5 Reasons Estate Planning is not only for the Wealthy

Ever wonder what you have in common with Jeff Bezos, Bill Gates, or Oprah Winfrey? You all need to do estate planning! One reason I often hear as to why a person does not have an estate plan is that they think estate plans are only for the affluent. While millionaires and billionaires may utilize estate plans to mitigate estate tax consequences or create complex charitable giving schemes, the reality is that most folks do not have to worry about those issues. Even though your bank account may not look like any of the above individuals’, implementing an estate plan is still tremendously beneficial to you and your family. Here are five reasons you should work with a trusted attorney to create an estate plan:

  1. Decide Where Your Assets Go – The primary estate planning tools that enable you to direct your assets upon your death are a Will or Revocable Trust. An estate planning attorney can help you decide which document will best meet your objectives. If you do nothing, the State of Minnesota directs who will receive your assets under Minnesota Statute 524.2-103. This statute sets forth the laws of “intestate succession” which provides who, among your living relatives, has priority to receive your assets upon your death in the absence of an estate plan. Making these determinations is especially important for blended families, unmarried partners, or situations where an unequal distribution of assets makes sense.
  2. Decide Who is in Charge – By completing an estate plan, you decide:
    • Who is in charge of gathering your assets and distributing them upon your passing. This person is called a “Personal Representative” under a Will, and “Successor Trustee” under a Trust. This person is in charge of gathering your assets, paying any debts, and distributing the assets in accordance with your estate plan. A Successor Trustee will also manage your trust assets in the event of your incapacity. If you do not have a Will or Revocable Trust in place (you guessed it!) the State of Minnesota has a statute (Minnesota Statute 524.3-203) that addresses who has priority to serve as Personal Representative.
    • Who should make healthcare decisions for you if you are not able to make them for yourself. Not only does creating a Healthcare Directive allow you to appoint an agent to make decisions for you, but also provides an opportunity for you to express your wishes about your future care and end-of-life decision-making.
    • Who may act on your behalf for financial/transactional-related matters during your lifetime. A Power-of-Attorney is an extremely powerful tool, allowing you to appoint an Attorney-in-Fact to act on your behalf during your lifetime (only), and can prevent the need for a guardianship proceeding in the event of your incapacity3.
  3. Guardianship – If you have minor children, estate planning is a must. When the parents of a minor child dies, the court looks at the “best interests” of the child in determining who should be appointed as guardian. An estate plan, either through a Will or Designation of Guardian, allows you to express your wishes to the court as to who you would like the guardian of your children to be. It may not be the same person that the court would otherwise appoint.
  4. Funds for Minor Children – Minor children cannot receive assets outright. When a person dies in Minnesota with no estate plan and minor beneficiaries, the court will order that any assets owed to minor beneficiaries be deposited into a court-monitored account until the minor reaches age 18 (age of majority). Not only is that a poor investment model, but most people would agree that giving an 18-year-old a potentially large sum of money is unwise. If you have assets you would like children to inherit upon your death who are presently minors, or to grandchildren who are minors, creating a Trust allows you to set aside certain assets for the benefit of those children. You will choose a Trustee who will oversee investing and distributing the assets; set forth the terms under which the Trustee may make a distribution to the beneficiary or for their benefit; and at what age or ages the beneficiary will be able to receive assets outright.
  5. Incapacity Planning – Estate planning allows you to decide who you would like to handle your financial affairs in the event you are not able to handle them during your lifetime. A Power-of-Attorney allows you to appoint an agent or agents to act on your behalf during your lifetime for financial/transactional matters. Additionally, utilizing a Revocable Trust as your primary estate planning tool allows you to nominate a Successor Trustee to act in the event of your incapacity with respect to Trust assets. Both tools, in most instances, will avoid the need for a guardianship or conservatorship proceeding, which can be a costly, time-consuming, and emotional process.

Estate planning enables you to honor your family by making an otherwise very difficult time (your incapacity or death) a little easier. If leaving a legacy of financial responsibility is important to you, proper estate planning is a great way to convey your values to future generations. If you have questions regarding estate planning, please do not hesitate to contact Robyn Ingber at (952) 460-9227 or [email protected].