Estate Planning Blog

Should Family Pay the Deceased’s Bills?

Careful! It may be best to pause before paying bills of the deceased.

It’s important to first know what the assets of the estate are, and what claims are being made against those assets. Is the estate solvent? If not, Minnesota law sets out a priority list for paying creditors. The creditors at the bottom of the priority list may not receive anything.

If, however, a family member has already advanced money to pay the bill of a creditor near the bottom of the priority list, then the family member will not be reimbursed if the creditor would not have been paid under Minnesota law regarding insolvent estates.

Therefore, the best scenario is to delay payments to creditors until meeting with a lawyer to assess whether the estate is insolvent or not. If it is insolvent, a special type of probate will be needed in which the court ultimately directs which bills are to be paid and which ones won’t be paid according to state law. Having the court involved also has the advantage of mitigating creditor pressure on the personal representative.

A note of caution: Survivors sometimes mistakenly think an estate is solvent because the upcoming sale of the deceased’s house will net sufficient money to pay all creditor claims. However, Minnesota law exempts certain assets, such as the home, from most creditor claims if the house passes to a surviving spouse, children, or grandchildren. It doesn’t matter if the children are grown-ups and living elsewhere. (Claims related to the homestead that are not exempt include any remaining mortgage, and any claims for state hospital care and medical assistance.) Consequently, the estate may be officially insolvent even though it appeared to be solvent due to the home value.

The most prudent step when someone dies may be to contact a lawyer to help sort out the myriad rules related to the transfer of assets.

©2017 Wittenburg Law Office, PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com

Will My Step-Children Inherit?

If you want your step-children to inherit, you need to specify that wish in your Minnesota Will or Revocable Living Trust.

If you don’t do so, then only your blood relatives or adopted children will inherit.

Without a Will (and assuming that you have no surviving spouse), your children inherit in equal shares under Minnesota law. No provision is provided for step-children.

Deaths create highly emotional situations for the loved ones left behind. How you treat your children and step-children in your Will or Trust may be how they view your love – or lack of love – for them. Particularly in situations where you’ve raised your step-children from a young age, specifically including them in a Will or Trust will enable them to receive part of your estate.

When your step-children come into your life as adults rather than as minors, their expectations regarding an inheritance from you may be different.

An estate planning lawyer can help you sort through your options for dealing with step-children when you prepare your Will or Trust.

©2017 Wittenburg Law Office, PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com

When Is Probate Preferred?

Typically, people want to avoid probate, but there are times when probate is the better path.

(Probate is a legal process in which a court formally appoints a personal representative to administer the deceased’s estate. Probate may occur whether or not the deceased had a Will. When the deceased’s Will names someone to be the personal representative, the selection is considered a “nomination” – not an appointment. It is the court that “appoints” and provides the official documentation that enables the nominated personal representative to act.)

People often prefer to avoid probate because the probate process is public, takes time, costs money, and involves some hassle.

But sometimes probate may be the preferred — or required — path because the court can resolve issues, thereby reducing pressure on the personal representative. Some examples are:

Heirs fighting. When heirs don’t get along, or don’t trust each other, the authority of the court can be the “parent in the room” to keep disputes from getting out of control.

Missing heir. Sometimes the whereabouts of estranged family heirs are not known. The court can direct what to do and when to stop searching.

Heirs under age 18. The court may appoint a conservator or guardian if such persons weren’t chosen by the deceased’s Will.

When several children are in line to inherit real estate that is destined to be sold. When several children are involved, there may be “too many cooks in the kitchen” for all the decisions that are needed to sell real estate. Moreover, when it comes time for the paperwork that ultimately transfers the property to a new buyer, the spouses of the children will also need to sign! In contrast, when there is a probate process, one person — the personal representative – makes the decisions and signs all the paperwork. Thus, with probate, only the personal representative is needed to facilitate the sale, and it’s easier to divide the net sales proceeds than to distribute the real estate itself. (As an aside: A Revocable Living Trust also would ease the transfer of real estate held in the Trust, and Trust assets typically avoid probate.)

When the desire is to split all assets of the deceased based on varying percentages. Sometimes a person desires to split all of his or her assets – real estate, bank accounts, investment accounts, etc. – among a list of heirs at varying percentages. Depending on the types of assets involved, it may be easier to accomplish this goal via a probate action.

When Will validity is questionable. The court will look at the evidence and make a determination.

When a Will provision is ambiguous. Again, the court will look at the evidence and make a determination.

Insolvent estate. The court, following the priority list set out in Minnesota statutes, will state which creditors should be paid and which ones won’t be. The blessings for the personal representative are reduced liability and reduced creditor pressure.

When a loved one dies, a lawyer can help the personal representative sort out the best steps for settling the deceased’s estate.

©2017 Wittenburg Law Office, PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com

Can I Disinherit My Spouse?

You can’t disinherit your Minnesota spouse unless he or she signed away those rights in a validly executed pre-nup or post-nup agreement.

Otherwise, even if you specifically omit your spouse in your Will, your surviving spouse has up to 9 months after your death to “elect against the Will” and seek the surviving spouse’s so-called “elective share”.

Calculating the elective share is a complicated process, but generally and loosely speaking, the Court looks at the combined assets of the deceased and surviving spouse. The Court then applies a certain percentage against that number for the award to the surviving spouse. The size of the percentage varies based on the number of years of marriage. The percentages start at 3% for one year of marriage. The maximum percentage is 50% for 15 or more years of marriage.

If there is no Will, the surviving spouse is entitled to the deceased’s entire estate if the deceased has no surviving descendants, or if all surviving descendants of either of them are descendants of both of them.

There’s a different Minnesota law when there is no Will and it’s a blended family situation. Thus, if either the deceased or surviving spouse has surviving descendants that are not also descendants of their spouse, then the surviving spouse receives the first $225,000 of the deceased’s estate plus one-half of any balance of the deceased’s estate.

The surviving spouse may also have certain rights in the homestead, and in certain exempt property such as personal property and an automobile. The surviving spouse and any minor children that the deceased was supporting may also be allowed a “reasonable family allowance” in cash from the estate for 1 year if the estate is insolvent and for 18 months if the estate is solvent. The amount of the family allowance may be determined by the personal representative, but is not to exceed $2,300 per month under Minnesota law.

Net, net, if you desire to by-pass your spouse, the two of you need to sign a pre-nup or post-nup agreement. Note that Minnesota has specific requirements for completion of pre-nups and post-nups for these agreements to be considered valid.

©2017 Wittenburg Law Office, PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com

Benefits of Estate Planning

Let’s admit it: We care about how we are remembered after death, and also about what happens to our lifetime accumulation of financial and other assets.

Thus, it’s foolhardy to think that we can keep putting off estate planning on the premise that death is still a long ways away, or that everything will somehow work out (miraculously) according to our wishes if we do nothing.

Death isn’t typically considered an upbeat topic to talk or think about. And, there’s some hassle and expense involved in estate planning because good estate planning is not just a bunch of forms.

Here are some advantages to undertaking estate planning:

Control. If you don’t have an estate plan, your possessions may go to someone that you didn’t intend. You also may incur unnecessary taxes. A Will is the way for you to handpick guardians for your minor children should both parents die. You also can appoint the trustee of your trust, and nominate the personal representative of your estate.

Better Memories. Grief over your death is enough for your loved ones to have on their plates. If, instead, they also must second-guess what you may have wanted for the disposition of your body, memorial service, etc., they are also going to remember their anguish over your lack of planning every time they think of you.

Relief for Your Loved Ones. There’s a sense of satisfaction for your loved ones if they know what you wanted and can therefore carry out your wishes.

Peace of Mind for You. You can leave this life knowing that, by planning, you’ve made your departure as easy as possible for your loved ones. Estate planning reduces the likelihood of family fights, and provides a roadmap for your loved ones to follow.

Save Money. Good estate planning that is periodically updated as your life or the law changes, is highly likely to result in lower costs for settling your estate and/or administering your trust. The savings are passed along to your intended beneficiaries.

Faster transfer of Assets. A well-reasoned estate plan may result in a faster transfer of your assets to your heirs. Having no estate plan, an outdated estate plan, or a problematic estate plan is likely to cause delays, which likely will mean a lesser inheritance for your loved ones.

Helps with Dementia or Other Mental Capacity Issues. Good estate plans provide for the day when you may experience mental incapacity issues. Without such planning, the court may be in control of your life. Court involvement can be expensive and a hassle.

So, do yourself and your loved ones a favor by making an appointment with an estate planning lawyer today. Consider this: You don’t know what you don’t know, so getting some solid legal advice is very helpful.

©2017 Wittenburg Law Office, PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com

Talk to Your Intended Heirs

Have you and your children had “the talk” about your estate?

You may think that you have the best-crafted estate plan that you can have. However, if your children don’t learn about it until your death, and are surprised by it, you may unintentionally trigger resentment and fighting that my last throughout their lifetimes.

Fighting often costs money, which adds an additional burden.

For example, if you are giving one child the family farm and the other child the proceeds of a hefty life insurance policy, explain to your children now why you set your estate plan up that way. (As an extra precaution, it may be wise to repeat the explanation in a letter to your children that they’ll find when they read your Will after your death.)

Although the value of the life insurance proceeds and the family farm might have been roughly equal initially, the valuations could be considerably out of balance by the time of your death. And, the child who received the family farm may have preferred cash rather than a business to manage or sell. Or, maybe the child with the cash would have preferred the family farm. In the end, it’s your decision as to who gets what. But it’s helpful for your children to hear your reasoning.

Plans for significant charitable contributions could also be discussed with your children to manage their expectations.

Personal property – i.e. your stuff – is a leading cause of family disputes. It is the emotional value rather than monetary value that typically comes into play here. So, to the extent possible, it may be helpful to get some agreement during your lifetime as to what will happen to the most desired items of your stuff. The items that they most covet may be significantly different than what you think they’ll want.

It’s also helpful if your children have some knowledge about the amount and type of your assets so that they can help you shepherd those assets as you age and possibly need help. What assets do you have available to pay for any long-term care needs? Your children can best help you manage your assets to provide for long-term care if they are kept at least loosely in the loop as to what your financial picture looks like from year to year.

Sometimes some forthright family conversations go a long way towards keeping family harmony.

©2017 Wittenburg Law Office PLLC. All rights reserved.

Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney licensed to practice law in the state where you live. Wittenburg Law does not expressly or implicitly warrant the accuracy or reliability of any of the Blog’s contents. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305 952-649-9771 bonnie@bwittenburglaw.com www.bwittenburglaw.com

Joint Account with Child May Backfire

Studio portrait of a senior couple jokingly choking each other while looking at the camera.

Designating one of your children as the joint holder of your bank account may create problems.

It is typically better to use a Minnesota Durable Power of Attorney document to enable the child to write checks and to take other actions on your behalf during your senior years instead of creating the jointly held account.

Why? A jointly held account may place your carefully crafted estate plan in jeopardy. » Read more..

Estate Planning is About Life as much as Death

legacy - isolated word in vintage letterpress wood type

Thoughtful estate planning may help you build the size of your estate, rather than just focusing on what happens to your money and other possessions after you die.

A proper estate plan typically includes typical documents such as a Will and possibly a Trust, but there’s more. » Read more..

Loan or Gift?

Cash pileNasty family fights may erupt after your death if it’s not clear whether the money that you transferred to one of your children during your lifetime was a gift or a loan.

If it was a loan, the child borrower must repay the money to your estate. If it was a gift, no money is owed to your estate. » Read more..

Writing Your Own Obituary

Family TreeBy writing your own obituary, you spare your grieving family the burden of trying to write one within the few days between your death and your funeral or memorial service. You also influence what you want people to remember about you.

The obituary of Bill Maurer of Des Moines, Iowa captures the reader right from the beginning with this introduction: “Bill Maurer’s goal was to live to be 113. He didn’t make it.” » Read more..