Frequent Questions

 All the stars have aligned! It is finally time to get started with your estate plan. Then the reality hits ~ what do I do next? How do I start my estate plan?

An “estate plan” is different for each of us. An estate plan begins very simply. Identify what you have. Start there. That inventory will typically include bank accounts, investment accounts, retirement accounts, life insurance, small business interests, real estate (home, cabin, investment), and other items. Include in that inventory how each asset is titled: do you own it alone or with another, does the asset have a current beneficiary or pay-on-death party listed? Figuring out what you own helps determine what type of plan fits your needs. 

Once you’ve identified what you own and how it is titled, then you’ll want to determine the person you will entrust with carrying out your wishes after you pass. That person is typically referred to as a trustee (if a trust is involved), or a probate personal representative (if a Will is involved). If you don’t have a trusted person for this purpose, a corporate trustee or personal representative could help carry out your wishes after your death.

Think about who you would like to receive your assets. This may be your spouse and children, nieces and nephews, or charities. Is there anyone you would like to exclude? Excluding individuals from your plan isn’t always a negative action. 

Sometimes we exclude because an inheritance could negatively impact a person’s ability to receive government assistance. Sometimes a loved one struggles with the ability to manage money, mental health or addiction issues and a large sum could be squandered.

While an estate plan commonly includes provisions in the event of your passing, most plans also include a plan for incapacity. Who do you want to be able to make legal, financial, and health care decisions for you if/when you’re unable to make decisions for yourself? Remember that no one is automatically entitled to make legal, financial, or health care decisions for you, not even your spouse. It is possible that you don’t want anyone to make decisions for you, even if you are incapacitated. In that case, at least you’ve made that decision. When choosing these individuals, they should be people you trust implicitly. They will be acting on your behalf when you are incapacitated and unable to make decisions for yourself. 

Finally, what are your goals for your estate plan? Do you want to avoid probate with a revocable trust? Do you intend to use only a Will for your estate plan and have your loved ones go through the time and expense of probate? Note that Wills do not avoid probate. Wills are a tool used when we anticipate probate. 

Contact Collins & Estrem, P.A. to help create your estate plan.

No. A Will, simply put, is a list of instructions to the Probate Court. A Will is, in most cases, a formal written document that includes direction to the Probate Court as to how a person’s estate is to be administered. It also provides direction for appointing a Personal Representative. The job of the Personal Representative is to gather the assets of the deceased, pay valid bills/claims, then distribute the rest according to the terms of the Will. 

Many people will take steps to reduce their wishes to writing and go through the legal formalities to create a valid Will to ensure their wishes are carried out. In those cases, the probate process is considered “testate” – i.e. dying with a Will. Once accepted for probate, the Will, or the “Testament,” is the controlling document throughout the probate process. The decedent (the person who died) maintains some control over the process through her Will. This is important for many reasons including maintaining assets in trust for children until an age after 18, and otherwise protecting those assets. 

Some people, though, prefer their estate be administered and distributed by rules created by the State of Minnesota. Let us repeat that – the same people who make our laws have anticipated your passing and created a one-size-fits-all plan for estates. How reassuring does that sound? In those cases, the probate process is considered “intestate” – i.e. dying without a Will. The intestate probate process can include more requirements than testate probates. In many cases there are unintended results, particularly with descent of the homestead or children possibly taking their shares at age 18.  In second marriages, intestate succession can result in complete omission of all the children of one spouse, which rarely is the intention. 

Many people achieve their estate planning goals by avoiding probate. They use different means such as careful and deliberate planning with asset titling, joint tenancy, beneficiary or transfer on death designations, and possibly a revocable living trust. 

Contact Collins & Estrem, P.A. to review your estate plan, even if it’s the one the State of Minnesota set up for you.

Contact Collins & Estrem, P.A. for help with your questions concerning Trusts.

A power of attorney is a document that authorizes a person to sign the name of another for financial and business affairs. The person who signs (or “gives”) a power of attorney is the “principal” and the person who is authorized to sign for the principal is the “attorney-in-fact” or “agent.” The principal does not give up authority to sign his or her own documents. Rather, a power of attorney will allow the agent to sign documents in addition to the principal. 

Choosing an agent is very important. That person, or people, will be entrusted to carry out your wishes. If you elect to have more than one person act as your agent, then you’ll need to choose whether those people act independently or jointly. 

The document can also include a limitation on the authority granted to an agent. For example, sometimes the principal will want the agent to be authorized only to sell a parcel of real estate and nothing else. Or the principal might want the authority to last for a given amount of time.  A common limitation is a restriction on the authority of the agent to make gifts to the agent. 

A power of attorney is considered “durable” if it continues to be effective during periods that you are incapacitated or incompetent. If the form is silent on that term then in most cases it will expire upon your incapacity. 

A typical financial or business power of attorney does not authorize the agent to make medical decisions for the principal or access the principal’s medical records. As such, if you intend to authorize another to help with your health care decisions, you should look into a Health Care Directive. 

Note that some banks or financial institutions want their own powers of attorney in addition to, or in lieu of, a standard or statutory power of attorney. It is a good idea to talk with your personal banker and your financial advisor if you’d like to make sure someone else can act on your behalf with respect to accounts at their various institutions.

The authority granted by a power of attorney document can end a few different ways. First, a power of attorney can be given for a limited time and, in that case, the authority will end on the date listed in the document. A power of attorney can be revoked by the principal provided he or she has mental capacity. Powers of attorney will also expire on the death of the principal and, to the surprise of many, can’t be used to settle affairs after death.

Contact Collins & Estrem, P.A. for help with your questions concerning Powers of Attorney.