Seminar: Planning Your Estate | Legal and Financial Issues for Families

Stuart E. Schmitz, Schmitz, Schmidt & Anderson, PA.
400 Robert Street North, #1840
St. Paul, Minnesota 55101
651-291-2405

Common Estate Planning Questions

When should planning begin?

• Immediately
• Before the crisis
• It is too late when incapacity or death occur

Who should be involved in the planning?

• Family
• Attorney

What should we keep in mind as the planning begins?

• Plan with care
• Take enough time – but do not procrastinate
• Information and education are the most valuable tools
• Who can and will act in your best interests
• Who will receive your estate
• Spouse
• Children
• Other relatives
• Friends
• Church and/or charities

Why is estate planning a good idea?

• Financial and personal autonomy
• Family harmony and organization
• Peace of mind

Planning for Incapacity

What is “Capacity”?

• Understanding nature of situation and extent of property
• Knowing the natural objects of One’s bounty
• And, remembering those items long enough to form a rational judgment about them

Powers of Attorney (Minnesota Statutes, Chapter 523)

• Financial management during capacity and incapacity
• “Durable” – lasts through incapacity
• Choosing the Attorney-in-Fact (Decision Maker)
• Specific authority granted
• Revocable during capacity
• Terminates at death
• Does not work with Social Security or IRS (Separate forms, although not “durable”)

Social Security Representative Payees

• Financial management of Social Security income during incapacity
• “Social Security Power of Attorney”
• Family members preferred
Annual accounting of income management required

Health Care Directive

• Combines Living Will and Durable Power of Attorney for Health Care
• End of life decisions in advance
• Sample health care decisions to be made:
• Respiration and Resuscitation
• Food and Water
• Organ donation
• Grants health care decision making authority to a health care agent
• Choosing the right health care agent is crucial. “Advocate who listens”
• Other important health care planning issues
• Family involvement – Communicate your intentions
• Provider involvement – File document with all health care providers

Guardianship/Conservatorship (Minnesota Statutes, Section 525.54 et seq.)

• Personal, medical and financial management with Court supervision
• Ward or conservatee judged to be an “incapacitated person”
• Look for the “Least Restrictive Alternative” first
• Guardianship vs. Conservatorship and the loss of basic rights
• Choosing a Guardian or Conservator – Nomination
• Costs and constraints

Planning for Death

Wills

• Financial management ONLY after death
• Only one Will at a time

Elements of a Will

• Written
• Signed by adult of sound mind
• Signed in the presence of two witnesses

Choosing a Personal Representative

• Amended by a “Codicil” during capacity
• Revoked by Destruction or New Will

Intestacy – Dying Without a Will or Trust

• Statutory Will
• Probate required if the probate estate totals $20,000.00 or more
• Personal Representative selected by the Court according to a priority schedule based upon the closeness of relation
• Order of distribution

1	2	3
Spouse	Parents	Grandparents
Children	Siblings	Uncles/Aunts
Grandchildren	Nieces/Nephews	Cousins

• No next of kin – “Escheat” to the State

Avoiding Probate

• Probate — Court process to finalize a deceased person’s estate
• Probate In Minnesota – well organized, relatively inexpensive, informal process available
• Probate assets – assets which have no legal agreement, such as joint tenancy or beneficiary designations attached to them at death
• Probate action required with probate assets of $50,000.00 or more
• With less than $50,000.00, Affidavit of Collection may be used
• Non-Probate assets – jointly owned , beneficiary designations, Trusts

Revocable “Living” Trusts

• Financial management during life and at death
• Elements of a Trust:
• Written agreement
• Trustee
• Assets in the Trust — A Trust is not a Trust until it is funded
• Benefits of a Trust:
• Continuous management — during capacity, incapacity and at death
• Estate consolidation
• Avoid Probate (Especially “Ancillary” Probate if real estate is owned in another State)
• Privacy
• Drawbacks of a Trust:
• Management complications
• Establishment, funding and maintenance costs