13 Estate Planning Myths Debunked.

In the world of estate planning, urban legends abound. Here are a few:

✦ Only high net worth estates need a plan. If you want to ensure that your family members receive your property according to your wishes, you need an estate plan. This should include a Will. Even if your estate size is modest, your loved ones will some day benefit from receiving your assets. In fact, if you have a spouse or children, a good estate plan is critical for protecting their future financial needs.

✦ I don't need a Will until I'm older. This is similar to the above-mentioned myth. You may be young and just starting your career. You might rent and not have many possessions or own real property at this time. But your assets will grow, as will your income and family. You might be putting money into accounts to plan for the future. If you have young children, you should think about protecting them financially in the event something happens. Plus, you don't want your loved ones trying to sort out your assets later.

✦ All I need is a simple Will for my estate planning. First, there is no "simple" Will. Your Will should be sophisticated enough to reasonably protect your assets while being responsive to your particular needs. While there is no "airtight" Will that is immune to contest, a well-crafted Will should be sufficiently robust to protect your assets and provide peace of mind. And yes, you should have one if you don't already.

However, a Will is only one tool to have in your estate planning toolbox. There are two others to consider, instruments that can help protect your interests while you are still alive.

First, a Durable Power of Attorney, to appoint someone you trust to manage your financial affairs in the event you are unable to do so yourself. And second, a Health Care Directive, to allow you to specify the kinds of medical treatment you wish to receive in the event of serious illness or incapacity. The Health Care Directive can be used to appoint one or more health care agents, who will be able to make those treatment decisions on your behalf.

✦ Once I have a Will, I'm set for life. A well-designed Will can anticipate some minor changes, but more significant life events warrant revisiting the Will. Getting married/divorced, having new children, grandchildren, buying or selling real property, are some of the life events that should trigger having your existing Will reexamined. You may only need to get a codicil (amendment) to the existing Will, or you may need to have an entirely new Will drafted. See a qualified estate planning attorney to find out the best course of action to keep your estate plan up to date.

✦ To disinherit someone, you must leave a dollar to them in your Will. This one is silly, but it stubbornly persists.  

In most cases you already have the legal right to disinherit someone (i.e., a child or grandchild). Leaving a dollar is unnecessary.

But if you don't have the legal right to disinherit someone (i.e., your spouse), leaving a dollar is completely irrelevant to the fact that your spouse has property rights and still receives a share of your estate. You cannot disinherit a spouse by means of a Will, no matter what language you put in it.

And if you're thinking you want to disinherit your spouse, you're probably in more need of a family law attorney.

✦ I can just write my own Will and sign it myself. This is called a holographic Will, and these handwritten Wills are recognized as valid in several states. However, Minnesota is not one of those states, and holographic Wills in this state will be disregarded by the probate courts. In addition, a holographic Will made in another state that does recognize them will still not be recognized in Minnesota. Your estate will be treated as intestate (as if the Will never existed) and your property will be divided per the laws of intestate succession.

There are some formalities required to properly execute a Will. Seeking the assistance of an estate planning attorney will help to ensure that your Will is well-crafted to meet your needs.

✦ An estate plan won't protect my digital assets. This is no longer true, as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has been adopted into law by almost every state, including Minnesota in 2016. Digital assets, such as documents, images, audio, video, that are stored online or on computer equipment, can be accessed and managed by the agents you have named in your Will or Power of Attorney.

✦ I don't need a Will if I'm using a Transfer on Death Deed. You should seriously consider having a valid Will, even if you have a TODD and the remainder of your estate is too small to require probate. Dying without a Will (intestacy), creates some uncertainties and your remaining assets may not end up being distributed the way you envisioned. A well-crafted Will can allow you to direct the distribution of your estate the way you want it. If you wish to give assets in unequal shares to family members, disinherit someone, give property to a non-family member, or donate to a charity, the laws of intestate succession have no provisions to allow for that. Those wishes will go unheeded by the court.

A Will also enables you to nominate the personal representative of your choice. With an intestate estate, the probate court appoints a PR without any input from you.

✦ Probate is something to be avoided at all costs. This is something touted all over the internet, and you might see financial "gurus" on TV advocating this idea. However, the probate process is more streamlined that you may think, and there are some advantages to it.

Probate can help ensure that the wishes stated in your Will are followed through. It limits the time creditors can make claims, allows a means for fair analysis of estate value, recognizes guardians for minor children, and duly appoints the personal representative. The court often requires an accounting of the estate assets, removing doubt from the minds of your heirs.

Of course, there are some disadvantages to probate: Fees, delays in transfer of assets, and public disclosure of the probate process are a few things to consider.

✦ Taxes on my estate will be onerous. Estate taxes are payed out of the estate before assets are distributed to beneficiaries. Inheritance taxes are payed by the beneficiaries on assets they receive from an estate. There is no federal or Minnesota inheritance tax. Only a few other states collect inheritance taxes. However, both the IRS and Minnesota collect estate taxes.

Federal estate taxes top out at 40%, but there is an exemption of $11.58 million per person. Minnesota's estate tax rate caps at 16%, and it allows a $3 million exemption per person. The vast majority of estates are valued below those exemptions, and as such would not be subject to estate taxes.

If your estate is valued above an exemption, it would be wise to sit down with a financial planner or tax advisor to determine what options are available.

✦ All of my property can be disposed in my Will. Your Will only disposes "probate" property that is in your name alone, and does not have named beneficiaries. Real property held in joint tenancy with right of survivorship (e.g. by two spouses) will transfer to the surviving joint tenant without probate when one of the tenants dies.

Many assets are transferred directly to named beneficiaries upon your death and are not transferred by a Will. These include life insurance policies, investment accounts, retirement accounts, and bank assets with payable on death (POD) designations. Real property can be transferred similarly, by means of a transfer on death deed (TODD).

✦ I need a new Will whenever my assets change. While it is wise to revisit your estate plan any time you have made major changes, such as buying/selling real property, most of your personal assets (and who you want to give them to) can be incorporated into your Will by means of a separate list. There's no need to amend or replace your Will whenever you buy a new car or some jewelry.

Minnesota law allows you to make an informal list of tangible personal property items, and that list is reference in a paragraph in your Will. As you acquire and get rid of personal items, you are free to amend that list as often as you like, without the need to change the Will. The list may be as simple as a sheet or two of notebook paper, but it must be written, signed and dated by you. The list cannot include money, coin collections or property used in your trade or business. 

✦ Getting an estate plan is too complicated. While there is no such thing as a "simple" Will, and the thought of drafting a Will, Power of Attorney and Health Care Directive may be intimidating, a qualified estate planning attorney can help you sort through the process. Some attorneys offer free or low-cost initial consultations to answer your preliminary questions and help you get started.

Clickbait "Legal Articles" Written by Unqualified Authors: Empty Calories.

Consumers often search online for some basic information before consulting an attorney. It's part of being a prudent consumer--looking for useful information, trying to determine what questions need to be addressed, and hopefully finding something that will point their feet in the right direction, to the right people. 

Others search the internet for information in lieu of consulting an attorney. This is where things get dicey.

As is the case with any subject matter online, there's a lot of information that is incomplete at best, and erroneous and potentially harmful at worst. Relying on bad legal information can cost you dearly later on.

The internet is rife with junk articles, peppered with generalizations and errors, thin on content, and not a lot of substance. Like wads of cotton candy hawked at the state fair--colorful, enticing and sweet-tasting, but not much you can sink your teeth into.

Those glossy, cute articles are meant to touch lightly on a subject and toss a few factoids to the reader. They are designed to draw in visitors from the search engines to run up their per-click ad revenue meter. Unoriginal articles yielding a nugget or two of dubious information for the unsuspecting visitor. Empty calories.

You've seen them: "Winning strategies for bankruptcy," "How to beat a DUI," or "Don't let the government take your estate." The sensationalized title may grab your attention, but the accompanying story frames the subject matter in an overly-simplistic, superficial view. Pure fluff.

With legal information it's never simple. How do you know you're getting the real deal from some online article?

Look at the byline. Was the piece written by a knowledgeable practitioner in your state, or some person whose background is outside the field of expertise being presented? Does the writer cite (with links) authoritative, up-to-date primary legal sources to back up their position? Does the author state their professional credentials and their areas of proficiency, and are those credentials on point? Or is it merely listed as some staff writer? That "legal" or "personal financial" writer might be nothing more than a fledgling journalism student or random nobody trying to make a name for himself/herself. The Dunning-Kruger effect is pervasive, and the internet is filled with people who purport to know things they aren't qualified to speak on.

Stick with information from attorneys and law firms practicing in your jurisdiction, who know the applicable law and how it's applied. Seek out articles published by law professors. Government sources are often a good source of helpful legal pointers. Many legal topics of interest to consumers are effectively addressed by the state Attorney General's site. Keep in mind that these online sources are not dispensing legal advice; but rather, giving some basic tips to steer you in the right direction.

Contact your state or local bar association to find qualified attorneys to reach out to. Many of those attorneys will give a short initial consultation for free or at a reduced fee.

Do your research, read up with a critical eye. But before you draw any conclusions, talk to a qualified legal professional.

Safe Deposit Boxes: Make Sure Someone Else Has Access.

Whenever I wrap up representation of a client and the documents are signed, the client heads home with the originals. I don't customarily store documents and the client is solely responsible for the safekeeping of them. I do give clients a few ideas on how best to store the Wills and Power of Attorney documents.

A home safe, lock box or a locking file cabinet is usually fine for most people. Others may prefer to keep them in a safe deposit box.

The question is: Should you store your estate planning instruments, such as a Will, in a safe deposit box? Keeping valuables in a home safe or lock box, while more easily accessible, isn't guaranteed to be secure, due to the possibility of theft, fire, or water damage. A safe deposit box is kept in a secure area of a bank, and its access requires two people--the lessee and a bank employee--to open it.

However, it's important to note that the FDIC does not protect the contents of safe deposit boxes in the event something happens to it. Once in a great while, stuff inside a safe deposit box disappears.

If you do decide to rent a safe deposit box with the intention of storing estate planning documents, it is a very good idea to have another person registered as a joint lessee of the box. This is usually done by you and the joint lessee signing a signature card when the account is set up. The bank only allows those lessees to access the box and they will usually require them to sign in each time they access it.

Be aware that the joint lessee will have access to the safe deposit box at any time, so this should be a person you trust. Some banks may allow designation of a successor upon your death, preventing the other person's access prior to that time.

If the safe deposit box is registered solely in your name, the bank's rental agreement may state that only the personal representative of your estate may access it after you die. Here's the conundrum: the person nominated in your Will to be the personal representative must be officially appointed as the personal representative by the probate court. That can't happen until the Will is found and reviewed by the court, but the Will is in the box.

In this case, the personal representative of the estate or an heir can bring a death certificate to the bank and sign an Affidavit in Support of Search stating that the person believes the safe deposit box may contain a Will. The bank will open the box and examine the contents in the presence of the personal representative or heir. If a Will is found in the box, the bank employee will make a copy, then deliver the original Will to the probate court.

In the case of a "small estate" with assets less than $75,000 (and includes no real property), an Affidavit for Collection of Personal Property can be used. This affidavit can be used by a blood relative of the decedent, or a person with a "legal interest" in the property. The catch is that this affidavit cannot be used until at least 30 days after the date of death.

Make sure your family knows you have a safe deposit box, and that your estate planning documents are inside. If the key to the box cannot be located by your heirs or personal representative, the bank may have to drill the lock open, and the contents will be inventoried.

Health Care Directives and safe deposit boxes don't go together.

If you have executed a Minnesota Health Care Directive, give copies of it to your doctors and other health care providers as soon as you can. Many providers scan it in so that doctors and nurses can see it in your medical file. Make sure your health care agents have a copy, too. NEVER store your Health Care Directive in a safe deposit box. If something happens to you that triggers the Health Care Directive, and the document is not on file where you are being treated, your health care agent may not be able to get to the bank to access the document. Your doctors may need guidance quickly and the bank may be closed or far away.

It's a similar issue for documents dealing with your funeral arrangements, burial, cremation, etc., as those documents will be needed soon after your death. It's best to have them readily accessible to family members, i.e., kept someplace other than in a safe deposit box. Make sure your family members know where those are stored. Perhaps give copies to the funeral home or relatives who will likely be involved in making those arrangements.