A Basic Checklist For Avoiding Probate.

Many of the inquiries to my firm include questions about avoiding probate. While the probate process can be drawn out and sometimes expensive, it has a few advantages, such as requiring a fair appraisal of the estate value and giving some protection from creditors. As with any legal process, there are pros and cons. Nevertheless, many people wish to avoid probate in a desire to streamline their estate planning.

Generally, an estate is subject to probate, in the form of what is called the probate estate. The probate estate includes property not held in joint tenancy or that which has designated beneficiaries, such as life insurance policies. Probate is required unless certain assets, such as real property, are removed from the probate estate. For those who wish to avoid probate to the extent possible, there are a few ways to help do so. One way is to move certain assets into a trust.

Another way is reducing the value of the probate estate to below $75,000, for it to qualify as a "small estate," not subject to probate. That means eliminating some high-value assets from the probate estate:

• TOD/POD designations for as many financial instruments as possible. Bank accounts, investment funds, etc.
• Transfer on Death Deeds (TODD) for the home and vacation properties. This takes the properties out of the probate estate by transferring it to named beneficiaries.
• Transfer on Death (TOD) registration of motor vehicles and watercraft.
• Gifting money while you are still alive. The IRS allows you to give up to $15,000 per person per year without triggering the federal gift tax. (Married couples can give double that amount.) 
• Giving property to charities while you are still alive.
  

Even with a probate avoidance strategy, the above measures do not eliminate the need for a well-crafted Will. Distributing your remaining personal assets and nominating fiduciaries should not be left unplanned. If minor children are in your estate plan, you will want to nominate individuals to act in their legal interests. Without a valid Will, your assets will be distributed according to the laws of intestate succession, which may not reflect your wishes. Not having a Will could also give rise to family disputes after you have died.

Consulting a qualified Minnesota estate planning attorney is the first step in protecting your hard-earned assets for the future of your loved ones.

Probate: Pros And Cons.

A common topic in the estate planning world is the concept of "avoiding probate." While doing so is a good idea in many cases, probate isn't necessarily a bad thing. When considering your estate plan, it's important to look over the pros and cons of the probate process.

Advantages of probate:

• Oversight by the court. Probate is governed by a set of enforceable rules based on established law, to help make sure your assets go where they should. This is an important consideration if there may be conflict among your beneficiaries. 
• Determining debts owed by the estate. Probate requires the personal representative to identify and give notice to legitimate creditors, thus providing more certainty of the estate's financial liabilities.
• Transparency. The probate court requires that written notice be given to your beneficiaries to keep them apprised of what's happening in the estate administration.
• Fair appraisal of assets. The court can approve the appointment of independent appraisers so that property is correctly valued.
• Protection from dubious creditor claims. The court will enforce limits under Minnesota law as to how much time a creditor has to pursue a claim against your estate. The laws relating to creditor claims can be complicated and are fact-dependent. Having the court set the rules can be helpful.
• Probate can be informal for some estates. Minnesota allows an informal probate process that does not require court supervision. This may be appropriate for estates without uncertainties, legal disputes, or complex administrative requirements.

Disadvantages of probate:

• Probate can be expensive. There are court costs, attorney fees, personal representatives' fees, and other expenses. Still, probate expenses may end up being less than the cost of defending against a Will contest or unfounded creditor claim.
• Probate can be time-consuming. Administering an estate in probate may take a year or more, depending on the complexity of the estate and whether there are conflicts among beneficiaries or claims from creditors.
• Public knowledge. Probate is a public process, and as such, your Will becomes a matter of public record. Your estate plan is available for anyone to look up. This could give unknown creditors an opportunity to make claims against your estate.  

Regardless of whether your estate will be probated or not, having a valid Will is an important tool for your estate plan. Consulting a qualified Minnesota estate planning attorney is the first step in protecting your hard-earned assets for the future of your loved ones.

Objectives A Good Estate Planning Attorney Should Aim For...

...And a prospective client should consider:

• Maximize the value of assets for the next generation.
• Minimize taxes and expenses.
• Avoid probate, if possible (or desired).
• Plan for incapacity issues.
• Design a plan that helps limit family conflict.
• Give the client peace of mind.

These are a few goals to reflect on when evaluating a practitioner. Discussing your estate planning needs with a qualified attorney and asking good questions can help you make the best choices for your loved ones' future.

If You Died Tomorrow, Would You Leave Behind Conflict And Chaos?

You don't have an estate plan right now.

Maybe you have thought about it, and the fact you are here reading this article suggests that you are at least giving it some consideration. Thinking about what will happen to your assets after you die is not an easy subject to delve into, and not easy to discuss with family.

Yet my question stands. What would happen if you died tomorrow?

It's a heady question. Some people are content to not have a Will. To not deal with it. To simply let the chips fall where they may. They may believe that the courts will work it out, or that their descendants will "do the right thing." Let's look at how those two possibilities may play out.

Will the courts work it out?

If you don't have a valid Will, that is just what will happen--the courts will work it out. Without your input. If you die intestate, your estate will need to be probated, which is to say that the court will call the shots in settling your estate. The probate court will appoint a personal representative to manage the process. The court-appointed PR may be a family member, maybe not. If minor children are involved, the court will appoint conservators to manage their inheritances, and may appoint a guardian to protect the persons themselves. 

Those appointed persons may or may not be people you wished to serve. The court will apply Minnesota's laws of intestacy in determining the distribution of your assets. How this goes may or may not be what you had wanted. 

The Minnesota intestacy laws were designed by legislators to make the best attempt at being fair and equitable. A fail-safe, if you will. But essentially blunt tools. As you can see, not having a valid Will throws a lot of "may or may nots" into the equation. Without a valid Will, you won't be able to provide guidance.

Will your children do the right thing?

As a parent, you may believe that your kids will make the right choices, will be fair, and will get along. But losing a loved one is stressful, and grief can cloud one's vision. Children can--and often do--act much differently after the death of a parent. They all have a legal and financial interest in your estate. And stress is a big influencer. Competition and quarreling are more common than you might think, even among otherwise well-behaved siblings. Without your wise guidance, they can be drawn to infighting, perhaps leading to drawn-out court battles. Again, you won't be able to provide guidance.

If you don't have a plan for your estate, all of that is left on the table for the court to sort out.

Don't leave open that chance for conflict and chaos. You worked hard to build your estate assets--don't leave it to chance. Talk to a qualified estate planning attorney and set a plan in motion to protect your assets and the financial future of your loved ones.