Mankato Estate Planning Attorney

It’s very important that you know what’s going to happen to your children, spouse and assets after they pass away. If you don’t plan your estate, there is no way to be sure of what will become of your hard work, or if the people you care about most get the support you wish. It may sound overwhelming to write a will, especially if you have a long, healthy life ahead of you, but it really just starts with a simple phone call to an experienced attorney who can help.

Most people would say that it’s just as important to avoid any unnecessary fees and taxes. A consultation with one of Knutson+Casey’s estate planning attorneys to review your current financial, familial and health situation is the first step towards gaining clarity in understanding who will watch over your children, how you will be buried, and how your assets will be distributed after your passing.

Three Essential Estate Planning Documents

It’s a misconception that estate planning begins and ends with a will/trust–and that you can write a will using an online form and have the estate plan and protection you need for peace of mind. In reality, a Mankato estate planning lawyer can talk to you about your life, your wishes, and your legacy, all while making certain that plan is free of common mistakes and loopholes.

Most people require three main estate planning documents:

  • A will or trust. This is the most important document of your estate plan. It contains an outline of your property and how you would like that property distributed to your loved ones and loved causes. A will may also include information on guardianship for your children and other dependents. Finally, a will may include information about your memorial, funeral, and burial, along with any special notes or requests.
  • Durable power of attorney. A power of attorney (POA) gives a person or organization the power to act in your place and on your behalf in the circumstance that you are unable to do so yourself. This may happen if you are unconscious or found mentally incompetent. The person or organization you name can make financial and legal decisions regarding your property just as if they were you.
  • Healthcare power of attorney. A healthcare power of attorney (POA) is similar to a durable power of attorney in that it gives another entity the power to make decisions for your in the event that you are incapacitated. This person can make all health care decisions for you, including whether to keep you on life support. Be certain that the person you choose knows your wishes clearly.

When Should You Start Planning Your Estate?

The right time to plan your estate is different for everyone, but most people do not begin early enough. While it can be difficult to think about your death, or what will happen in the event that you can no longer care for your family, avoiding the issue is not the best answer, especially for the people and causes that you care about most.

How might you know that you are ready to think about your will, trust, and other estate planning documents?

  • You have accumulated significant assets. If you own property of value (even if it only of personal value) you likely care about what happens to that property when you are gone. This property could be as simple as a special vehicle or piece of jewelry, or as complex as retirement accounts, land, and businesses.
  • You have a family. If you have children, it is vital to have a plan for their guardianship in the event that you are not able to care for them. Even if you don’t have children, you may have strong opinions on which of your family members receive which portions of your property.
  • You are passionate about a cause. If you have become involved in a particular cause, charity, or organization, you may wish to leave your property or part of your property to a specific program or nonprofit. An estate plan can ensure that they get the support you wish to give them in the event of your death.

Notice that these three landmarks have little to do with age–you should start estate planning based on your circumstances, not your age.

MINNESOTA TRUST LAWS FOR 2016

On January 1, 2016 a new trust law takes effect in Minnesota. The new law, is codified at Minn. Stat 501C, and adopts provisions of the Uniform Trust Code. Clients will benefit from the greater flexibility and efficiency this new law provides.

Because the law’s application is retroactive, clients have an opportunity to modify existing trusts to take advantage of these changes. Provisions that clients may find particularly advantageous include the following:

Directed Trusts

Clients now have the opportunity to create Directed Trusts. These trusts allow for the appointment of an Administrative Trustee to manage the trust and receive direction from individuals or committees regarding investment and distribution decisions.

Creditor Protection

The new trust law largely maintains the creditor protection afforded to beneficiaries of an irrevocable trust, but goes one step further by clarifying that rights of beneficiaries remain protected, until distributions are made. This change in the law is particularly relevant for trusts containing special withdrawal powers, commonly referred to as “Crummey” powers. These powers grant a beneficiary the limited right to withdraw principal, upon receipt of notice from the Trustee and are typically found within Irrevocable Life Insurance Trusts (“ILIT”). The law makes it clear that merely holding a withdrawal power does not open the door for creditors. Rather, a creditor’s interest attaches only after the beneficiary exercises its withdrawal power and the distribution is made.

Trust Modification

Irrevocable trusts can now be modified or terminated upon the consent of the settler and all beneficiaries, without judicial approval, even if the modification or termination is inconsistent with a material purpose of the trust. If the settler does not agree to the termination or modification, beneficiaries will need to seek judicial approval.

Non-Judicial Settlement Agreements

The new law expands the ability for beneficiaries to enter into non-judicial settlement agreements, without court approval. Matters that may be resolved by non-judicial settlement include:

  • The interpretation or construction of trust terms
  • The approval of a trustee’s report or accounting
  • Direction to a trustee to refrain from performing a particular act, or to grant the trustee a necessary power
  • The resignation or appointment of a trustee and his or her compensation
  • Transfer of a trust’s principal place of administration
  • Liability of a trustee for an action relating to the trust

Expanded Authority by an Attorney in Fact

An attorney in fact can now amend or completely revoke a grantor trust, if the power of attorney document expressly authorizes the attorney in fact to do so.

Limitations Regarding Contest of Trust Provisions

Under existing law, in order to challenge or contest the validity of a revocable trust, a claim must be made within three years after the settlor’s death. The new trust law enables a trustee to shorten this time period to 120 days, by sending all interested parties a copy of the trust instrument, along with a specific notice that complies with the Code. This change promotes administrative efficiency.

Power to Remove a Corporate Trustee

In the past, where the settlor, a co-trustee or a beneficiary sought removal of a corporate trustee, the successor was required to be another corporate trustee. Under the new law, a corporate trustee can now be replaced with an individual trustee.

Secret Trusts

Generally, a trustee of an irrevocable trust has a duty to keep all beneficiaries informed of the administration process. The new law allows a party to limit disclosure of information, to current beneficiaries. This can be important for individuals who wish to keep contingent or remote remainder beneficiaries from having specific knowledge about the trust administration process.

Decanting Laws Adopted

The new law allows a trustee or settlor to alter the terms of a trust through a process called decanting. Decanting involves the transfer of trust assets to a newly appointed trust with modified terms. Changes that can be made through the decanting process include: altering distributions, decreasing or excluding beneficiaries, and extending ages of distribution for children or grandchildren. The timing for when decanting can occur, the nature and extent of the changes, and specific notice requirements all factor into the decanting process. Decanting will enable clients to make necessary changes to an otherwise non-amendable and irrevocable trust.

This summary sets forth just a few of the favorable changes the new trust law provides. This law takes effect January 1, 2016 and applies retroactively, enabling clients to alter and improve their existing trust instruments. Please contact an attorney at Knutson+Casey to discuss Minnesota’s new trust code, and how your estate plan can be amended to take advantage of these exciting changes.