Frequently Asked Questions about Estate Planning, Special Needs Planning, Minnesota Business Law, and Asset Protection Services
We have compiled a variety of questions that we regularly get from estate, special needs planning, asset protection and business clients in the Minneapolis area. Our answers are included with each question and we hope that you find value in the information we have provided.
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I have heard that if I have a trust, I will lose control of my assets. Is that true?
That is not true. When you have us prepare a revocable living trust for you, you retain complete control of everything. If for some reason you want assistance with managing your assets, we can draft your trust to allow for someone else to help you manage your assets.
What if I want to change the trust, can I do this?
Absolutely. A revocable living trust can be amended or terminated. You can change it as often or as little as you want to. Usually, the reasons you would make changes to your trust are to change who you want to manage your assets after your passing or to change who receives your assets after your passing.
I have a will. That means my family avoids probate upon my passing right?
Wrong! This is one of the biggest misunderstandings I see. If you have a will, your estate will still need to go through the probate process. That being said, you obtain some key advantages by having a written will. In the absence of a written estate plan, the Court decides everything about your estate: Who the personal representative is; Who receives your assets; Who the guardian is of your minor children; and When they receive those assets. When you do a properly prepared will, you get to determine ahead of time who you would want as your personal representative, who the guardian of your minor children should be, who you want to receive your assets, when you want them to receive those assets, as well as any restrictions and protections you want to place on receipt of those assets. This is particularly important when you have minor children.
Your estate will still go through the probate process which means it will still take 12-16 months, cost 3%-5% of the gross estate and be completely public. However, you get the advantage of assuring your wishes are followed and not leaving everything up to the Court.
Do I need a will?
If you have children or own property, you should have a written estate plan no matter how large or small your estate is. If you have a written estate plan, you have the peace of mind of knowing that upon your passing, your wishes will be carried out by whom you want and how you want. In addition to deciding who should manage your affairs, where your assets should go and when people should receive them, you can and should name guardians for your minor children.
What if I die without a will?
If you pass away without a will (known as “intestate”), the State of Minnesota will decide who is in charge of your affairs, who should receive your assets and when they should receive your assets through a process known as probate. In short, your affairs may be managed by people you would not have wanted, your assets given to people you may not have wanted to receive them, and in amounts and a manner which you may not have wanted.
What is a living will?
In Minnesota, a living will is also known as a health care directive. A health care directive is a document in which you name someone, or a couple of people, to make health care decisions for you in the event you are unable to express your wishes for your health care. You may also provide detailed instructions to your agent(s) as to what your specific wishes are for your health care. In fact, the more detailed your instructions are for your care, the easier it will be on your agent and your family in the event your agent(s) is ever called upon to act.
My wife and I own everything jointly. If I die first, my spouse will get everything without probate. If my spouse dies first, I get everything without probate. So why do we need an estate plan to avoid probate, it looks like we will avoid it right?
Wrong. If you die, your spouse will indeed own everything without probate. If your spouse dies first, you will indeed own everything without probate. The problem is when the last of you die, there will be a probate. Owning everything jointly does not avoid probate, it just puts it off until the last of you passes away. The only way to avoid probate is to prepare a valid trust and make sure it is properly funded.
What is the difference between LLP and LLC?
Choosing your business entity can be a confusing process, especially when you're seeing options like "LLC" and "LLP." Laws can vary from state to state, but what is the difference between the two?
LLC (Limited Liability Company)
- Owners of an LLC are called "members" and they may include individuals, corporations, other LLCs, and foreign entities. With an LLC, members have limited personal liability for the debts and actions of the business, but not for another member of the LLC. If someone makes a mistake that requires legal action, every member could be held accountable.
- Some businesses like banks and insurance companies usually can't be organized as an LLC.
- LLC is not a recognized classification for federal taxes; a corporation, partnership or sole proprietorship tax return must be filed.
- Owners of an LLP are called partners. Much like a general partnership, but each partner isn't liable for the misconduct, negligence, or mistakes of other partners. They are only responsible for their own actions.
- LLPs are common for professional occupations that require a license, such as a legal practice or accountants’ partnership.
- The LLP's income is not taxed as a business, but it is taxed on an individual level when the profit is passed down to partners.
LLP (Limited Liability Partnership)
If you would like to learn about the exact laws for Minnesota business owners, contact Maple Grove business services attorney Chuck Roulet for a free consultation. He will be able to recommend whether your company should be an LLC or LLP, or possibly another business entity entirely. Call Chuck at 888-719-5589 and download a free copy of his book, Be Your Own Boss: A Fast and Friendly Legal Guide to Starting Your Own Business.
What is probate and how does it work?
Probate is the legal process that happens after you pass away. Each state has a probate court with their own rules, so the way things work may vary slightly from state to state. However, the general idea of probate administering your estate remains the same.
The probate court will look at your will, make sure it is valid, and decide how to proceed from there. Officials appointed by the court will usually pay off any debts you have first. After that is done, they'll begin the process of distributing your assets to the beneficiaries named in your will. If you do not have a will, your assets will generally pass on to your spouse. If your spouse is deceased, Minnesota has a table of heirship to determine who is next in line. The list can go very deep if you do not have immediate family, but if you do, it will generally go in this order:
In Minnesota, certain kinds of property and assets do not need to be probated. They include:
- Property owned as joint tenants
- Jointly held bank accounts
- Payable-on-death accounts
- Life insurance proceeds to a specific beneficiary
- Pension benefits with a designated beneficiary
Probate court in Minnesota can take quite a bit of time and be expensive, but it is an important part of distributing your estate accurately and according to your wishes.
Contact Attorney Chuck Roulet at 888-719-5589 if you're looking for a lawyer to oversee your will in probate or if you have any other questions regarding estate planning in Minnesota.