has authority to make decisions. If Mom named you as her personal representative, then you have power and authority to make funeral and other arrangements after Mom’s death. If Mom named someone else as her personal representative, then that person is in charge after Mom’s death.
The legal aspects of estate planning, estates, trusts and probate can leave you and your family wondering what to do. Everyone’s situation is entirely unique, and the scenarios covered above do not make up all of the options available to you and your family. Getting legal advice can help! The only way to get legal advice about these and other issues is to engage an attorney. The attorneys at Blethen Berens are personable, compassionate and down to earth. Let them help find the solution that’s most fitting for your family. They’ll handle the legal work for you so that you can focus on what’s important: you and your family.