Does Your Estate Plan Need a Tune Up?

Your estate plan — like your car — needs a tune-up occasionally.

If you don’t get that tune-up, either your estate planning goals may not be met, and/or you may be paying hundreds — if not thousands — more for legal services and/or other costs than would have been the case if you had timely asked a lawyer to review your estate plan and suggest necessary adjustments based on current laws and your current goals.

For example, one of the reasons that some Minnesotans establish a Revocable Living Trust is in an effort to avoid a probate action when they die. Probate requires Court involvement; trust administration typically does not.

However, as further explained in the paragraphs that follow, if you don’t keep your estate plan updated, your heirs may face the expense of both a probate action in Court and a trust administration outside of Court! When both are needed, the cost of settling your estate may be significantly higher.

In Minnesota, probate may not be as expensive and time-consuming as the process is in certain other states, but time and money are involved nonetheless, so Minnesotans often wish to avoid probate.

Minnesotans may use a Revocable Living Trust and/or other techniques as tools to avoid probate.

These tools work because only “probate assets” (and real estate if owned solely by the deceased) require Probate Court involvement in Minnesota. Stated another way, probate is required in Minnesota if the deceased held real estate is his or her name alone at death, or had “probate assets” of $50,000 or more in his or her name alone at death.

Assets that were held jointly by the deceased with another person, or held in a Revocable Living Trust (or certain other types of trusts), are not considered “probate assets” under Minnesota law. Similarly, assets that have a beneficiary designation or that are held as a payable-on-death (P.O.D.) or transfer-on-death (T.O.D.) account also avoid probate.

Your estate plan, including the titling of your assets and designation of beneficiaries may have been perfect when it was first established.

However, as the years go by, your once carefully crafted estate plan may fail to meet your goals due to changes in laws and in your goals. Moreover, your actions over the years in opening up new accounts or by moving assets around may have inadvertently created “probate assets” out of assets that you once intended to be non-probate assets.

A review of your estate plan by an estate planning lawyer may help you make any necessary adjustments that you now need to meet your current goals and to lessen the expenses paid to settle your affairs after you die.

Note that estate tax laws have changed dramatically in the last decade. Consequently, the provisions that were well thought-out in the Revocable Living Trust drafted for you years ago may not be suitable for you today. It’s to your advantage to get your Revocable Living Trust reviewed, and possibly changed, while your Trust is still revocable. It becomes irrevocable, i.e. unchangeable, when mental incapacity or death strikes. Once mental incapacity occurs, it’s also too late to make changes to your Will, Health Care Directive and Power of Attorney documents.

As a rule-of-thumb, it’s probably best to review your estate plan every five years to see if there are any changes that should be made or that you desire to have made.

Some of the specific triggers for a review are as follows:

  • Tax laws have changed.
  • You are moving to another state.
  • You are spending summers in one state and winters in another.
  • You are getting married or divorced.
  • You are getting married for the second time.
  • Your spouse has died or is experiencing incapacity issues.
  • Your own potential for age-related mental incapacity issues looms larger.
  • Your physical health outlook has changed.
  • You are retiring.
  • You have received an inheritance.
  • You have won the lottery.
  • Your income potential has changed significantly.
  • The value of your assets has changed significantly.
  • Your desires for the distribution of your assets at death have changed.
  • You have changed your mind about who should be your personal representative (Will), trustee (Trust), health care agent (Health Care Directive) or attorney-in-fact (Durable Power of Attorney).
  • Your elderly parents or adult children are moving in with you.
  • You want to name or change beneficiaries, or name additional beneficiaries, such as charitable organizations.
  • You have a child or grandchild with special needs.
  • You have started a business.
  • You need to develop a succession plan for your business.

A periodic review of your estate plan can reveal issues that need to be resolved to give you peace of mind that everything is in order and that the burden on your heirs is limited.

©2015 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