Estate Planning While at Home

The team at Mullen and Guttman, PLLC is dedicated to creating safe, flexible options for creating your estate plan. We’ve developed a 4-step, Covid-friendly planning process to help Minnesotans achieve their estate planning goals safely and efficiently.

Our simple, 4-step planning process:

Creating or updating your estate plan is a simple process you can begin from the safety of your home to protect your loved ones and gain some peace of mind. A properly designed estate plan gives your loved ones the tools they need to care for you if (and when) you need them to.

Call our team at (612) 756-7272 to schedule a free consultation and begin working on our estate plan today.

What to Do When a Loved One Passes

The time immediately following a loved one’s passing is never easy and can often be overwhelming. In addition to sorting through a variety of emotions, you may find yourself with an extensive list of confusing and draining responsibilities, so it’s important to stay in touch with family and friends for support and encouragement. If your loved one passes in the midst of shelter-in-place orders, connecting with family and friends virtually can help you through this difficult process.

Make sure to discern and honor the final wishes of your loved one. Final wishes may be included in an estate plan, but often are recorded separately. These include whether the deceased is an organ donor, whether they want to be cremated or buried, and other instructions for the funeral. Be sure to contact immediate family to clarify final wishes.

Arranging the Funeral

Once the family has been contacted, you can begin funeral preparations. Where possible, divide responsibilities among family members. If the deceased left no instructions, seek the advice of family members as you plan for the funeral. While keeping in mind the wishes of the deceased and family, follow these general guidelines:

  1. Set a clear budget. Costs can add up, with the average funeral coming in between $7,000-$15,000.
  2. Research funeral home options that align with your budget. Consult family or friends who have experience making funeral arrangements.
  3. Choose a funeral home.
  4. Meet with the funeral director and clearly communicate the plan for the funeral: embalming or cremation, open or closed casket, burial site, religious traditions, and any other details you’ve gathered from final wishes or family.
  5. Arrange for the headstone. You can do this through the cemetery or an outside vendor.
  6. Prepare an obituary. You can do this through the funeral home, write one yourself, or ask a family member.
  7. Spread the word. When a date and time are set for the service, prepare a list of well-wishers to invite. Note that during the current COVID-19 crisis funerals and memorial services are often being streamed online. Include an address to send flowers and donations in the invitation.

Tasks to Complete and Documents to Gather

After the funeral, you and your family will have further tasks to complete. These tasks may include:

  • Securing Real Estate: Make sure to secure any real estate owned by your loved one. This may include changing locks, forwarding mail, updating utility services, and updating homeowner’s and automobile insurance. You may need to make arrangements for lawn care and/or snow removal.
  • Contacting Family and Friends: Keep friends and family informed of funeral and memorial details.
  • Contacting Your Loved One’s Professionals: Locate information for your loved one’s attorney, accountant, and financial advisor.

Most of these tasks require some kind of documentation. Here are some of the documents to gather:

  • Death certificate: You may need up to a dozen copies for various tasks. You can work with the funeral director to do this, or contact the Minnesota Office of Vital Records.
  • Personal Documents: Birth certificate, marriage or divorce certificates, military discharge papers.
  • Financial Documents: Financial or retirement account records, IRS returns, property deeds, vehicle titles.
  • Insurance: Locate life insurance policy and contact company, stop health insurance and update other insurance policies as needed.
  • Will/Living Trust: Locate the will or living trust of the deceased.

The Probate Process

If your loved one created their will or living trust with a lawyer, locate the original documents. It is usually beneficial to speak with an estate planning attorney. Be sure to find a law firm with experience in estate planning and administration, and a reputation for compassion and empathy.

It may be difficult to begin a legal process shortly after a loved one’s death. However, if your loved one had a will, you may need to go through probate to carry out their wishes and distribute their assets. If they had a living trust, you likely won’t need to go through probate, but you can still get guidance from estate planning lawyers.

So, what is probate? Probate is the legal process of settling an estate after a loved one dies. The property of the deceased is gathered and inventoried, their debts are paid, and everything left is either distributed in accordance with the will or divided among their heirs.

It’s a common misconception that if the deceased has a will, their estate doesn’t have to go through probate. Though a will can name a personal representative to allow the probate process to go more smoothly, the estate will still have to go through probate. If the deceased doesn’t have a will, the probate court will appoint a personal representative.

Since each estate is unique, the probate process is slightly different in every situation. However, the process generally follows these steps:

  1. Gather information and documents, including will, death certificate, and asset information.
  2. Meet with a probate attorney to prepare probate application or petition.
  3. File the probate application or petition with the proper probate court to appoint a Personal Representative (sometimes referred to as Executor or Administrator) for the estate.
  4. Publish notice of the probate in the appropriate newspaper.
  5. Give notice to heirs and beneficiaries under the will or to statutory heirs (if no will exists).
  6. Inventory and appraisal of estate assets by the Personal Representative.
  7. Payment of estate debt to rightful creditors.
  8. Sale of estate assets.
  9. Payment of estate taxes, if applicable.
  10. Final distribution of assets to beneficiaries or heirs.

Probate typically takes between nine and twelve months, and can drag on much longer if someone contests the will, if there are disputes between the personal representative and alleged creditors, or if the estate is complex and enters formal probate proceedings.

How Does Probate Work During the COVID-19 Crisis?

The ongoing COVID-19 pandemic has impacted many legal processes, including probate. Currently, many hearings are being conducted by remote technology and certain fees and fines are delayed by 60 days. Since the coronavirus pandemic is a rapidly developing situation, it’s important to keep track of how the virus could impact your probate process by contacting your lawyer and checking the Minnesota Judicial Branch website.

How Mullen & Guttman’s Probate Attorneys Can Help You

The experienced Minnesota probate attorneys at Mullen & Guttman can assist you with your loved one’s living trust or will, and guide you through both the informal and formal probate processes. During the COVID-19 crisis, we are fully equipped to communicate with you by phone, Zoom, email, and mail, as well as conduct limited in-person meetings that observe social distancing and other appropriate safety precautions.

Even when the estate being administered appears to be straightforward, unexpected roadblocks can slow down the process. The experienced and compassionate Minnesota probate attorneys at Mullen & Guttman have helped many families through the probate process. We can assist you through each step of probate, from filing an application to distributing assets, as well as assist with the administration of a living trust and updating the estate plan for a surviving spouse or beneficiary.

Contact the probate lawyers at Mullen & Guttman to start your probate process today.

Consider Using a Trust to Protect Your Child’s Inheritance from Divorce

You’ve worked hard to leave your children a financial legacy, and the last thing you want is for half of your child’s inheritance to walk out the door with an ex-spouse if he or she gets divorced someday.  But, under today’s laws, that could actually happen if you don’t safeguard your family’s assets and plan ahead.

Although it isn’t pleasant to think about, you may have to take legal action to ensure that your married child inherits the assets you planned to leave them.  In many circumstances, an estate planning attorney will recommend that clients leave assets to their children in a trust.  Passing down your assets in a trust can keep them separate and out of reach from a divorcing spouse, as well as other creditors that may be knocking on your child’s door. If any of the following describe your child(ren), we highly recommend that you consider a trust.

Your child is unmarried.
If your child is currently unmarried, there is a good chance that he or she will be married at some point in the future. Since there is no way to know whether or not that marriage will be successful, it is a good idea to keep their assets protected in a trust—just in case.

Your child is newly married.
If you are or have been married, you know that there will be many bumps in the road.  There’s really no crystal ball here, but again, putting your child’s inheritance into a trust now will give you the peace of mind knowing that half the funds won’t walk out the door with your ex-son or daughter-in-law if things go south at any point in the marriage.

Your child is in a rocky marriage.
Even if your child has been married a long time, their marriage could still be struggling.  If you sense trouble and have a bad feeling about the future of their marriage, it may be a good idea to protect your child’s inheritance in a trust for all of the reasons listed above.
Trusts can be complex documents, and you will likely need the help of an estate planning attorney to set one up.  If you have questions or you are ready to get started, contact Mullen & Guttman Law Firm at (612) 756-7272 to set up an initial consultation.

3 Estate Planning Mistakes to Avoid

Recent studies have shown that only a little more than half of all Americans have a Will or Trust document in place to direct their estate after they pass away, and that the vast majority of those documents have not been updated in the last five years.  Even worse, it’s been reported that most adult children are unaware if their parents even have an estate plan and would be unable to find estate planning documents, if they did indeed exist.  These can lead to serious troubles down the line and are among some of the top mistakes people make regarding their estate plans.  We have compiled this list of additional estate planning mistakes that you should be aware of, and hopefully avoid:

Family Squabbles

In a perfect world, there would be no sibling rivalry – both before and after the death of parents.  However, it’s just a fact of life that families don’t always get along, and that could not be more painful or true than when a parent passes and disputes arise about the inheritance.  A lot of times this is caused by unequal distributions amongst siblings.  Estate planning attorneys often advise their clients to have a conversation with their future beneficiaries in advance about why they are – or are not – leaving them certain assets or valuables in their estate.  If the parent is uncomfortable having this type conversation, a letter written to each beneficiary to be read upon the parent’s passing can serve the same purpose.

Unaccounted Taxes

Estate planning attorneys often see this issue come up with estates that do not leave enough revenue to pay estate taxes, forcing the beneficiaries to sell property such as homes or other assets just to pay off estate tax debt.  Careful planning with an estate planning lawyer can help you avoid these kinds of issues, and makes it worthwhile for you to meet with your estate planning attorney on a regular basis to learn about changes in the estate tax law for your financial situation so that you can update your estate plan accordingly.

Out-of-Date Estate Plan

Unexpected changes happen in life, such as a falling out with a family member, a divorce, or a new marriage.  However, legal issues arise when these changes are not accounted for in your legal documents.  For example, if you were to disinherit a child but not change your Last Will and Testament to reflect this – well, that child won’t technically be disinherited.  You can also flip that around and have a situation where you and your child have reconnected after a falling out, but if you never added that child back into your estate plan, they may not receive that inheritance you decided to give them after all.  Divorce and marriage can also wreak havoc on out-of-date estate plans, so it is important that you speak to an estate planning attorney after any major life events.

Preparing to Meet With an Estate Planning Attorney

A thorough and complete estate plan must take into account a significant amount of information about your assets, your family, your property, and your wishes during and after your life.  When you make your first appointment with an estate planning attorney, ask the attorney or the paralegal if they can provide a written list of important information and documents that you should bring to the meeting.  

Generally speaking, you should gather the following information before your first appointment with your estate planning lawyer.

Family Information
List the names, birth dates, death dates, and ages of all immediate family members, specifically current and former spouses, all children and stepchildren, and all grandchildren.

If you have any young or adult children with special needs, gather all information you have about their lifetime financial needs.

Property Information
For all real property you own or can reasonably expect to acquire, gather the property description, your ownership interest information, the address, market value, any outstanding mortgage balance, and the most recent tax assessment.

For any personal property of value (such as vehicles, jewelry, coins, antiques, stamps, and art), compile a list that includes a description, the physical location of each item, your ownership interest information, the market value, and any liens against the property.

Business Information
If you have an ownership interest in a business, make sure you have documents showing your ownership interest in the business, the business location, the names and contact information of other owners, and 2-3 years of past profit and loss statements.

Financial Information
Compile a list of all your financial accounts, including: checking accounts, savings accounts, investment accounts, stocks and bonds, and U.S. Treasury notes.  If any of these accounts currently have designated beneficiaries, bring that information as well.

Gather all retirement savings information, including 401(k) plans, 403(b) plans, IRAs, life insurance policies, Social Security statements, and pension information.  Make sure you have the account names, account numbers, current balances, outstanding loan balances, and currently named beneficiaries.

If any family members owe you debts, compile that information.

Questions to Think About
The following are some of the first questions your estate planning attorney will ask.  You are not required to have answers ready for all these questions, but because some of them are complex, it is a good idea to think through these issues before your appointment.

  • Who will be beneficiaries of your property?
  • Do you want to bequeath any specific items of property to specific individuals?
  • Is there anyone you do not want to be a beneficiary of any of your property?
  • Do you plan to make any bequests to any nonprofit organizations – university, church, charity, or other organization?
  • Do you know who you want to act as executor of your will?
  • Do you know who you want to act as trustee of any trusts you establish?
  • If you have minor children, who do you want to appoint as guardian?
  • Do you want to make arrangements for your health and financial well-being in the event you become unable to make decisions for yourself?
  • Do you have specific wishes for your funeral?
  • Are you a registered organ donor?<

Borrowing from your retirement accounts: Issues to consider

So you have credit card debt, overdue mortgage payments, or suddenly need to buy a new car. We’ve all been there. You need money now, and your retirement accounts continue to climb. Fortunately, many employers allow you to take out loans on these accounts, but should you really begin spending that money before you retire?

On one hand, there are benefits to borrowing from your retirement accounts. You are essentially borrowing your own money, so the payments you make, plus interest, go back into your account. Since it’s your own money, these payments do not affect your credit score, and most 401(k) loans have relatively low interest rates.

However, there are many risks associated with taking money from accounts like your 401(k). It is recommended that you see a financial advisor before making this decision to address the cost and potential ramifications of the loan.

First consider the reason for taking out a loan, and the multiple options that you face. A dire emergency is the only recommended cause for borrowing from these accounts; some plans even require it. If you’re looking to spend the money on something more frivolous, like a family vacation or a new entertainment system, however, you should consider alternate financing options.

The downside to these loans comes in handling the repayment plan. Interest paid to your own account sounds easy enough, but these payments are subject to taxes. Furthermore, once money is borrowed from your retirement account, it is no longer eligible for tax-deferred growth. Payments you make on the loan come from after-tax assets, so the money you repay into your account can end up getting taxed for a second time once you withdraw after retirement.  

A standard 401(k) loan allows you to borrow up to half of your balance, with a maximum of $50,000. Normally, you have up to five years to repay the loan. Failure to do so within the five-year period means your loan will be deemed an early withdrawal, and will be subject to taxes as well as a 10% early withdrawal penalty.

If you are looking to borrow money from your retirement accounts, carefully consider your repayment plan in advance. It’s especially important to make certainthat you are secure in your employment; if you leave or lose your job, your loan payments will be due within 90 days. Consider borrowing only if interest on a loan from your retirement plan would be less than that of another loan alternative. A final tip: Continue contributing to your 401(k) while you pay off the loan to lessen the impact on your savings.

 

The Basics of Conservatorships

Sometimes, bad things happen to good people. A tragic accident. A sudden, devastating illness. Have you ever wondered what would happen if a loved one became incapacitated and unable to take care of himself? While many associate incapacity with a comatose state, an individual, while technically functioning, may be considered incapacitated if he cannot communicate through speech or gestures and is unable sign a document, even with a mark. In some cases, an individual may have no trouble communicating, but may not be able to fully appreciate the consequences of their decisions and hence may be deemed to lack capacity. With proper incapacity planning which includes important legal documents such as a durable power of attorney, healthcare proxy and living will, the individuals named in such documents are empowered to make necessary financial and medial decisions on behalf of the incapacitated person without obtaining additional legal authorization.  Without proper incapacity planning documents, even a spouse or adult child cannot make financial and healthcare decisions on behalf of an incapacitated individual.  In such cases, a conservatorship (or guardianship) proceeding is necessary so that loved ones are able to provide for their financial and medical healthcare needs.

A conservatorship is a court proceeding where a judge appoints a responsible individual to take care of the adult in question and manage his or her finances and make medical decisions. The court appointed conservator will take over the care of the conservatee (disabled adult).  When appropriate, the court may designate an individual “conservator of the estate” to handle the disabled person’s financial needs and another person “conservator of the person” to manage his healthcare needs. One person can also serve as both. If you are planning to serve as someone’s financial conservator, be prepared to possibly post a bond that serves as a safeguard for the conservatee’s estate. Individual states have their own guidelines for conservators, so check your local rules for more information.  

To minimize the incidence of mismanagement or fraud, the court holds the conservator legally responsible for providing it with regular reports, called an accounting. Additionally, the conservator may not be able to make any major life or medical decisions without the court’s approval and consent. For example, if you have been named the conservator for a relative, you may not be able to sell his or her house without the approval of the court.

The best safeguard to avoid going through court to get a conservatorship, however, would be to establish a durable financial power of attorney, a power of attorney for healthcare, each authorizing a family member or trusted individual to act on your behalf in case of incapacity.  While your agents have a legal obligation to act in your best interest they won’t have to post an expensive bond either.  Make sure the power of attorney clearly states that it will be effective even if the principal becomes incapacitated.

Preserving and Protecting Documents Is Part of Healthy Estate Planning

In the unsettled time after a loved one’s death, imagine the added stress on the family if the loved one died without a will or any instructions on distributing his or her assets.  Now, imagine the even greater stress to grieving survivors if they know a will exists but they cannot find it!  It is not enough to prepare a will and other estate planning documents like trusts, health care directives and powers of attorney.  To ensure that your family clearly understands your wishes after death, you must also take good care to preserve and protect all of your estate planning documents.

Did you know that the original, signed version of your will is the only valid version?  If your original signed will cannot be found, the probate court may assume that you intended to revoke your will.  If the probate court makes that decision, then your assets will be distributed as if you never had a will in the first place.

Where should you keep your original signed will?  There are several safe options – the best choice for you depends on your personal circumstances.

You can keep your will at home, in a fireproof safe.  This is the lowest-cost option, since all you need to do is purchase a well-constructed fireproof document safe.  Also, keeping your will at home gives you easy access in case you want to make changes to the document.  There are two main disadvantages to keeping your will at home:

  • You may neglect to return your will to the safe after reviewing it at home, which increases the risk it will be destroyed by fire, flood, or someone’s intentional or accidental actions.
  • Your will could be difficult to find in the event of your death, unless you give clear instructions to several people on how to find it, which then creates a risk of privacy invasion.

You can keep your will in a safety deposit box.  Most banks have safety deposit boxes of various sizes available to rent for a monthly fee.  Banks, of course, tend to be more secure than private homes, which is one primary advantage.  Also, if you keep your will in a safety deposit box, then after your death, only the Executor of your estate may access the original will.  Thus, the will is strongly protected against alteration or destruction, because family members may have access to a copy but only the Executor will have access to the all-important original.

If you do keep your will and other estate planning documents in a safety deposit box, try to do so at the same bank where you keep your accounts and inform your executor of its location.  This will streamline the financial accounting process.

You can also keep your original will and other estate planning documents at your lawyer’s office.    Law firms often have systems for long-term document storage.  However, keep in mind that the law firm may dissolve before the willmaker’s death, which can make it difficult to track down your will.  

You may also be able to store your will and other documents online.  Many large financial institutions have begun offering long-term digital storage of important documents.  However, any electronic version of your original will is – by definition – a copy, not the original.  So, you still must find a safe place to store the original, signed and witnessed will.  Online storage “safes” may be an excellent back-up, but you must still find a secure place to store the paper originals.

Guardianships & Conservatorships and How to Avoid Them

If a person becomes mentally or physically handicapped and can no longer make rational decisions about their person or their finances, his or her loved ones may consider a guardianship or a conservatorship whereby a guardian would make decisions concerning the physical person of the disabled individual, and conservators make decisions about the finances.

Typically, a loved one who is seeking a guardianship or a conservatorship will petition the appropriate court to be appointed guardian and/or conservator. The court will most likely require a medical doctor to make an examination of the disabled individual, also referred to as the ward, and appoint an attorney to represent the ward’s interests. The court will then typically hold a hearing to determine whether a guardianship and/or conservatorship should be established. If so, the ward would no longer have the ability to make his or her own medical or financial decisions.  The guardian and/or conservator usually must file annual reports on the status of the ward and his or her finances.

Guardianships and conservatorships can be an expensive legal process, and in many cases they are not necessary or could be avoided with a little advance planning. One way is with a financial power of attorney, and advance directives for healthcare such as living wills and durable powers of attorney for healthcare. With these documents, a mentally competent adult can appoint one or more individuals to handle his or her finances and healthcare decisions in the event that he or she can no longer do so. A living trust will also allow someone to handle your financial affairs – you can create the trust while you are alive, and if you become incompetent someone else can manage your property on your behalf.

In addition to establishing durable powers of attorney and advanced healthcare directives, it is often beneficial to apply for representative payee status for government benefits. If a person gets VA benefits, Social Security or Supplemental Security Income, the Social Security Administration or the Veterans’ Administration can appoint a representative payee for the benefits without requiring a conservatorship. This can be especially helpful in situations in which the ward owns no assets and the only income is from Social Security or the VA.

When a loved one becomes mentally or physically handicapped to the point of no longer being able to take care of his or her own affairs, it can be tough for loved ones to know what to do. Fortunately, the law provides many options for people in this situation.  
 

What happens if you are bequeathed a car that no longer exists? The ABCs of Ademption

If you’re involved in settling a loved one’s estate, you may come across the curious word “ademption”. Ademption describes what happens when something designated in a will no longer exists. Say, for example, your uncle dies and leaves for you in his will an old-school Harley Davidson motorcycle. However, if your uncle crashed the motorcycle two years before the will was probated and there’s nothing to leave, then that gift would be considered adeemed and you would receive nothing. This is why certain wills include language that says, “if owned by me at my death.”

However, it is important to realize that certain items cannot be adeemed. For instance, money. If your uncle died and left $7,000 for you in his will, but left a zero dollar balance in his accounts, your gift of cash would not be adeemed. Instead, the estate would be responsible for satisfying that gift, say for example, through the sale of the house or other such property.

There are exceptions to ademption, however. If the property leaves the estate after the person who wrote the will has been declared incompetent, ademption is waived.  Other states make exceptions for cases where interest in a corporation that no longer exists because the shares were exchanged with that of an acquiring company.  Your state may tackle ademption differently based on its laws, so please consult a qualified real estate or probate lawyer if you want to learn more about ademption and its exceptions.