Minnesota Laws -Wills

Transcription

1 Minnesota Laws -Wills A will is the most common document used to specify how an estate should be handled after death. Anyone designated to receive property under a will (or trust) is called a beneficiary. A will can be simple or elaborate, depending upon the size of the estate and the wishes of the person who makes it -- the testator. Many types of post-death instructions can be described in a will. A will can describe who should receive specific items of furniture, artwork, or jewelry. A will can name a guardian who will take care of minor children should there be no surviving parent. A will can disinherit a child if the testator does not want the child to receive any part of the estate. The options for what a person can do with a will are varied but limited. Requirements for a Valid Will Each state sets slightly different formal requirements for the creation of a legal will. In Minnesota, a person must be at least 18 years old in order to make a legal will. In addition, he or she must be of sound mind, which means that the individual has no mental disability that prevents him or her from understanding the full nature of the document, he or she signs. In Minnesota, a will must be in writing and must be witnessed and signed by at least two other people. A handwritten will, often called a holographic will, is valid in Minnesota provided that it is witnessed and signed by two people. Individuals must sign their own wills, but if they are illiterate or otherwise incapacitated, they can direct another person, in the presence of witnesses, to sign for them. A will is valid until it is revoked or superseded by a new will. Individual provisions can be changed by a codicil, which is described in the section, Changing and Updating Wills. It is not necessary to hire an attorney to create a will. A non-attorney can create a will, but he or she must pay close attention to the details outlined above. Smaller estates can be described simply, and making a will to disperse a smaller estate can be done by almost anyone. The simplest will in history ever to be declared valid by a court contained only three words: "All to wife." However, a lawyer's guidance is very helpful with complicated property holdings or an estate with many assets, especially if they are located in several different places. Small business owners need the advice of an experienced attorney to transfer their assets. In these cases, an attorney's help can ensure that the transfer of property described in the will is done in a way that minimizes the survivor's tax liability. In addition, a complicated estate may require documents other than a will, such as a trust agreement, to ensure that all of a person's wishes are carried out. Personal Representative A will typically appoints someone called a personal representative to carry out the specific wishes of the person who has died -- the decedent. The personal representative should be a

2 trusted friend or family member who should be made fully aware of his or her duties before the decedent dies. A personal representative must do many things, including collecting and managing the decedent's assets, collecting any money owed at the time of death, selling any assets, if necessary, to pay estate taxes or expenses, and filing all required tax returns. Because a personal representative is allowed to charge a fee for doing this work, choosing a friend or family member who is also a beneficiary to fill this role may be a good choice, as he or she may not charge the full amount allowed by law. To ensure that one's estate has a personal representative chosen by the decedent, it is wise to name one or more contingent personal representatives who can take over the responsibilities of the primary personal representative if the primary personal representative is unable to assume the responsibilities of the position. If a person does not name a personal representative in his or her will, state law establishes the order in which a probate court appoints relatives to act as personal representative. If none of these family members agree to be the personal representative, the probate division of the district court may appoint a professional administrator to do the job. Appointing a Guardian for Children A person with minor or dependent children can name in a will a guardian to care for those children should there be no surviving parent. If a person fails to name someone to assume the role of guardian, the probate court appoints someone. The person chosen by the court will usually be a close relative or friend, but it may not be the person the parent would have chosen. As with the selection of a personal representative, it is important that the potential guardian understands the provisions of the will and is willing to accept the responsibilities of being a guardian. Also, it is wise to name an alternate guardian should the primary guardian be unable to accept the responsibility. Of course, the selection of a guardian for children is likely to influence how the parent wants to distribute his or her property. Otherwise, a decedent's money might go to one person while his or her children go to another person. The parent may want to give property to someone only if the recipient accepts guardianship of a child. In this way, the guardian is given the financial resources to care for the child. Planning for Incapacity People drafting wills often use the opportunity to plan for the possibility of their own incapacity. By preparing a document called a durable power of attorney, they can give another person of their choosing full legal authority to act on their behalf should they become unable to handle their personal and financial affairs. Without a durable power of attorney, a person's family might need to go to court to have someone appointed to handle the person's legal affairs. If a power of attorney is made part of the will, it is essential that the will be made known to family members before the testator becomes incapacitated. If a

3 will is kept secret, locked away in a safe deposit box until a person dies, it will be too late for the power of attorney provisions to be useful. Some people also use a document called a durable power of attorney for health care to make health care decisions in advance should they subsequently become incapacitated. Restrictions on Wills In order to protect spouses and dependent children, some laws prevent a person from disinheriting a spouse or child. A married person cannot completely disinherit his or her spouse without the spouse's consent. Occasionally this happens through a prenuptial agreement, for example, in which a second spouse agrees that an entire estate will go to children from a first marriage. In the absence of a contrary agreement, a surviving spouse has the right of election, which allows him or her to take a portion of the spouse's estate. This is used when a spouse is unhappy with the provisions of a will. A person may legally disinherit a child by clearly specifying in a will that the child not receive any of the estate. There are other limits to a will. Anything owned in joint tenancy with another person will go to the surviving joint tenant. Arrangements must be made to end the joint tenancy before death if one joint tenant does not want the other to inherit the jointly held property. Because there may be significant tax consequences in doing so, these changes should be made only after consulting an attorney. Other possessions are not considered part of the estate because they are already promised to someone else. For example, a testator cannot specify in a will that someone other than the beneficiary of a life insurance policy gets the benefits described in that policy. However, a person can designate his or her estate as the beneficiary of a life insurance policy. In this case, the money from the policy will be added to other estate assets and will be distributed according to the will. Similarly, the money from a retirement plan goes to the persons named on the plan, regardless of whether they are beneficiaries in a will. Laws designed to uphold public policy also limit what can be done with a person's assets after death. For example, conditions in a will encouraging someone to do something illegal or immoral in order to inherit money or property would not be enforced. Changing and Updating Wills The provisions of a will are valid until they are changed, revoked, destroyed, or invalidated by the writing of a new will. Changes or additions to a will can be included in a document called a codicil. Codicils must be written, signed, and witnessed in the same way as a will. Wills cannot be changed simply by crossing out existing language or writing in new provisions. In order to avoid making a new will or codicil each time a person's possessions change, a will can specify that personal property is to be distributed according to

4 instructions outlined in a separate document. A person can then revise the separate document as often as necessary, without observing all of the formalities required to change the will itself. If someone dies with a will that is not up-to-date, people may not be provided for adequately. For example, a person chosen to be a personal representative or guardian may have died or fallen out of favor with the author of the will, or a favorite charity may no longer be in existence. A significant amount of case law has dealt with how a probate court is to proceed with a will that has become unenforceable because of changed circumstances. These headaches can be avoided if a will is reviewed at least every two years and revised for major changes in tax laws or for personal events such as births, deaths, marriages, divorces, or significant changes in the size of the estate. It is also a good idea to review a will if its author moves to another state, because the new state of residency may have different inheritance and tax laws. In Minnesota, a divorce automatically revokes any distribution to the former spouse. The Right of Election As discussed previously, Minnesota's probate code protects surviving spouses from being entirely disinherited by a decedent spouse. A surviving spouse who is unsatisfied with his or her portion under an otherwise valid will is allowed to exercise the right of election and take one-third of the decedent's estate. Thus, the one-third portion is the minimum amount a surviving spouse may receive. A will can give more to the surviving spouse, but if it gives less, the surviving spouse can simply elect to forego his or her share under the will in favor of this statutorily guaranteed one-third share. Dying Without a Will If a person does not have a will or has not adequately planned for the distribution of his or her estate at death, survivors can face a complicated, time-consuming, and costly process. Often survivors wind up having to pay more taxes on their inheritance than they would have paid had there been a will or other estate planning tool. To provide for surviving friends and relatives, or to support favorite causes or charities, a person can plan for the distribution of his or her estate after death. With planning, an estate can be distributed as fairly as possible with as little tax burden as legally allowed. When a decedent leaves no will or other comparable estate planning tool, he or she is said to have died intestate. The division of the state district court system set up to handle wills and trusts is called the probate division. When a person dies intestate, the probate division steps in to divide the decedent's estate, according to a formula known as the state inheritance laws. Under the state inheritance laws, the probate division uses formulas set by the legislature to divide a deceased person's possessions among any surviving relatives.

5 A probate division applying the state inheritance laws first deducts from the estate funeral expenses, any unpaid medical bills, taxes, family allowance expenses, and any other debts owed. If the decedent has a surviving spouse and no children, the entire estate, after these deductions, goes to the spouse. If there are children, and the family home was not held in joint tenancy, the surviving spouse receives the right to the homestead for his or her life, known as a life estate, and a portion of the remaining estate. Surviving children receive whatever is left of the estate after the spouse's share is deducted, and they inherit the homestead when the surviving spouse dies. In the absence of a will, a surviving spouse with at least one child generally receives a life estate in the homestead, the first $70,000 of the estate, plus one-half of the amounts remaining after the first $70,000 are deducted. The other one-half of the estate is divided equally among the decedent's children. If one of the decedent's children dies before the decedent, that child's share passes to his or her living descendants, if any. Anyone entitled to inherit a portion of an intestate decedent's estate is known as an heir. One problem with relying on a probate division applying state inheritance laws to distribute one's estate is that it may not distribute the estate in the manner the decedent would have wanted. State inheritance laws only recognize relatives. The inheritance laws never permit the probate division to support a decedent's close friend, lover, or favorite charities. If no relatives are found, the estate goes to the state. Clearly, for most people writing a will or creating a trust is advisable.