You may be surprised to hear this from an attorney, but not everyone needs a will. If a person owns property, there may be more than one way to handle transferring the person’s property after he or she passes. If the person owns real estate, one of those methods might be a Transfer on Death Deed (TODD). Patty at Stotzheim Law Office & Mediation, LLC can help you determine whether a will is appropriate for your needs or if there is a simpler and more cost-effective way to transfer property.
However, there are some people who absolutely need a will, for example, parents with minor children. A will can direct who will be the guardians of their children if both parents die or if one dies and a surviving parent is unable to care for the children. Without a will, there could be disagreements among family members about who should take care of the children, and then it will be up to a judge to decide. Although judges are very experienced in these types of matters, the judge is the person who knows the least about your family. If you are a parent, do you want a stranger making these decisions about your children? It is an unpleasant thought, but one that should motivate parents to get their will done!
People who have blended families also need a will. The law provides one choice for distributing your property after you pass. For people with blended families, the law most likely will not provide adequately for your entire blended family if you have not created the appropriate estate plan. Stotzheim Law Office & Mediation, LLC can help you plan the distribution of your property that fits your unique situation so you don’t have to worry about your loved ones being treated unfairly after you pass.
If you are not sure you need an estate plan, call Patty at Stotzheim Law Office & Mediation, LLC to discuss your situation. I can clarify the complexities of estate planning so you can feel at ease about the future.
What is a trust and who needs one?
The concept of a trust can be difficult to understand, but the key to comprehending trusts is to consider its main objective. Trusts are created for the purpose of managing property for the benefit of another person. And trusts are not just for wealthy people. For example, our attorneys can create a will for the parents (of any income level) with minor children which includes provisions that if both parents die, the children’s inheritances will be placed into a trust until they are mature enough to manage the money for themselves. Without provisions for a trust, a judge, someone who knows the least about your family, will make those decisions for you.
To understand how a trust actually works, it may be helpful to think of a trust as a bucket. This bucket becomes a separate entity recognized by the law and the IRS, somewhat similar to a corporation. When you transfer property into the bucket, you become the Settlor. The bucket is now the owner of those assets. The Settlor dictates the terms about how the bucket will be managed and those terms are outlined in the Trust Agreement. The Settlor also names a Trustee who must manage the bucket according to the terms in the Trust Agreement. The Settlor also names the Beneficiaries of the bucket. Fortunately, while you are alive, you can be all three persons: Settlor, Trustee, and Beneficiary.
The property you transfer into the trust can be in the form of real estate, cash, investments, and tangible personal property, among other things. Trust agreements can be extremely complex or rather simple depending on the desires and goals of the Settlor. Trusts can either be created while the Settlor is living or it can be created upon the death of the Settlor. The flexibility of the trust instrument makes it a very valuable tool for many estate plans.
The advantages of a trust include: Avoidance of probate. Trusts are generally not administered through the courts after the death of the Settlor. This means the beneficiaries can receive the assets sooner and without the expense of a probate proceeding. “Spendthrift provisions” can prevent those beneficiaries who would otherwise squander their gifts if given to them outright and all at once. Statistics of people who suddenly come into large sums of money reveal stories of bankruptcy, personal problems, and even criminal issues. Most people want to protect their loved ones from such tragedies. With a revocable trust, provisions are made to allow a Trustee to take over when the Settlor becomes incapacitated. Trust agreements offer more protection to the Settlor than does a power of attorney or even a court-appointed conservator. Trusts are private documents and do not need to be filed with the court. For some people, this is a valuable tool for protecting their family and their privacy.
There are also disadvantages to creating a trust, many of them relating to tax consequences. Talk with Patty at Stotzheim Law Office & Mediation, LLC to find out if a trust should be part of your estate plan.
What is probate?
Probate is the court procedure required to legally transfer property of a deceased person to the decedent’s heirs. Depending on the types of property owned by the decedent, it may or may not be necessary to file a probate proceeding. In Minnesota, the probate laws are streamlined and provide a reasonable process for transferring the property of a decedent. However, there are costs involved and unexpected issues can appear which may complicate the process. Therefore, attempting to navigate the probate process alone may be challenging. With the assistance of an attorney, the probate process can be manageable. If you are unsure whether you need to start a probate process or whether you have unique circumstances, Patty at Stotzheim Law Office & Mediation, LLC can review your situation and give you clear advice. I know this is a difficult time for you and I want to help by putting your mind at ease. If I believe you can handle the probate process on your own, I won’t hesitate to tell you.
Who needs a guardian and what does a guardian do?
A guardian is needed for an adult who is suffering from an incapacity that prevents him from being able to make reasonable personal decisions and has demonstrated behavior showing an inability to meet his own personal needs for medical care, nutrition, clothing, shelter, and safety.
Guardianships may be necessary in situations where an elderly person is living on his or her own and has begun to suffer from dementia or other disabling diseases. A family member or concerned person may file to be named as the guardian of the person. Once the court grants the petition, the guardian has the authority to make decisions on behalf of the person (now called a ‘protected person’), which may include the authority to determine the protected person’s residence and scope of medical treatment.
The extent of the authority of the guardian depends upon the needs and resources of the protected person. These situations are always challenging, particularly because it is emotionally difficult to realize that the person can no longer take care of him or herself and usually because the person resists offers to help. To make matters worse, family members often struggle to agree on an appropriate course of action. If you are unsure whether a loved one needs a guardian, call Patty at Stotzheim Law Office & Mediation, LLC for straightforward advice.
Who needs a conservator and what does a conservator do?
A conservator is needed for a person with significant financial resources who is suffering from an incapacity that prevents him or her from making reasonable personal decisions and has demonstrated behavior showing an inability to meet his or her own personal needs for medical care, nutrition, clothing, shelter, and safety. The threshold for being granted a petition for conservatorship is similar to a guardianship, but the role of the conservator is to manage the person’s finances for the person’s benefit.
The conservator’s responsibilities are significant, including a requirement to account for all the person’s finances every year and file the report with the court. If a conservator is not comfortable managing all the finances, a professional can be hired. However, problems arise when the size of the person’s estate do not justify the expense of hiring professionals. Petitions for conservatorships should be carefully evaluated and the petitioner should be fully advised as to the serious responsibility attached to the appointment. If you are uncertain whether a loved one or friend needs a conservator, call Patty at Stotzheim Law Office & Mediation, LLC for straightforward advice.
HEALTH CARE DIRECTIVE
What is a health care directive and who needs one?
A health care directive (HCD) is a document informing your medical treatment providers with directions on whom to consult with if you are unable to make decisions for yourself. Every adult needs an HCD because accidents are rarely foreseen. An HCD designates a person, your health care “agent,” who will make decisions for you when you are unable to communicate for yourself. The HCD also has directions for your agent indicating your wishes, including instructions if you are in a terminal condition.
An HCD should be included in every estate plan, but it can also be completed on its own. Stotzheim Law Office & Mediation, LLC offers an affordable flat fee for clients wishing to complete only an HCD. If you have not completed an HCD, I encourage you to call me. Completing an HCD will greatly ease the pain and uncertainty for your loved ones should they be faced with making this type of decision for you.
POWER OF ATTORNEY
What is a power of attorney and why would a person need one?
The power of attorney is a tool for managing one’s affairs when the person, called the “principal” is unable to accomplish this management for him or herself. A power of attorney (POA) is an extremely effective tool, but should be used with great caution because of the broad and sweeping powers granted by the document. There are various forms for a POA and various ways to limit or expand the powers granted by the principal. A POA is only effective while the principal is still alive. Thus, a POA is effective for managing the affairs of a principal who has become incapacitated, but it won’t be helpful to wind up affairs after the principal has passed. If you are unsure whether a POA would help you or a loved one, call Patty at Stotzheim Law Office & Mediation, LLC.