In addition to our knowledgeable and talented attorneys, Kennedy & Ruhsam houses a support team with a variety of creative skills and interests. Our own paralegal Tina Johnson created the following article for Today Magazine, a local monthly publication, with the aim of educating and entertaining Minnesotans about the estate planning process. “Crafting your Legacy” ran in the summer of 2022. (link to https://www.todaymagazinemn.com/
Tina Johnson has been with Kennedy & Ruhsam since 2020, at which time she won the Barbara H. Peppersack Lifetime Service Award, recognizing paralegals for their extensive service and contributions to the profession. See more here: (link to https://www.mpkennedylaw.com/blog/2020/december/congratulations-to-tina-m-johnson-rp-/
Crafting Your Legacy
Where do you plan to lay your hat in an autumn field? When you are dead and done? This is precisely what British singer/songwriter, Bobby Long, portrays in the lyrics for his song “Dead and Done.” The importance of having an estate plan is to plan for your end-of-life issues, ensure the best possible future for your family members and loved ones, and to provide for any charitable causes you support at the time of your death. Although crafting an estate plan is extremely valuable for everyone, statistics consistently show that less than half of American adults have an estate plan in place.
So, what is included in an estate plan? For instance, do you choose a Will or a Trust as part of your plan? Let’s dive in and explore the most typical documents included in an estate plan. When preparing for your end-of-life, you must consider both your medical needs and your financial goals. Then, most importantly, it is focusing on how you want to benefit those you leave behind or the charitable causes you support, whether that is through a Will or a Trust.
A Living Will, also known as a Health and Funeral Care Directive, outlines your medical needs, such as the terms for your incapacity, your burial wishes, whether you want to donate your organs, and outlining who you want to appoint to step in and make these vital and empowering medical decisions on your behalf, ;as well as decisions regarding your post life remembrance services, if any.
For the financial piece of your legacy while you are alive, we turn to the Power of Attorney. This estate planning tool allows you to appoint an Attorney-in-Fact to step into your shoes to handle financial aspects or transactions for you, should you become incompetent or unavailable. Know that this is a very powerful document and should be carefully considered. The Power of Attorney is a document used during your lifetime and/or incapacity. The Power of Attorney ceases upon your death.
The substance of an estate plan is a Will and/or a Trust, or possibly both. Believe it or not, Minnesota has a “default” Will for you which is outlined under the state intestacy statutes. The assets and liabilities of those who pass away without a Will or Trust in place, will be distributed or settled by following the laws of intestacy as contained in the state intestacy statutes. Furthermore, in the absence of a Will or Trust or other applicable directive, the state intestacy statutes will also control who will raise your children, who will be their guardian and/or conservator, or whether the courts step in, in such capacity.
A Last Will and Testament is the heart and soul of an estate plan. A Will enables you to dictate how your assets are to be distributed when you die. A Will names the beneficiaries of your estate that will receive your property upon your death and appoints an executor or Personal Representative who will carry out your wishes and settle any outstanding debts. A Will also allows you to name a guardian and/or conservator for your children. It is a true brilliance bringing your heart into your legacy plan! Wills may include testamentary trusts within them to protect your loved ones from creditors, or a divorce, or a beneficiary who struggles with poor financial choices, or to protect a beneficiary with disabilities. There is only one original Will and when it is filed with a probate court, it becomes public record. Additionally, a Will only emanates and becomes effective at your death.
A Living Trust is another estate planning tool that is useful for several reasons, such as for individuals or couples with larger, taxable estates, who have dynamic assets or other property, for those who may expect a disability, or for individuals or couples who are averse to probate. The key aspect of a Living Trust, also known as a Revocable Trust, is that it takes effect as soon as the Trust agreement is executed. While creating a Trust may be more complex and more expensive than a Will, the beauty is this…a Trust is private. A full copy of a Trust is not filed in the probate court system and the trust estate can be managed in private. However, individuals creating Trusts must take the next step in transferring their assets into the name of the Trust, or by naming the Trust as a beneficiary of accounts or policies. If funding the Trust is accomplished, a Trust may avoid probate. On the flip side, if funding the Trust is not completed prior to your death, you essentially leave your legacy in an empty purse and will have an empty gas can on your hands.
Other valuable insights for having a Trust included in your estate plan (either a Revocable Trust or a Testamentary Trust) is to minimize taxes, including estate and gift taxes, to avoid probate, to assist, protect and help beneficiaries of the Trust by setting time limits for children inheriting from the Trust (i.e., hold inheritance in rust until the children reach 21, 35 or 40 years old), or by including “spendthrift” provisions to protect your beneficiaries from unforeseen creditors. Trusts are valuable in situations involving a second marriage with children from a prior marriage, by including provisions that provide income and principal payments to the spouse during lifetime, with the remainder of the Trust passing to the children.
As you can see, having an estate plan in place will provide you with the peace of mind of knowing just where you will lay your hat in an autumn field upon your death. Whether your plan includes a Will and/or a Trust, you are providing a lasting-legacy for the future of your family.
Please contact Kennedy & Ruhsam Law Offices, P.A. at (651) 369-7749 with offices located in Cannon Falls and Eagan, Minnesota, for assistance in crafting your estate plan with passion and expertise.