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 – rather than the State — to nominate a guardian.
- 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 phase in 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: A key way to capture the exemption from Minnesota estate taxes for each spouse — $1.2 million for persons dying in 2014 — is by establishing Trusts. Otherwise, only the exemption for the second spouse to die is captured. (The Minnesota exemption is set to increase by $200,000 each year until it reaches a maximum exemption of $2 million in 2018.) Note that life insurance proceeds held in your name are counted as part of your estate for purposes of figuring the estate tax, even though you personally never got the cash!
- 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 deals with this potential situation.
- If there’s a fight over family keepsakes, they may be sold, rather than divided among family members. Solution: Minnesota law allows you to add a “separate writing” to your Will to direct whom is to receive each family keepsake that you list.
- Without an estate plan, your grieving heirs may face a heavier and more contentious burden in trying to administer your estate.
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