Estate Planning: Wills & Trusts In Minnesota
Why You Need an Estate Plan: The Facts
Estate planning is for everyone, regardless of age or net worth. Failing to plan costs your loved ones much much more than working with an expert attorney at Metropolitan Law Group to draft your estate plan. If you pass away without an estate plan, the state and IRS determine how your assets will be distributed, and a court decides who becomes guardians of minor children, essentially acting as your stand-in estate planners.
In Minnesota, without an estate plan a probate court must get involved. If there are no challenges, this process can take years to complete and it is extremely expensive because your assets are subject to taxes as well as attorney fees, court fees, publication costs, expert valuations and more (that could have been avoided with an estate plan) and puts additional stress on grieving loved ones.
You’ve worked hard to accumulate valuable assets, real estate and to leave a legacy – let us help you plan your estate to ensure it all gets distributed as you wish, avoids probate court and excessive taxation.
Should You Create an Estate Plan?
Creating an estate plan is for every Minnesotan. If you have young children, own real estate, have a bank account or have business interests, you NEED an estate plan. It can be challenging to imagine what could happen to your spouse, children, business or other loved ones should you suddenly pass away or become incapacitated. With your affairs in order, you can move forward knowing that your family is protected, your assets are secured, and your legacy will go on.
Do You Need Asset Protection?
Asset protection planning involves making prudent decisions today to protect yourself, your business, and your hard-earned assets from loss due to lawsuits, creditors or bankruptcies. This type of legal planning is especially prudent for professionals and business owners, whose personal assets could be at risk due to the nature of their employment.
It is undeniable that the number of divorces, lawsuits and bankruptcies is staggering. While no one believes it will happen to them, wealth created through a lifetime of work, saving and investing can be lost overnight if these life events strike. To protect your assets from such disaster, proper risk management strategies should be given careful consideration. These strategies include exempting your assets from the claims of creditors, limiting your liability through legal entities, and transferring your risk through insurance.
Special Needs Trusts In Mn
Special Needs Trusts
Twin Cities special Needs Estate Planning focuses on providing for the special needs of our loved ones with disabilities when we are no longer there to organize and advocate on their behalf. Parents of children with special needs must make careful estate planning choices to coordinate all of the legal, financial, and special care needs of their children – both now and in the future.
An Overview of Special Needs Planning
There are several types of trusts to assist with these special planning challenges. The most common types are Support Trusts and Special Needs Trusts
Third-Party Special Needs Trust: Created using the assets of the parent(s) as part of an estate plan; distributed by a Will or Living Trust.
Self-Settled Special Needs Trust: Generally created by a parent, grandparent or legal guardian using the child’s or their own assets to fund the Trust (e.g., when the child receives a settlement from a personal injury lawsuit and will require lifelong care). If assets remain in the Trust after the child’s death, a payback to the state is required, but only to the extent, the child receives public assistance benefits.
Special Needs Trusts are a critical component of your estate planning if you have loved ones with disabilities for whom you wish to provide after your passing. Generally, Special Needs Trusts are either stand-alone trusts funded with separate assets (like life insurance) or they can be sub-trusts in existing living trusts.
Business Succession Planning
Business Succession Planning
Saying that family businesses are the backbone of the American economy is an understatement. Approximately 90 percent of all businesses in this country are either family-owned or family-controlled. They come in all shapes, sizes and colors, representing all sectors of our economy. From agriculture to services, technology and manufacturing, family businesses generate an estimated one-half of the U.S. Gross National Product and pay half of all wages earned in this country
Not all family businesses are traditional small businesses either. In fact, roughly one-third of all businesses included in the Fortune 500 are family businesses. But not all of the family business statistics are rosy.
Family businesses tend not to outlive their founders. At any given moment, 40 percent of family businesses are in the process of transferring their ownership. Unfortunately, two-thirds of all initial transfers fail. Of the one-third that survives an initial transfer, only one-half will survive a second transfer. It is estimated that by 2040 about $10.4 trillion in family business owner net worth will be transferred.
Why Family Businesses Don’t Survive
Why such a dismal success rate? The reasons are as varied and unique as the businesses and business owners themselves. Nevertheless, many of the failed transfers can be traced to three causes: people, taxes and cash.
Transferring Family Business from One Generation to the Next
The family element in every family business can mean the difference between its success or failure during the transfer process. The retirement, disability or death of the business owner are all common events that can trigger a business transfer.
Tough questions must be asked and answered. Otherwise, a business that took decades to build can be destroyed overnight
For example, who will run the business after you? Will it be your spouse, one of your children or a non-family member key employee? If your spouse will not run the business, will he or she still be financially dependent on it… or can you make arrangements to ensure they are financially independent of it?
What arrangements have you made for the inheritance of your children who are not active in the business? Have you in-law proofed your estate?
Thinking ahead to the second-generation transfer of your business, what provisions have you made to encourage thrift and industry among your grandchildren?
MINNESOTA PROBATE COURT
The only certainty about the federal estate tax is its uncertainty with each change in Congress and the White House. Additionally, some states now impose their own estate taxes, independent of any federal estate taxes.
Accordingly, careful monitoring of the economic, political and legal climate is required. Why? Without proper estate-liquidity planning, your family may have to sell the business just to meet an estate tax cash call.
Minnesota Probate Court
What is Probate Court?
A set of default rules (Minnesota laws) that are applied by a judge to determine how someone’s assets will be distributed and who will become guardians of chidren when they die.
When Does an Estate Have to Go to Probate Court?
When a person dies without a Living Trust, dies with just a will, or no will, his/her estate is forced into probate court.
Probate is a court-supervised legal process that is required after:
- A person dies;
- The person’s total property value exceeds the probate threshold (between $55K-$166K; depending on state of residency and adjusted periodically); and
- The transfer of property is not controlled by asset title (ex: through a living trust, joint tenancy, etc.); or
- The person has any interest whatsoever in real estate not held in trust
The probate process is used to:
- Authorize someone to administer the estate/distribute assets (often called a “personal representative” or “executor”)
- Determine and publish what assets and debts the deceased person had
- Pay the deceased person’s debts where appropriate
- Identify beneficiaries
- Distribute the assets after the debts and expenses of administration have been paid and attorney and court costs paid
- Allow for litigation of assets by interested parties, beneficiaries, and creditors
Can I go to Probate Court Without a Lawyer?
Even with an uncontested estate, the probate process is very long: typically 8-18 months. Most probate cases require 1-2 court hearings. Navigating the rules of court can be stressful. Our Minneapolis attorneys request that the parties attend the court hearings virtually and handle all the heavy lifting so you can relax.
Probate in the Minneapolis St. Paul Metro area requires large volumes of paperwork be filed. Interested parties and heirs must be properly served and notices be published in authorized publications. We prepare, serve, publish and file electronically to ensure all deadlines are met and to ensure the quickest process available.
Minnesota has 3 types of Probate Actions: Informal, Formal and Supervised. Each has a separate process and set of rules. Time and costs involved vary. We will evaluate your probate case over a virtual call with you and determine which type of probate is right for you.