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