Estate Planning Attorney Located in Roseville and Serving Hennepin County, Ramsey County, and the Twin Cities Metro Area
A basic estate plan should include the following documents:
- Advance Medical Directive (Healthcare directive)
- General Durable Power of Attorney
- Last Will and Testament and/or Revocable Living Trust
For individuals who have significant wealth, additional estate planning documents and tools can be incorporated into the basic estate plan, such as an Irrevocable Life Insurance Trust, a Charitable Trust, and/or gift planning. These additional estate planning techniques are complex and highly personalized, so they are not included in this discussion of Estate Planning Basics.
Typically, this is a two-part document. The first part provides you the opportunity to appoint someone (health care agent) to make medical decisions you when you are unable to do so as the result of a temporary incapacity (e.g., heavily medicated) or a permanent incapacity (e.g., Alzheimer’s or dementia).
The second part of the AMD provides you the opportunity to give a “dying declaration” to your family and physician. This declaration tells physicians and family members whether you wish to die by natural means or whether you wish to have life-sustaining artificial assistance in the event you are in a terminal or vegetative condition. This is your opportunity to guide your health care agent into making a decision about your health care as you would do if you were able to. Although this second part of the AMD is optional, it is highly beneficial to your health care agent.
In this document, you appoint a trusted person to manage your finances should you be unable to do so yourself. The GDPOA is only valid during your lifetime.
If an individual becomes incapacitated and does not have a GDPOA, often an expensive Guardian/Conservator proceeding administered by the Court will be required.
A will provides you with the opportunity to leave your assets to family, friends and charities of your choice. Wills are only effective upon our death and they do not control the disposition of assets when a beneficiary has already been named (i.e. life insurance, IRA’s, etc.). Most Wills contain a provision involving tangible personal property and/or specific bequests (e.g., gifts of real estate or cash). The residue provision governs the distribution of the remainder of your estate to the designated beneficiaries. Also, the Will names the Personal Representative (executor/ executrix) who settles the estate and your preferred Guardian for any minor children.
Wills can vary in complexity:
Simple Wills are basic Wills for married or unmarried individuals with relatively uncomplicated estate plans – those that pass all the probate assets to the surviving spouse or children.
Complex Wills provide individuals with many different options by including more complex planning tools for how your property is transferred or for limiting your tax exposure. For example, you may wish to hold your assets in trust for the beneficiary because of the beneficiary’s age or pre-existing medical condition. Supplemental Needs Trusts can be incorporated into a Will if a beneficiary is receiving means-tested support, such as Medical Assistance (Medicaid).
Pour-over Wills are used when you have a Revocable Living Trust (“RLT”) as part of your estate plan. The Will simply “pours-over” to the RLT any asset not titled in the name of the RLT at death.
Revocable Living Trusts (RLT)
Revocable Living Trusts are created during life and can be amended or revoked at any time. Generally, RLT’s can be useful for: (1) asset management during the creator’s (“settlor’s”) life, (2) efficient distribution of assets at the settlor’s death by avoiding probate, and (3) avoiding publicity.
The following family situations may benefit from a RLT:
- blended families where each spouse wants his/her assets to pass to his/her respective children,
- families with minor children who would receive large inheritances if both parents passed away,
- families or individuals who may be subject to estate taxes at death,
- families with disabled children,
- families with a complex or unusual bequest,
- families who want to avoid the public record or probate, and
- families where a beneficiary may have marital, creditor, or personal problems.
Unlike probating a Will, the administration of a RLT does not become public record. Often, a RLT is created but not all assets are properly placed in the trust. In order to avoid probate, the settlor must properly funded his/her trust and ensure that no probate assets remained in his/her estate at death.
There are many factors to consider when preparing your estate plan. It is important to consult with an experienced estate planning attorney to assist you with the preparation of your estate planning documents.