Planning with a Will


If you are like the majority of people, you can benefit from at least a basic estate plan that uses a Will as the primary estate planning document.

In order to be a valid, a will must generally be:
(1) in writing;
(2) signed by the testator (some limited exceptions apply); and
(3) signed by at least two individuals, each of whom signed within a reasonable time after witnessing either the signing of the will.

It is strongly recommended that the signatures of the person making the will (“the testator”) and two witnesses sign be notarized in order to create a “self-proved” will.  If properly notarized, the probate court will not require additional evidence as to the validity of the signatures of the testator or witnesses, which can speed up the probate process.

Unfortunately, “do-it-yourself” wills often do not consider

A Basic Will

A basic or “simple” Will should accomplish a number of objectives including:

  • identify beneficiaries of the Will
  • provide for payment of valid debts
  • distribute specific gifts of money or property to individuals or charities, if desired
  • distribute the rest of the Testator’s assets per the Testator’s instructions
  • identify who the Testator wants to serve as the personal representative (executor) of their estate

Simple Wills are nice because they are just that… simple.  No complicated trust provisions.  Just the basics to ensure an orderly transfer of assets at death.

Whether you are single or married, a simple Will may be all that is needed for asset distribution planning if (1) you expect your total assets at death to be below the Minnesota and federal estate tax thresholds (or you aren’t concerned about taxes that might apply), and (2) you have no special concerns that would warrant putting assets in trust for the protection or benefit of children.

For others, a basic Will might not address key concerns.  For example, if you expect that your estate will be large enough to trigger Minnesota or federal estate taxes, or if you have a minor children who would not be capable of responsibly managing their inheritances by the time they turn 21, then you should at least consider incorporating trust provisions into your Will or other more complex estate planning options.

 

Advantages of a Will

Setting up a will not only you specify who should inherit your assets upon your death, but also allows you to:

  • Avoid Confusion and Disputes.  By setting up a will, you can establish your intentions with certainty, potentially avoiding conflicts among surviving family members. By way of contrast, if you die without a will, you are said to have died “intestate” and your estate will be distributed to your heirs-at-law based upon (1) the intestacy laws of the state where you live at the time of your death, and (2) if you owned real estate or other tangible personal property in other state(s), the intestacy laws in effect in the  other states.  If you only own real estate and other property located in Minnesota, the applicable intestacy laws are codified at Article 2 of Minnesota’s Uniform Probate Code.  In some situations, distribution of an estate pursuant to the intestacy statutes in the state(s) at issue may result in a distribution of assets different from what the decedent might have intended, especially in situations where the decedent or the decedent’s surviving spouse has children from another relationship.   Similarly, if you own reside in one state but own real estate or personal property located in another state, the intestacy laws of multiple states may not be consistent, resulting in a different division of assets among your heirs which depends on where the property is located.

 

  • Protect Beneficiaries. A common reason for setting up a will is to protect minor beneficiaries.  All states, including Minnesota, require a guardian or conservator to be appointed to manage a minor beneficiary’s personal and financial needs until the minor becomes an adult.
    • Nominate a guardian for minor children. Parents of young children should consider creating an estate plan if only to nominate a guardian to make decisions for their children until the children reach the age of majority (21).
    • Nominate a custodian to manage a minor’s inheritance. Select who should manage assets to be inherited by minors until the children reach the age of majority (21).

 

  • Make special gifts. Make gifts of money or specific items of property to a specific individual or charity.  If properly referenced in your Will, you have the flexibility to create a written list separate from your will that governs distribution of personal property items to particular individuals (subject to certain restrictions).
  • Disinherit heirs. If you want to disinherit a child, you must take action to create an estate plan.  Your heirs automatically inherit under Minnesota’s intestacy law if you fail to plan.
  • Allocate responsibility for tax liabilities. Decide whether your estate or the beneficiary (or beneficiaries) of your estate will bears the tax burden associated with the transfer of probate assets, rather than letting Minnesota law making the decision for you.
  • Trigger the creation of a trust upon your death. If you have concerns about leaving significant assets to some individuals at the time of your death, consider including a “testamentary trust” provisions in your will that direct all or some portion of your probate assets into a trust.  If you include a testamentary trust, you can nominate the person you would like to serve as the trustee who will be responsible for managing trust assets, and provide instructions for how the trust assets should be managed and specify the events which will trigger partial or full distributions to your beneficiaries.  (Helpful if assets could be inherited by minor children who might otherwise squander their inheritance, or by adult children facing divorce or other financial difficulties where the assets might otherwise be seized by the child’s creditors)

Disadvantages of using a Will as your primary planning document.

  • Probate.  One possible drawback of relying on a Will to distribute your assets at death is the probate assets – those controlled by your Will – must go through probate court proceeding in order to be transferred your intended beneficiaries.  For most people with average-sized estates, probate is not such a big deal.  However, some people may have concerns about:
    • Lack of Privacy.  Probate records are generally open to the public, which can be a concern for some concerned about maintaining privacy. In a probate proceeding, basic information about the deceased person’s estate (total assets, total debts, the identify of your heirs, the identity of the person serving as personal representative) is open to the public.  As a practical matter, most people may really care to examined the court records in most probate proceedings.  For those who are concerned about privacy, probate can be avoided entirely with proper planning if desired.
    • Delay.  While it’s true there will be some delay for an estate to be probated, Minnesota has adopted relatively efficient standardized procedures for probating estates, and often the cost of probate is not a drawback when compared to the cost of estate planning methods used to completely avoid the need for probate.
  • Little or no control over assets after death.  Unless your Will includes a “testamentary trust” (provides for the establishment of a trust after your death), a Will only controls who inherits your assets, but provides you with little or no control over when your heirs inherit your assets.  If you want or need more control over what happens after your death, consider including trust provision in your Will or establishing a trust.

For those concerned about the drawbacks of probate, setting up a trust as the primary estate planning instrument can provide the means for avoiding probate and accomplishing other estate planning goals at the same time.

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Hennessey Law Office PLLC serves clients in the Twin Cities greater metropolitan area, including the cities of Apple Valley, Burnsville, Bloomington, Eden Prairie, Edina, Minneapolis, Prior Lake, Richfield, St. Louis Park, St. Paul, Savage, Shakopee, and other surrounding communities in Hennepin County, Ramsey County, Dakota County and Scott County.