Upcoming CLE: U.S. Supreme Court Review 2024.

Mitchell Hamline School of Law is hosting its annual U.S. Supreme Court Review, Tuesday, October 22, 2024, from 5:00 to 6:30 PM, with a reception to follow. This program will be held in person in the Mitchell Hamline auditorium and is hosted by Professor Mike Steenson and Professor Mehmet Konar-Steenberg. With this year's SCOTUS activity, this should be an interesting and very thought-provoking discussion. The program is pending for 1.5 CLE credits.

Register here.

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Some other upcoming Mitchell Hamline CLEs:

Mastering Standardized Field Sobriety Tests: A Legal And Practicable Perspective (virtual). Thursday, September 26, 2024, 12:00 PM - 1:00 PM.

Ramsey County Bar Association "Does Democracy Matter?" Tuesday, October 1, 2024, 6:00 PM - 8:00 PM, in the Mitchell Hamline auditorium. Registration required by September 27, 2024.

The Federal Estate Tax Exemptions Will Be Changing.

Federal estate tax code allows for an exemption for estate taxes due after a person's death. This exemption has been increasing annually over the past several years, and is currently $13.61 million for an individual and $27.22 million for a married couple. This exemption is the amount the federal government allows each person to pass to non-charitable and non-spouse heirs before any federal estate tax is owed.

Beginning on January 1, 2026, the federal exemption for estate taxes will be reduced. This change is not due to recent law changes, as it was built into current law. The law included a sunset provision that would roll back the exemption after the end of 2025. After the law's sunset, we can expect these exemptions to be cut in half in 2026, to approximately $7 million for an individual's estate and $14 million for the estate of a married couple. It is possible that Congress could act on this before 2026, but it appears unlikely, and one should not count on that.

Note that Minnesota's estate tax exemption stands at $3 million for an individual and $6 million for a married couple. At this time, there is no Minnesota tax law provision changing those exemption amounts.

While exact numbers for the 2025 exemption have yet to be announced (it's based on inflation), it is estimated that next year's estate tax exemption will be approximately $14 million per couple. What this means is that if your estate is valued at greater than $7 million or $14 million for a couple, you may need to make some plans before the end of 2025.

There are a number of ways you can shelter some of your estate assets while you are still alive. For example, you can set up trusts, give to charities, or give gifts to people. It should be noted that there are no plans at this time for the federal government to reduce the annual gift tax exclusion, which is $18,000 per person gifted per year.

The impact of these changes can be complicated, and can vary based on many factors. The sunset deadline is approaching and will be here before you know it. It would be wise to seek the advice of a qualified estate planning attorney and a qualified financial planner.

Simultaneous Deaths Of Both Spouses.

The chance that two spouses would die at the same time is very slim. Nevertheless, it is a non-zero risk and, painful as it may be to think about it, such a tragic situation should be considered when making your estate plans.

Under the common law, if two spouses died close to the same time, it had to be determined by medical evidence which person actually died first, even if the deaths were only a few moments apart. The estate of the spouse that died first would pass to the second spouse, and then the second spouse's estate (which is combined with the first spouse's estate) would pass to the second spouse's heirs. This scenario required two probates!

However, it is often impractical or even impossible to determine the order of two deaths with any certainty.

Enter the revised Uniform Simultaneous Death Act, which Minnesota incorporated into its Probate Code in the 1990s. Under this Act, if two spouses die within 120 hours of one another, and there is no Will, the law treats each spouse as having predeceased the other. Therefore, the law views it as a simultaneous death, even if the two spouses died up to 120 hours apart. Then, the probate court applies the laws of intestacy to determine which beneficiaries will share in the two spouses' combined estate.

Having a poorly-drafted Will isn't always helpful, and in fact can complicate things. If each spouse's Will names the other spouse as sole beneficiary, without clearly naming contingent beneficiaries, problems can arise. The Will does not give instructions as to how the combined estate is divided by the couple's descendants, and the probate court must apply the laws of intestacy to distribute estate assets.

Here's where things can get even more complicated.

Suppose the couple have a blended family, i.e., each spouse has children from previous relationships. Each spouse has a Will, favoring their respective children. Perhaps these Wills were executed by each spouse before they were married, and they never executed new Wills after they were married. If both spouses are deemed to have died simultaneously under the law, whose children receive shares of the estate? The outcome is uncertain.

For example:

Adam and Betty get married. Adam has a son from a previous relationship, and Betty has two daughters. Adam and Betty each have Wills executed before they got married, and they never got around to getting new Wills.

Then, a terrible tragedy strikes. Betty dies right away, but Adam lives 3 more days. Under the law, the probate court treats Adam as having died before Betty, and Betty as having died before Adam. Simultaneous deaths.

Whose children receive shares of Adam and Betty's combined estate? Again, an uncertain outcome. There may also be uncertainty for any gifts to individuals outside the family, charitable donations, etc., if the two spouses' Wills differ on those issues.

To prevent that, Adam and Betty could have had Wills drafted that names one of them to have survived the other, and the Will of the presumed "surviving" spouse would govern as to contingent beneficiaries. There may be some tax benefit in doing this, as well.

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If you do not have an estate plan, or your existing plan is dated or you're just not sure, it would be wise to seek a qualified Minnesota estate planning attorney.

Why Do People Put Off Getting An Estate Plan?

I hear many reasons--excuses, really--why people are hesitant to having an estate plan drafted. Here are a few common objections:

 

"I don't need one now, I'm too young."

A well-crafted estate plan is not just for older people. Unfortunately, people can die at any time. It would be wise to have a valid estate plan in place, regardless of your age. 

"I'll deal with it later."

Sure, life's hectic, with careers and family responsibilities. However, it doesn't take a lot of time to have a qualified practitioner craft an estate plan that helps ensure your assets go to those you want to receive them.

"I don't have enough assets for an estate plan to matter."

Even small estates can and should be protected. Sentimental or family heirlooms are important, even if their monetary value isn't great. Even if you don't own real estate or have large monetary assets, you still should consider protecting the assets you do have and make sure your loved ones would receive them if something happened to you.

Keep in mind that many disagreements happen over modest estates.

 

"My kids will just sort things out when I'm gone."

If you don't have a valid will, Minnesota intestacy law decides where your assets go after you die. The law generally follows "next of kin," but that may not be what you want. Maybe you wish to give assets to children unequally, or perhaps leave out one who is estranged or has addiction issues. Intestacy doesn't factor that in. Want to leave something to a close friend? Sorry, that cannot be done without a valid estate plan. Would you like to donate to a charity? Without a valid estate plan that won't happen.

Another issue to consider is who will be responsible for administering your estate when you're gone. Without an estate plan to nominate a person or persons to be the Personal Representative of your estate, it may be up to the probate court to make that decision. The person they appoint may not be one you would choose--perhaps even a total stranger.

 

"It costs too much." 

A basic will is a very powerful instrument and can be very affordable, especially when you consider the time and expense your loved ones would endure if they have to sort through your assets, deal with the probate court, etc. (See intestacy, above)

"I'm not comfortable talking about death-related issues."

It's never easy. Talking about your death can be unnerving. Wouldn't you rather solve this issue now and not have to worry about it later? Having an estate plan in place can bring peace of mind.

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Protecting your hard-earned assets means having confidence in knowing that those you care about will receive them. There's no time like the present. Contact a qualified Minnesota estate planning attorney to find out how to get your estate plan started.

 

 

"If I Die Without A Will, Is My Ex-Spouse Entitled To Any Of My Estate Assets?"

The short answer: No.

If you die intestate (leaving no valid Will), Minnesota's intestacy laws exclude ex-spouses. Therefore, an ex-spouse is not entitled to your estate assets. Instead, your assets would be distributed based on the state's intestate succession law: to current spouse, children, parents, siblings, etc. Next of kin.

However, if your divorce decree requires division of marital property and you still have any of that property when you die, your ex would have legal claim based on the decree.

For example: if the decree requires dividing proceeds from selling the house, but you die before the sale is completed, your ex-spouse is entitled to the share of the property, per the terms of the divorce decree. Thus, your ex could make a claim against your estate in probate court. 

As you can see, these types of scenarios are governed by the terms in the divorce decree.

Another issue would arise if your divorce is not final at the time of your death. You would still be legally married at that time, and your spouse would be entitled to at least a spousal elective share under Minnesota law. And if you have no valid Will, guess what? The intestacy laws put your spouse at the head of the line for inheriting your estate assets.

If you are divorced and you haven't already done so, it is a good idea to review your financial instruments that have named beneficiaries, such as insurance policies, retirement plans, investments, and assets with payable-on-death provisions such as bank accounts and real estate. Your ex-spouse may still be named as a beneficiary and you may wish to change that. Fortunately, Minnesota law automatically revokes the beneficiary designation of an ex-spouse, so revisiting those instruments is mainly a matter of naming new beneficiaries.

Finally, if you have Power of Attorney or a Health Care Directive that names your ex-spouse as a fiduciary, you may wish to review those documents. Minnesota law also automatically revokes the fiduciary status of an ex-spouse, so revisiting those allows you to choose new fiduciaries.

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If you are recently divorced or are currently in the divorce process, it would be a good idea to seek out a qualified attorney to discuss your estate planning needs. Your divorce attorney should have some knowledge of how your estate could be impacted by divorce, and they may be able to help with some of those concerns. However, it would be wise to seek separate estate planning counsel to ensure all of your estate-related issues are addressed and up-to-date.