Searles Law Office

Without a will you cannot name a guardian for your minor children nor direct where your assets go upon your death. The courts will determine the appropriate guardian for children and your assets will go to your “heirs at law,” who are defined by state statute.

A Health Care Directive is the more recent version of what is commonly called a “Living Will.” The Health Care Directive is more comprehensive in that it allows you to name one or more people to make medical decisions for you when you are unable and permits you to state what medical treatments you do or do not wish to have under certain circumstances. A Living Will was only effective if you were in a “terminal condition.”

Yes. A Power of Attorney allows another person to handle your financial affairs when you are incapacitated by reason of illness, accident, age or any other reason. Without a Power of Attorney, a friend or family member would need to go to court to be appointed your guardian or conservator to be able to handle your financial affairs.

While most people think of estate planning as planning for your demise, proper estate planning includes planning for your death and your disability. The primary goals include having your assets pass easily to your heirs, reduction or elimination of estate taxes and continuity of asset management if you are incapacitated. A Health Care Directive is also an essential part of your estate plan so that loved ones can make medical decisions for you when you are unable. The proper documents drafted by an experienced attorney are necessary to achieve all of these goals

A Will, Durable Power of Attorney and Health Care Directives are minimum requirements. In order to avoid probate, frequently a living trust is added. If a trust is indicated, deeds to real estate should be executed to move homes, cabins and other real estate (especially real estate in other states) into the trust.

If you have a change in your family, net worth, or state of residence, you should have your estate plan reviewed. A significant change in the tax law is another change that should make a review desirable.

A trust is a legal contract created by the Trustor (property owner) with a Trustee (manager) to manage property for the beneficiaries of the Trust.

• Avoids the time, expense and aggravation of a formal probate in the county where property is owned.
• Can avoid probate in other states where the Trustor owns real estate.
• Trust administration at death is private; no public court records.

The term “executor” (or, in most states, “personal representative”) refers to a person or entity wraps up your financial affairs following your death. A trustee is the person or entity who manages a trust established by an individual whenever that individual is unable to do so. The personal representative is appointed in a will while the trustee is nominated in a trust agreement. An individual (a surviving spouse or an adult child) who may be most familiar with your financial issues might be the most appropriate and cost effective choice in many situations. A bank or other financial institution may be more appropriate in other situations involving complex financial issues, or when there is an absence of available family members, although a bank or trust company will charge an annual fee for those services, usually 1% per year or more.

The best approach to providing for minor children is to establish a trust for those children during your lifetime or upon your death. The named trustee will then manage your assets for your children until they reach the ages when you have decided they can manage the remaining assets for themselves. Assets passing directly to minors under your will require extraordinary court supervision which can be avoided through use of a trust.

In general, it is better to transfer assets into your trust during your lifetime to avoid probate. (See FAQ 8, above) Real estate should be transferred to your trust during your lifetime by signing a new deed putting title to the real estate into the name of the trustee. Financial assets can be transferred to your trust by establishing new accounts in the name of the trustee with the appropriate financial institution. In addition, Minnesota and many other states allow you to sign a “Payable on Death” designation for bank accounts and a “Transfer on Death” for investments to transfer those assets to your trust upon your death. Retirement accounts (such as a 401(k) or IRA) and life insurance can be directed to your trust by use of appropriate beneficiary designations. Finally, all assets remaining in your name at your death, without a beneficiary designation, will pass to your revocable trust through the use of a “pour-over” will, which is always done in conjunction with a revocable trust.

While many attorneys draft wills and trust agreements, not all are well-suited to the task. Education and experience in estate planning are the best benchmarks for determining if an attorney is well-qualified.

Ask friends, neighbors, colleagues, and other people you trust for referrals, especially those who have recently updated their estate planning documents. Many people who have recently experienced major life events (Birth of a child, death of a parent or other family member, marriage or divorce) are often good sources of information in this area. In addition, checking out sites on the Internet, can be a good place for additional information.