TRUST AND ESTATE
No one likes to think about their mortality.
However, there are certain things that are inevitable in life
and death is one of them. Ideally, however, estate
planning starts long before death occurs. Each person may
plan their asset transfers through trusts, gifting, real estate
transfers, life estates and other estate planning methods to:
- Reduce Taxes;
- Reduce the costs of Probate Administration;
- Avoid the loss of assets based on medical assistance and
nursing home care.
An estate consists of each individuals property, which may
include possessions, bank accounts, real estate, furniture,
automobiles, stocks, bonds, life insurance policies, retirement
funds, pensions, and death benefits. If planned well, an
estate can often be passed on before death or shortly after
death with minimal loss based on administrative fees and taxes.
A will is the most common document used to specify how an estate
should be handled after death. A beneficiary or heir is a person
who is designated to receive property under a will (or trust).
There are many types of Wills. A will can be as simple or
as elaborate as needed given the size of the estate and the
needs of the person seeking to transfer their assets.
there are many kinds of instructions that can be included in a
trust or a Will. A will can describe who should receive
specific items of furniture, artwork, or jewelry. A will can
name a guardian who will take care of minor children should
there be no surviving parent. A will can disinherit a
child if the testator does not want the child to receive any
part of the estate. A Will may include trust provisions and
contingencies that a beneficiary must accomplish certain thing
or reach certain thresholds before having a claim to assets or
proceeds. For example a Will may indicate a child will receive a
certain part of the assets (the corpus) upon completion of
college, The options for what a person can do with a
will are extremely broad. As a result, an experienced estate
planning attorney is necessary to ensure that the testator's
wishes can be realized.
Minnesota Requirements for a Valid Will
Under Minnesota law, a person must be at least 18 years
old in order to make a legal will. In addition, the person
must be of sound mind. generally, that means that the person
must have no cognitive disabilities that significantly
impair him or her from understanding the full nature of the
document that they sign.
Second, a Minnesota will must be in writing. It must
also be witnessed and signed by at least two other people.
This is what is called a self proving Will. If the
Minnesota Will is handwritten, it is often called a holographic
will. A holographic Will can be determined as valid in Minnesota
if it is witnessed and signed by two people.
Each person making a Will must sign it. .
However, if that person is determined to be unable to sign
through illiteracy or some incapacitation, it can be
demonstrated that they knew what they were doing when they
directed an agent, another person, ideally a person who
has no interest in the Will, to sign for them in the
presence of witnesses.
A will is valid until it is revoked or superseded by a new
will. A Will can always be changed later by what is
called a Codicil.
As previously stated, a more extensive estate may require
documents other than a will, such as a trust agreement, to
ensure that all of a person's wishes are carried out.
Executors or Personal Representatives
A will appoints an individual to execute the Will. That
person is often called an executor or a personal representative.
Ideally, the executor or personal representative will be a
friend or family member. That person should always be made fully
aware of his or her duties before the testator dies. It is also
advisable to let them know where the Will can be located.
Often a copy of the Will is provided to them in a sealed
Once the executor passes away, they are referred to in legal
documents as a decedent. An executor or personal
representative is then responsible for collecting and managing
the decedent's assets, collecting any money owed at the time of
death, selling any assets, if necessary, to pay estate taxes or
expenses, and filing all required tax returns.
If a person does not name a personal representative in his or
her will, state law establishes the order in which a probate
court appoints relatives to act as personal representative.
Appointing a Guardian for Children
One of the benefits of a Will is the ability to appoint a
guardian for any minor children if there is no surviving parent.
The testator may name a guardian an alternate guardians if the
first elects not to exercise that duty or in the event that they
predecease the testator.
Powers of Attorney
drafting a Will should also consider executing a durable Power
of Attorney in the event that the become incapacitated, unable
to handle their own affairs, before they pass away. This
is done by preparing a document called a durable power of
attorney. This document grants another person full legal
authority to act on their behalf should they become unable to
handle their personal and financial affairs. Without it, the
Court may have to become involved through costly legal
proceedings in order to appoint a person to handle all legal
Dying Without a Will
A person who dies without a Will loses the ability to
distribute their estate after their death. This can create
confusing and often costly legal proceedings that may eat up the
state value. It may mean paying more administrative fees,
legal fees and taxes in a time consuming process.
When a decedent leaves no will or other comparable estate
planning tool, it is called dying intestate. State statutes then
dictate how an state is divided which is determined as part of a
court proceeding called a probate proceeding. In such a
proceeding, the state's, intestacy laws determine who will
receive what portion of the assets.
A trust is another estate planning tool. There are different
types of trusts. There are testamentary trusts, those trusts
created after a person dies as part of a Will, and living
trusts, a trust instrument created to transfer assets while the
individual is still alive.
In a typical trust arrangement, a person or persons hold
legal title to property for another person. They are called
trustees. The assets are held for the benefit of beneficiaries,
those receiving the benefit of the trust.
In a living trust, you may retain control over the property
held in the trust. A living trust may allow a person to
transfer assets and reduce taxes as well as set up long term
Generally, to create a living trust a person should have an
estate with a value of $100,000 or more. Estate of $100,00
or more are subject to probate proceedings in Minnesota which
can cost anywhere from 2% - 4% of the estate's value
in court costs and legal fees.
An advanced living trust for larger estates may be structured
to accommodate complex family situations which may include
remarried spouses with children from serial relationships.
Living trusts also avoid probate and are completely private.
In Minnesota, once established, almost anything maybe placed
in a living trust. In "finding" the trust, you essentially
change the name or title on existing assets to the name of the
In an A-B Trust, each of the two separate trusts receives its own
$2 million tax exemption, meaning a total of $4 million is sheltered
from estate taxes.