Commonly Asked Questions about Estate Planning
- Why should I have a will?
- If I do not have a will, my property goes to the government on my death, right?
- If I do a will, there is no probate, right?
- If I have a will, I do not have to pay estate taxes, right?
- What is this living trust that I see advertisements and seminars about?
- If I do a health care directive, that means that I am more likely to become an organ donor, right?
- If my attorney does a living trust for me and also does a will for me, the attorney is doing more for me than I need, right?
- You own property in your name alone and want to specify who will get it when you are gone.
- You or your spouse has children from another relationship.
- You have minor children and need to name who would raise them and handle their money for them until they are grown.
- You have a person you want to leave money to who is disabled.
- You want to pick who will be the person who administers your estate.
If I do not have a will, my property goes to the government on my death, right?
No. If you do not do a will, there is a statute called the Intestate Succession Statute that says who receives your property. The legislature tried to guess what people would want and provided for your spouse and children to take first and your closest blood relatives after that. Return to top.
If I do a will, there is no probate, right?
Probate refers to the process that has to gone through to get your debts paid and the property distributed where it belongs. So, the will tells us what to do, but whether you have to go through probate or not depends on what kinds of assets you leave.
Assets like life insurance, IRAs 401(k)s, jointly held property, transfer on death (TOD) or pay on death (POD) designations and transfer on death deeds (TODDs) have named beneficiaries and so those assets do not normally have to go through probate.
Assets in your name alone or held with someone else as tenants in common are assets that have to probated. Return to top.
If I have a will, I do not have to pay estate taxes, right?
The issues of what assets are subject to the will and whether the government will assess estate taxes are totally different issues.
First, only large estates are subject to estate taxes. Right now estates have to be over one million dollars for the State of Minnesota to assess an estate tax.
Second, the government will include in the estate tax calculation all assets you owned, regardless of whether those assets are governed by the will or not. Life insurance, IRAs and so on that are not governed by the will and are not "probate" assets will still be included in the tax calculation. Return to top.
What is this living trust that I see advertisements and seminars about?
A living trust (sometimes called an intervivos trust) is a trust that you establish during your lifetime. Unless you establish an irrevocable trust, you retain the right to change it any way you want to in the future. Normally during your lifetime you are the trustee and the beneficiary. Because of a peculiarity of the probate statute, assets in the trust are not subject to the probate process. They go under a different set of rules called trust administration. In New York, California and Florida, that distinction is huge. In Minnesota, it is less important. Return to top.
If I do a health care directive, that means that I am more likely to become an organ donor, right?
These are totally separate issues. You can specify in your health care directive instructions about organ donation but the health care agent does not automatically have the right to donate your organs. You have to give the health care agent the power to donate organs affirmatively. Return to top.
If my attorney does a living trust for me and also does a will for me, the attorney is doing more for me than I need, right?
It is normal to do a will for someone who is also doing a living trust. In order for the living trust to work, all significant assets have to be in the trust. The purpose of this will is to make sure that any assets not in the trust are added to the trust and go where you want them to, or if there is litigation after your death (think bad car accident) that you have named who would be your personal representative. Return to top.
© Copyright Karen L. Tarrant (2010)