Over 20 Years Of Helping Minnesotans Plan Their Futures

Frequently Asked Questions

Q: What Is A Guardianship?

A: A guardianship is a legally recognized status that is typically used when an individual can no longer make sound or safe decisions regarding the care of his or her person or property, or has become exposed or susceptible to undue influence and fraud. A guardianship essentially involves removing an individual’s legal rights, so great care and attention is paid during the appointment process. To appoint a guardian, an individual must make an application to the court that provides a detailed and thorough explanation of the events or concerns necessitating the appointment of a guardian. Typically, most states require that the individual seeking the appointment of a guardian provide sufficient notice to all individuals affected by the proceeding, in addition to providing the individual in question with independent legal counsel. The law also usually requires a heightened standard of proof, clear and convincing evidence, of the individual’s lack of capacity and provides the individual in question with the right to a jury trial. After the court appoints a guardian, he or she will have many responsibilities when it comes to the individual’s care and well-being. The guardian will consent to and oversee any medical treatment that the individual receives in addition to determining the individual’s location of residence. The guardian can make end-of-life decisions on behalf of the individual and will have the authority to make financial decisions in addition to determining when it is appropriate to release the individual’s private information. Due to the broad scope of authority that a guardian receives, it is extremely important to take great care when pursuing the appointment of a guardian.

Q: What Happens If The Terms Of A Trust Are Disputed?

A: Trusts are governed by state law, and the rules and procedures regarding the types of disputes that may be brought and the individuals who have standing to bring a dispute vary among jurisdictions. Generally, however, a person must prove that he or she has standing to bring a challenge against the trust. The concept of standing is a legal term of art, which means that the individual experienced direct harm or would experience imminent harm if the trust terms were enforced as written. For example, if Bill creates a trust leaving all of his assets “to all my children, Sue and Betty,” and later has a third child, the third child has standing to sue the trust on the basis that he or she was not specifically named in the trust provision. Since the trust clearly indicates that Bill wants to leave his assets to “all” of his children, the omission of the third child would seem to contravene Bill’s intent. A trust can also be challenged on a technical basis. Each state has specific rules that must be adhered to when drafting a trust. For example, most states require the settlor of the trust (the person who creates it) to be at least 18 years of age at the time the trust is created. Additionally, a trust may be challenged on the basis that fraud was involved in its creation or in the execution of its provisions. For example, if the settlor of the trust was under duress at the time that he or she executed the trust, which involves physical force or a threat of physical force, the terms of the trust can be challenged. If the trust was set up to result in the performance of an illegal act, like money laundering, the trust can be challenged on the basis that there is fraud in the execution of its provisions. There are additional bases for challenging a trust, and it is important to check with your local state provisions before pursuing a potential claim.

Q: Can I Leave Money To A Charity?

A: Absolutely. When leaving money to a charity, however, it is important to take into account certain taxes and exemptions that will be applied to your contribution. Leaving money to a charity in your will typically results in a charitable tax credit of up to 50 percent and may result in other exemptions from estate tax calculations. In most cases, leaving money to a charity will result in a reduction of the inheritance tax that must be paid during the administration of your estate. When identifying the charities to which you would like to donate, it is important to ensure that they do maintain a government-recognized charitable organization status. Individuals who leave large gifts to charities in their wills should be aware that a family member might contest the bequest. Some family members feel slighted when they realize that the family member bequeathed more to a charity than to him or her. The probate system allows a family member to file an objection to the executor’s administration of the decedent’s will. These objections can include an objection to the amount of money provided to a charity. A trustee can also be directed to contribute to a charity upon your passing. The trust documents can contain language that directs the trustee to provide a specific monetary amount or percentage of the value of the trust’s assets to a charity after your death or upon the dissolution of the trust. The specific charity or charities can also be identified.

Q: What Is A Power Of Attorney?

A: A power of attorney is a document that grants a specified individual the right to act as the grantor’s attorney in fact or agent should the grantor become incapacitated. The laws governing the creation of powers of attorney and the scope of the designated individual’s authority vary from state to state. In most cases, however, the individual who creates the power of attorney, often called the principal, can dictate the scope of the individual’s authority. For example, the principal can designate one person to deal with one particular issue, which is called a specific power of attorney, or provide him or her with broad authority to handle any issues that arise should he or she become incapacitated. The latter version is called a general power of attorney. An attorney-in-fact is responsible for maintaining accurate and diligent records of all transactions and decisions that he or she makes on the principal’s behalf. Some of the types of decisions that an attorney in fact can make include gifts of money, financial decisions, and the recommendation of a guardian for the principal’s minor children or dependents. Many people use powers of attorney to make healthcare decisions for them in the event that they become incapacitated. A power of attorney can be given the authority to give, withhold, or cease all medical treatments, diagnostic procedures, or services. The document will usually include instructions from the principal regarding how far he or she wants his or her treating physicians to go before ceasing all life-saving measures. The principal can designate any adult as his or her attorney in fact, including an adult child or trusted friend.

Q: Will My Beneficiaries’ Inheritance Be Taxed?

A: Current federal laws require United States citizens and residents to pay three types of taxes on a transfer of property: estate tax, generation-skipping transfer tax, and gift tax. An estate tax, which is also referred to as an inheritance tax, constitutes a tax on your right to transfer property at the time of your death. The first step to calculating your estate tax is to determine your “gross estate.” This typically includes every asset and interest that a person owns or has an interest in at the time of his or her death. There are many other calculations and additions that are conducted when determining an individual’s gross estate. For example, the value of any property that the decedent had, at any time, transferred during the three years prior to his or her death is added to the decedent’s gross estate, even if he or she no longer owns the property at the time of death. After calculating the gross estate, federal law allows for certain deductions to be made on the “taxable estate.” These deductions include, but are not limited to, funeral expenses, claims against the estate, administration expenses, some contributions to charitable organizations, and certain bequests made to surviving spouses. Calculating the amount of inheritance tax owed also requires determining the tentative tax base that applies to the estate. The tentative tax base schedule changes each year. Check with the IRS’ website to determine which figure will apply to a particular estate. Currently, at least 15 states have an estate tax, and over five states have an inheritance tax. Some states, like Maryland and New Jersey, use both. Check with your state’s rules to see what tax obligations apply in your location. States such as Minnesota have a much smaller exemption on estates and thus impose taxes on smaller estates than the federal government. This smaller exemption can be awfully expensive to small estates.

Q: What Plan Can I Make For My Pets?

A: It is possible to provide for your pet through a will, though you will generally want to leave money for pet expenses in the care of the person who will be taking the pet, rather than leaving money directly to the pet. In this situation it is also important to identify a backup caregiver, provide care instructions, and to specify that the funds you are leaving to any caregivers are intended for your pet’s care. You also have the option of setting up a trust for your pet, though this is an expensive and complicated process that likely will not be the best fit for most people. In the absence of a will or trust, there are animal care non-profit and rescue organizations that can help to locate a good home for your pet, but it can be risky to rely on this option in the event that such organizations do not have capacity or are not located in your area. Finding a friend or family member who will agree, either legally or informally, to take care of your pet and setting aside funds and information for pet care may be the safest option.

Q: Should I Hire A Lawyer To Help Me Draft A Will Or Can I Do It Myself?

A: Whether or not you need an estate planning lawyer to help you draft a will generally depends on the extent and complexity of your assets. Many people will only use a will for the purpose of passing on things like a home or personal property to their loved ones. In preparing your will, it is important to meet certain basic procedural requirements like making sure you have witnesses when you sign the necessary documents. However, with some careful reading and research, it is certainly possible to draft a valid will on your own if your estate is relatively simple. If your estate will be more complex and/or involves significant assets, it may be best to work with an attorney to ensure that your wishes are carried out with respect to the disposition of your property.

Q: What Happens When Someone Dies Without A Will?

A: A person who passes without a will is referred to as intestate. Each state has enacted a set of intestacy laws that make provisions for how a deceased individual’s assets should be distributed if they pass without a will. Since each state has the authority to create its own intestacy laws, the procedures that apply after an intestate individual passes vary greatly. In general, however, each state’s laws provide a list of the decedent’s next of kin in the order in which they will receive a portion of the decedent’s estate. For example, a state may specify that the decedent’s surviving spouse receives the decedent’s property, or that the decedent’s surviving spouse receives one-half of the estate and the decedent’s surviving children receive the other one-half of the estate in equal shares. These laws vary, particularly where the surviving children are from a previous marriage and unrelated to the surviving spouse. In the event the decedent is single and has no surviving children, the decedent’s parents typically are next in line to receive the decedent’s property. If the decedent has no surviving parents at the time of his or her death, the estate is divided among the decedent’s surviving siblings in equal shares. If an individual passes without surviving siblings, his or her estate is divided among his or her siblings’ decedents. It is important to look up the intestacy rules that apply in your state.