Good Riddance, 2020.

The last few years we never bothered to make a late night of New Year's Eve. Being homebodies, we usually opted for a nice dinner and a couple of drinks, then early to bed. 

Not this year.

We plan to stay up past midnight, just to make damn sure 2020 is escorted out the door. We're not taking any chances. ;)

Here's a toast to a much better year in 2021. We have new a new President and Vice President stepping in just three weeks from now, and they have their work cut out for them. We have vaccines. I don't know what the new "normal" will look like, and we may never revert back to the old normal. But it will be vastly better than what we've been through this past year.

I hope that you, and everyone you care about, are secure, healthy and prosperous. It's going to be a rough few months ahead. But it WILL get better. Be safe.

Property That's Not Distributed By Your Will.

Perhaps you are considering (or already in the process of) having an attorney craft your new Will. You might think you'll be all set, right? But you might be surprised how much of your estate is not subject to the terms of your Will, and these assets should be carefully considered in your estate planning.

Your Will deals with what is called the probate estate. However, there are some assets that are not part of the probate estate, and are thus not distributed by your Will. This includes property owned in joint tenancy (with right of survivorship), and payable-on-death (POD) accounts such as life insurance, retirement accounts, and brokerage investments. Those are transferred or paid directly to your beneficiaries upon your death.

In addition, there are other types of property that can be removed from your probate estate. These include real property, bank accounts, and motor vehicles. By use of a Transfer-on-Death Deed (TODD), real property can be conveyed to a named beneficiary after your death. Similarly, POD designations can allow payment of your bank account funds to beneficiaries after your death and vehicle titles can be transferred to a beneficiary by setting up a Transfer-on-Death notice. Thus, these assets are no longer subject to the terms of your Will.

Pro tip: Because there are so many assets that will be distributed directly, it is important to make sure those beneficiary designations are up to date. It is wise to revisit your investment accounts, pensions, life insurance, and other payable-on-death instruments from time to time.

If the estate governed by your Will is valued at less than $75,000 with no real property (i.e., any real property is either in joint tenancy with another person who survives you, or you had registered it under a TODD), then your estate may avoid probate altogether. Avoiding probate can save your family a lot of time and money.

You may ask: If so many assets can be designated to transfer outside of probate, why have a Will in the first place? 

Having a valid Will is important to ensure that your property is distributed per your wishes, no matter the makeup of the estate assets. Your estate may still include a sizable residue comprising many items of value, and the Will directs to whom those assets will go. The Will names your beneficiaries and successor beneficiaries, and it nominates personal representatives and other fiduciaries such as guardians and conservators. Your Will can incorporate a distribution list of personal property items, which can be updated as you wish without changing the Will itself.

If you are considering your estate planning strategies, a qualified attorney can help you get started. When meeting with your attorney, it is important to discuss all of your assets, so that they can be best protected for your loved ones.

Thinking About A Transfer On Death Deed?

There are many benefits of a Transfer On Death Deed (TODD), and it's a tool often used to help keep estates out of probate, as it conveys real property directly to a beneficiary upon the death of the property owners.

While a TODD may allow your estate to avoid probate, it is not a substitute for a Will. A well-crafted Will can allow you to name beneficiaries for the remainder of your estate assets, give specific gifts to individuals and charities, nominate a personal representative (executor) to administer your estate, and nominate conservators and guardians to protect minors who are or might be beneficiaries.

But careful consideration must be given before executing a TODD. If you are contemplating using a TODD, you should ask yourself some questions:

1. Do your children want or need the property, or do they just want cash from the sale of the property? [Chances are, they will want the cash.]
2. Do you want the property to stay in the family? [See #1.]
   
3. Do all of your children get along with one another, especially when money is at stake?
4. Do all of your children and their spouses get along with one another?
5. Do all of your children have funds to pay their share of property taxes, assessments, association dues, property insurance, utilities, repairs and maintenance, and are all of your children willing to pay their share of those expenses?
6. Will your children be able to take time from their busy lives to deal with all those responsibilities listed in #5?
   
7. If one of your children wants to sell their share of the property, will the other child or children have the funds for a buyout?
8. If one of your children wants to sell their share of the property, will the other child or children, and their spouses, be willing to sign the listing agreement, purchase agreement, deed and affidavit of seller?
9. If one of your children wants to sell their share of the property, will the other child or children be comfortable co-owning real estate with someone outside of the family, possibly a stranger?
   
10. Are you aware that if one of your children dies, the spouse, children and/or grandchildren could inherit part of the property?
11. Are you aware that if one of your children gets divorced, the property could become part of the settlement?
12. Are you aware that your children's names will be in the chain of title and if one or more of them has financial troubles, owes back taxes or has judgments, creditors can place liens on the property and force a sale?
13. Are you aware that your children inherit the property along with mortgages, judgments and liens?

A Transfer On Death Deed is a useful tool in your estate plan. However, it is not a one-size-fits-all solution. In some situations, it can cause financial burdens and family conflict later on. No matter whether you choose to use a TODD or not, you still should have a valid Will. 

Discussing your estate planning needs with a qualified attorney can help you make the best choices for your loved ones' future.

What To Do When Your Estate Planning Attorney Retires.

What happens when your attorney retires, dies, or moves away? What happens to your Will if it's stored at the law firm? Like the old USPS ads, "Don't make your mail come looking for you," it's the same with your estate planning documents. Losing track of those documents could be disastrous for your family.

Here's a scenario of how things could go sideways:

After his wife passed away 20 years ago, Robert engaged a local attorney to have a new Will drafted. The attorney kept the original at his firm and gave a copy to Robert. A few years later Robert moved. Now Robert has died, leaving three children, none of whom could find Robert's original Will. The children looked up the attorney and discovered that he had retired a few years ago, his whereabouts unknown. The law firm had been closed and there was no one around who knew where the file went.

Unbeknownst to the children, when the attorney was getting ready to retire, he had made efforts to contact Robert in order to return his files, including the Will. But since Robert never gave the attorney his forwarding address, the attorney was unable to reach Robert. No one knew where the Will was or where the attorney kept his files.

Robert's children could not locate the original Will and only had a copy of "a Will." Two of the children believed that the copy was not of the latest Will and they contested it in court, believing that that there was a newer Will. But since the children did not have the original, executed document to submit to probate, they became embroiled in a protracted legal battle that spanned over a year, with court and attorney fees that consumed a large portion of the estate assets. The court ultimately did not honor the copy of the Will as Robert had intended, and applied the laws of intestacy instead.

This administrative dumpster fire was just a hypothetical, but similar cases have played out for real in many jurisdictions. There's a lot of blame to go around in the above scenario, but the obvious culprit is lack of communication by both the attorney and the client.

Robert's attorney should have more clearly stated his file retention policy (typically 6 years or more after closing the matter), and informed Robert of what happens when the attorney retires or dies. Many attorneys store client documents, and those attorneys often set up their calendars to trigger followup calls to their clients from time to time. Some attorneys make contingency plans to transfer custody of files to a partner after they have ended their law practice.

When retiring, if the attorney was faced with holding a client file and not having an address to send it to, he could have deposited the Will for safekeeping with the probate court in the county of Robert's last known address. Every county in Minnesota offers this service for a small fee. The children or personal representative would likely think to look there.

Robert dropped the ball, as well. He should have contacted his attorney to give his new mailing address.  Robert could also have asked for his documents to take with him before the move. In any case, 20 years is a long time to not update an estate plan. Robert should have talked to his attorney to make sure it still reflected his wishes and family structure, which also would have been an ideal time for the attorney to discuss file retention choices.

Steps to safeguarding your estate plan:

• Make sure that your attorney has your up-to-date contact information if you move or get new phone numbers or email addresses. 
• Keep your original estate planning documents in a secure location, such as a home safe or safe deposit box. Make sure your family members and personal representative have access to those documents. 
• If you choose to let your attorney take custody of the originals, set up a plan for your family members to obtain them when you become incapacitated or die. A Letter of Instruction is a good way to direct your children to the documents. Ask your attorney about the law firm's retention policies--how long do they store files, and what happens to files when the attorney retires or moves.
  
• Revisit your estate plan every few years or so, or if any major life changes occur, such as marital status, new children, new assets, moving, etc.
  

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Contact a qualified attorney to ensure that your estate plan still responds to your needs and the needs of your family. 

Where's My Inheritance?

You have been named as a beneficiary in the estate plan of a family member who has recently passed away. You may have been wondering how long it will take for you to receive your inheritance.

The short answer: It depends.

The wheels of estate administration turn slowly and there are a number of factors that affect how much time it will take before estate assets can be distributed to the beneficiaries. Distributing inheritances is among the last of the tasks of estate administration, as there are many other responsibilities that take priority. Only after all the probate requirements have been satisfied can the personal representative distribute the remaining assets (residue) to the beneficiaries.  In the world of estate administration, beneficiaries are at the back of the line, not the front.

If probate is not required (small estate value and no real property in the probate estate), the process may be resolved as quickly as within a few months. But if the estate is subject to the probate process, it may take a year or more for administration to be completed.

The personal representative must be appointed by the court and then must administer the estate: collecting and securing the estate property, determining asset values, contacting creditors and paying off all valid debts, filing and paying taxes, handling any disputes that may arise, and providing accountings to the court. All of this must be completed before any inheritances are distributed.

Other factors may complicate and lengthen the administration process. Dealing with the decedent's real property, business holdings, or out of state property, are just a few issues that can prolong the process. If anyone should contest the Will, that can drag out the administration, sometimes by several years.

Some estates may become insolvent, meaning that the assets are insufficient to pay debts and taxes, leaving nothing for the beneficiaries.

If you are counting on that inheritance from a family member, it is important to understand that the administration process takes time--a lot of time. Be patient, Grasshopper.

What's All This Self-Proved Wills Stuff, Anyway?

There are certain legal requirements for executing a valid Will in Minnesota. Your Will must be in writing, you must sign it in the presence of witnesses, and you must have testamentary capacity at the time you sign the document.

Executing a Will in Minnesota does not require a Notary Public. However, by taking the additional step of making your Will self-proved (which does require acknowledgement by a Notary), that helps establish that your Will was properly executed, in the event it is contested in court.

To make a Will self-proved, you and two witnesses acknowledge that you signed and executed the Will voluntarily, that you are at least 18 years of age, not under undue influence, and of sound mind. This is documented in a self-proved affidavit attached to your Will. You and the two witnesses sign the affidavit while in the presence of one another, and those signatures must then be notarized.

Under Minnesota law, a properly executed self-proved Will is automatically presumed by the probate court to be an authentic Will. That does not mean the Will is completely immune to challenge. In fact, no Will is certain to be air-tight. However, a self-proved Will is more difficult for an interested person to challenge in a Will contest. Since the proponent of a Will (usually the personal representative) bears the burden of proof in court to show due execution, having the Will self-proved adds evidentiary weight to defend it if contested.

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Crafting a Will that meets your wishes is an important tool to protect your assets for your loved ones. Talking to a qualified estate planning attorney is a great place to start.