Years of Estate Planning and Probate Law Experience

Estate planning is just another form of financial planning. The basic purpose of estate planning is simple: It is to either maximize a person's wealth or reduce their expenses. The only difference between estate planning and general financial planning is that estate planning has a longer horizon and extends on to your children and other descendants. Most people who wish to do estate planning and who do not have unusual or exceptional circumstances wish to accomplish some or all of the following goals:

1. Insure that your assets will go to the people you want to inherit them.
2. Avoid the cost and inconvenience of having to go through a probate of the estate.
3. Protect the value of your estate from the Medical Assistance laws and nursing home costs.
4. Provide for minors and younger children's needs.
5. Avoidance of estate taxes.

If you consult with a professional for estate planning advice, the person you meet with in general should be able to save you, or more likely your heirs, more money than the cost of the consultation. If the estate planning session does not save you more money, it should at least substantially reduce your risk ofhaving yourestate depleted unnecessarily during your lifetime. A good professional in estate planning should learn during the conference the client's primary objectives and concerns and advise the client on the different options available to achieve those objectives. Generally, the objectives clientswishtoachieveareone or moreofthe fivegeneralgoals listedabove. Uponcompletion of the estateplanningsession,a competent advisorwill explain the options that exist for you to achieve your particular estate planning goals andwill further explain the advantages and the risks associated with each optionavailable to you. A professional planner will then allow you whatever time you feel you need to consider the options available to you, discuss themwith yourspouse or such others as youmaychoose, and will then assist you in implementing thosechosenoptions to achieveyourgoals. Except inan emergency, such as a serious illness, there should be no need to make an immediate decision or to take any particular course of action.

A power of attorney can be an informal substitute for a Guardianship or a Conservatorship. Creating a Guardianship or a Conservatorship, assuming it is uncontested (that is, assuming everyone agrees it is necessary) usually costs between $1,000 to $2,000 and costs between $500 and $1,000 a year to maintain because there are annual accounts presented to the court and a bond premium required. A properly drawn power of attorney can avoid these expenses.

A power of attorney can be an informal substitute for a Guardianship or a Conservatorship. Creating a Guardianship or a Conservatorship, assuming it is uncontested (that is, assuming everyone agrees it is necessary) usually costs between $1,000 to $2,000 and costs between $500 and $1,000 a year to maintain because there are annual accounts presented to the court and a bond premium required. A properly drawn power of attorney can avoid these expenses.

1. Power of Attorney documents are broad and sweeping and would allow the person or persons appointed to take control of your assets and do anything they wanted with the assets, including using them for themselves. A power of attorney can, however, be revoked at any time for any reason or for no reason at all. It is frequently recommended that possession of the power of attorney documents be retained by the person giving the power until such time as it is necessary to exercise the power. It is also frequently recommended that a spouse be given the power to revoke the authority of a child lo act under a power of attorney.
2. A power of attorney authorizes someone else to act but does not require anyone to act. The person given the power may refuse to exercise the power.
3. A person who acts under a power of attorney acts at his or her own risk. Under a Guardianship or Conservatorship a judge supervises what is done and any action authorized by the judge protects the guardian or conservator. This same protection is not available to a person acting under a power of attorney.

If you transfer property to your children, reserving the right to use the property until you die, you are known as the life tenant and your children are known as remaindermen.

1. If you do this and do not need to apply for medical assistance for a period of 60 months, most but not all ofthe remainder interest in the residence will be preserved from the reach of the medical assistance laws. Pursuant to a law passed by the Minnesota legislature in 2003, the State of Minnesota will now claim a lien on the remainder interest in the land based on a medical recipient's age at the date of death.
2. Transferring your residential real estate and reserving a life estate will eliminate the need for a probate proceeding upon the death of the life tenants as to that real estate. If there are other probate assets held in your name alone, probate will not be entirely eliminated. However, real estate is the most common type of asset which requires probate proceedings and there are easy and inexpensive ways to avoid probate for non real estate assets.
3. So long as you reserve a life estate in the property you transfer and continue to occupy the property, your real estate taxes will notgo upbecauseof the transfer. Your real estate taxesmay go up if everyone's real estate taxes go up, but under current law il will not go up because of transferring the property and reserving a life estate.
4. When you reserve a life estate, there is no way that the remaindermen or their creditors can force the sale of the life estate under Minnesota law.
5. When a life estate is reserved, there will be no capital gains taxes if the real estate is sold shortly after the life estate ends.

1. If you wish to sell or mortgage your property, it maybe awkward because all of your children and their spouses, must sign the deed or mortgage.
2. If any of your children have a judgment or tax lien it will attach to their remainder interest. This will usually mean that it must be satisfied before the property can be sold or mortgaged, resulting in a loss to your child. If a child later develops financial problems and files bankruptcy, he or she will lose their remainder interest. In the event your child needs to apply for medical assistance, the child's remainder interest will have to be sold or transferred before the child will be eligible for mediacl assistance.
3. If any of your children have marital problems which end in divorce, their remainder interest will figure in your child's property settlement and may pose a problem.
4. In the event of sale of the property before your death, if there is a taxable gain, your children may have to pay capital gains income tax on a portion of the gain.
5. In the event of a sale of property during your lifetime, your children will receive part of the sale proceeds and they will have no legal obligation to return their portion of it to you.
6. If ypon entering a nursing home, the property is sold, it will be necessary to use a portion of the sale proceeds to pay for your nursing care expense. The percentage is determined by actuarial tables used by the Minnesota Department of Human Services.
7. If the deed conveys your property to your children as tenants in common and any of your children die before you, it will be necessary to probate that child's estate. Usually, a remainder interest owned by a deceased child will go to his or her spouse, if they are married. If you have conveyed the property to your children as joint tenants and one of your children dies, that deceased child's share will go to your surviving children as surviving joint tenants. This will not require a probate proceeding.
8. The property will be included in your taxable estate for estate tax purposes.
9. When you create a life estate, a gift is automatically made to your children. The gift is known as the "remainder interest". This gift disqualifies you for mediacl assistance (help with nursing home bills) for a period of time up to 60 months. Sufficient cash assets must be reserved to pay for nursing care during that time.