What Is The Purpose Of Estate Planning In Minnesota?
The purpose is to plan for your assets in the event of your incapacitation or death. Along with your assets, if you have minor children, it will form a plan to care for them. The other consideration is to ensure that family members are not thrown into chaos trying to figure everything out.
I Don’t Really Have Much For Anyone To Inherit. Do I Still Need To Do Estate Planning?
It makes sense for almost anyone to make a simple will. The will sets aside who can administer your estate, and you can pick a trusted person to do so. Also, if you have minor children or even a small amount of assets, it’s good to minimize any possible conflict. Wills are inexpensive to complete. So, there is no good reason not to have a simple will.
What Exactly Is A Will? Should It Be A Part Of Everyone’s Estate Planning Documents?
A will is a written document that names all the beneficiaries of the decedent’s assets and ensures that everything is distributed according to the wishes of the decedent. Wills are not required in every estate plan, but they are an essential component of estate plans.
What Is A Trust? Are There Different Types Of Trusts That I Should Consider
A trust that is established for a beneficiary that does not allow the beneficiary to sell or pledge away interests in the trust is known as a spendthrift trust. It is protected from the beneficiaries’ creditors, until such time as the trust property is distributed out of the trust and given to the beneficiaries
Special Needs Trust
A special needs trust is one that is set up for a person who receives government benefits so as not to disqualify the beneficiary from such government benefits. This is completely legal and permitted under the Social Security rules provided that the disabled beneficiary cannot control the amount or the frequency of trust distributions and cannot revoke the trust. Ordinarily, when a person is receiving government benefits, an inheritance or receipt of a gift could reduce or eliminate the person’s eligibility for such benefits.
By establishing a trust, which provides for luxuries or other benefits which otherwise could not be obtained by the beneficiary, the beneficiary can obtain the benefits from the trust without defeating his or her eligibility for government benefits. Usually, a special needs trust has a provision that terminates the trust in the event that it could be used to make the beneficiary ineligible for government benefits.
Special needs have a specific legal definition and are defined as the requisites for maintaining the comfort and happiness of a disabled person when such requisites are not being provided by any public or private agency. Special needs can include medical and dental expenses, equipment, education, treatment, rehabilitation, eyeglasses, transportation (including vehicle purchase), maintenance, insurance (including payment of premiums of insurance on the life of the beneficiary), essential dietary needs, spending money, electronic and computer equipment, vacations, athletic contests, movies, trips, money with which to purchase gifts, payments for a companion, and other items to enhance self-esteem. The list is quite extensive.
Parents of a disabled child can establish a special needs trust as part of their general estate plan and not worry that their child will be prevented from receiving benefits when they are not there to care for the child. Disabled persons who expect an inheritance or other large sum of money may establish a special needs trust themselves, provided that another person or entity is named as trustee.
Revocable trusts are created during the lifetime of the trustmaker and can be altered, changed, modified or revoked entirely. Often called a living trust, these are trusts in which the trustmaker:
- Transfers the title of a property to a trust
- Serves as the initial trustee
- Has the ability to remove the property from the trust during his or her lifetime
Revocable trusts are extremely helpful in avoiding probate. If ownership of assets is transferred to a revocable trust during the lifetime of the trustmaker so that it is owned by the trust at the time of the trustmaker’s death, the assets will not be subject to probate.
Although useful to avoid probate, a revocable trust is not an asset protection technique as assets transferred to the trust during the trustmaker’s lifetime will remain available to the trustmaker’s creditors. It does make it more somewhat more difficult for creditors to access these assets since the creditor must petition a court for an order to enable the creditor to get to the assets held in the trust. Typically, a revocable trust evolves into an irrevocable trust upon the death of the trustmaker.
An irrevocable trust is one that cannot be altered, changed, modified or revoked after its creation. Once a property is transferred to an irrevocable trust, no one, including the trust maker, can take the property out of the trust. It is possible to purchase survivorship life insurance, the benefits of which can be held by an irrevocable trust.
This type of survivorship life insurance can be used for estate tax planning purposes in large estates, however, survivorship life insurance held in an irrevocable trust can have serious negative consequences.
Asset Protection Trust
An asset protection trust is a type of trust that is designed to protect a person’s assets from claims of future creditors. These types of trusts are often set up in countries outside of the United States, although the assets do not always need to be transferred to the foreign jurisdiction. The purpose of an asset protection trust is to insulate assets from creditor attack.
These trusts are normally structured so that they are irrevocable for a term of years and so that the trustmaker is not a current beneficiary. An asset protection trust is normally structured so that the undistributed assets of the trust are returned to the trustmaker upon the termination of the trust provided there is no current risk of creditor attack, thus permitting the trustmaker to regain complete control over the formerly protected assets.
Charitable trusts are trusts which benefit a particular charity or the public in general. Typically charitable trusts are established as part of an estate plan to lower or avoid the imposition of estate and gift tax.
A charitable remainder trust (CRT) funded during the grantor’s lifetime can be a financial planning tool, providing the trustmaker with valuable lifetime benefits. In addition to the financial benefits, there is the intangible benefit of rewarding the trustmaker’s altruism as charities usually immediately honor the donors who have named the charity as the beneficiary of a CRT.
A constructive trust is an implied trust. An implied trust is established by a court and is determined by certain facts and circumstances. The court may decide that, even though there was never a formal declaration of a trust, there was an intention on the part of the property owner that the property is used for a particular purpose or go to a particular person.
While a person may take legal title to a property, equitable considerations sometimes require that the equitable title of such property really belongs to someone
How Do I Avoid Probate?
Trusts help protect your assets. If the decedent is worth more than $75,000, has a home, or is named on one, they must go through probate. If the assets are in a trust, You will pay for a testatrix and an attorney and wait on a judge to make several decisions throughout the course of probate. These are all valuable resources that could diminish your estate. Creating a trust to hold your home or other assets makes sense when you are trying to avoid probate.
What Is Probate? What Factors Lead To Occurrence Of Probate In Minnesota?
Probate is started after a decedent dies, and it’s a process in the courts in which the court oversees the administration of the estate. The Judge assigns someone as the testator, and the court also will resolve disputes between heirs about property. Some probates can be informal, where the court, others will be formal, and the testator will make the bulk of the decisions. Probate is a court process that ensures everything is handled correctly as the deceased intended.
Are There Ways To Avoid Probate With Proper Estate Planning?
Yes. Creating a testamentary trust during your life can help you avoid probate, and also, certain assets cannot be probated like life insurance or 401(k)s that you designate one party to receive at your death. If you have more than one owner on an asset at the time of death, that asset transfers to the second owner when you die. That would be a straightforward way to avoid probate on certain assets.
For more information on Estate Planning Process In Minnesota, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (651) 796-3400 today.
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