Undoubtedly, you would want your loved ones (or favorite charitable organizations) to receive your assets in the event of your death. Unfortunately, Minnesota state law as well as federal tax law has a myriad of rules and regulations that would impact how your assets are to be distributed to these beneficiaries when you pass away without an estate plan. By seeking professional legal assistance, you can be assured that you will have made the proper arrangements for the legal transfer of your assets in the event of your death, thereby reducing court costs, attorney fees, and taxes for your beneficiaries.
Here are some common questions relative to whether or not an estate plan is necessary for you.
- What If I Become Legally Incapacitated? If you and/or your spouse become incapacitated due to unforeseen circumstances such as an accident or illness, it may be necessary for a judge to appoint a guardian or a conservator for you. The person appointed will have the power to act on your behalf to manage your financial affairs as well as make health care decisions for you. However, if you have the appropriate estate plan documents in place, you will be able to choose the person(s) you would like to hold those positions, all without court involvement, and without unnecessary legal expenses associated with the court action.
- Who Raises My Children? If you and your spouse both die before your children reach age 18, then a judge would appoint someone as the minor child’s legal “guardian” to make decisions on behalf of the child until they reach age 18. If you do not have the necessary estate plan documents in place identifying who you want to serve as guardian, then a judge would make that decision among the various friends or family members who might petition the court to be appointed to serve as the child’s guardian. The judge’s decision may not be consistent with who you would like to parent your minor children.
- Who Will Receive My Assets? Unless you specify otherwise, your spouse and children (including children from a previous relationship or marriage) would each be entitled to a certain percentage of your assets determined by the laws of intestacy (no Will). These percentages and people may or may not be consistent with your wishes. In addition, if you put an estate plan in place, you can identify your beneficiaries, including step-children, friends, other family members, or a favorite charity to receive a portion of your estate assets. In addition, you can designate certain date(s) on which they receive a certain percentage, or their entire share, depending on their needs. You alone can determine whether your child is mature enough at age 18 to receive their inheritance.
- What Taxes Are Paid Following My Death? Under current Minnesota law, if you and your spouse hold life insurance policies and other assets of more than $1.6 million, a Minnesota estate tax return would need to be filed following the death of the survivor of you and your spouse. However, if you and your spouse create an estate plan, it is possible to double the amount of assets that pass to your beneficiaries free of estate taxes.
Depending upon your circumstances, your estate planning documents may specify distributions that tum out to be similar to the state “default” rules of intestacy. But rather than taking any chances, you and your beneficiaries, will have the peace of mind that comes from knowing that you put a plan in place that meets your objectives. In our experience, the anxiety level among surviving family members is significantly lower following your death if they know that they just need to follow the directives in your estate plan and do not need to try to determine what you would have wanted.