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Lessons from a Pandemic: We Are Not Invincible

While it may sound obvious, we all think we are invincible at certain points. Call it youthful ignorance or burying our head in the sand or whatever excuse we may have, but we all think or act like we are invincible at some point. Frankly, it is natural to think that nothing bad could ever happen to us. Other people are mere mortals, but me, I am gonna live forever. Of course, deep down, we all know that is not true, but it is not comfortable to acknowledge that.

COVID-19 reminded us that we are mortal. That we can get sick. We can get severely sick to the point that we need someone to speak for us. And worst of all, we could die. Again, over a half million people died from this sickness that we just learned about last year. It is true that young and, presumably, healthy young people generally survive this sickness, but not everyone does. There again is that feeling that I am not going to be the one that gets sick and dies, it is going to be the other guy.

One thing that we missed out on from the pandemic is Minnesota State University, Mankato Maverick hockey. Our family is a huge supporter of the program and season ticket holders. The “other guy” syndrome that we often see is beautifully illustrated by a promotion that the program does each year. Each year they hold a cancer awareness night. As fans walk into the game, they hand out glow necklaces to everyone. You can see a picture of the arena below that holds 5,100.


Before introducing the starting lineups, all the lights are turned off and the arena is dark. The announcer comes on the loudspeaker and tells everyone to “break” the glowing part of their necklaces and hold it above their head if they have ever been afflicted with cancer. A somewhat small portion of the crowd follows the instructions and the announcer then asks anyone that has a family member that has had cancer to break their necklace and hold it above their head. A larger part of the crowd follows the instructions. Finally, the announcer instructs everyone that knows someone that has been afflicted with cancer to break their necklace and hold it above their head. Inevitably, every person in the crowd is holding a necklace above their head and the entire arena is glowing green.

So, what does this have to do with a pandemic? Well, nothing directly other than we did not have Maverick hockey this year. What it does illustrate is the life is precious. It is NOT always someone else. At some point, it is each of us or it is someone that we love. It means that planning now is important. Intentions are great, but they do not mean anything if we do not follow through and actually complete our planning.

Whether you need a simple will or you need a trust or you need a special needs trust for your children or you need a health care directive for your wishes if something happens to you, a sense of urgency is important. The last thing that any of us wants to hear in the estate planning community is that you had the best of intentions to get it done, but just did not think it could happen to you. Your loved ones will be the ones the suffer the consequences. Our goal is to take away any uncertainty of how your loved ones are taken care of or who is going to take care of them. None of us are invincible, it could be us.

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Why We Do What We Do

When I was younger, I had a conversation with our pastor about all of us doing our job. He told a story from when he first started in his ministry. Like most of us just starting out, he didn’t have much money and he and his wife purchased a fixer-upper house. One cold, Minnesota winter night his furnace went out. He called one of the members of his church that was an HVAC repairman to see if he could come out the next day. The man immediately told him he’d be out and take care of the problem. When the man got to the pastor’s house, the pastor made sure to thank him and reassure him that he didn’t need to. The man’s response was that he had “a job to do and you needed me. You would do the same thing for me if I needed you” if he were in the hospital or had a family member pass away.

From that day our family has instilled that mentality. Our job at Kiecker Law is to help protect you and your family in your greatest times of need. If you or a family member passes away, we want to make sure your minor children are taken care of. If you are sick and can’t make financial or health decisions yourself, we want to make sure that the person you want is making decisions for you. If you have a child (minor or grown) that has special needs, we want to make sure they are taken care of. That’s what our job is.

Obviously, writing legal documents is part of that. Another part of that is to help educate you as to what your options are in situations or what steps you can take to help plan for an unfortunate situation. The list could go on and on with respect to education. As some of you have probably noticed, we haven’t published a blog or newsletter since November. Some of that is due to the holidays, family situations and a little thing called a pandemic, but an even larger part of that is that Kiecker Law has agreed to take on a law firm with locations in Sleepy Eye and Lake City (Pat Lowther Law). Omni and Pat have been planning a succession plan for Pat’s firm for a while, but that plan was accelerated as Pat recently decided to step aside sooner than anticipated. A much larger audience will receive this newsletter/blog than previous months and we hope that we can serve as a legal educator and trusted advisor for both Kiecker Law and Lowther Law clients.

We are currently living in a unique time. We live in a time that we can learn so many lessons. It’s safe to say that most of us have been worried, concerned, and flat our scared in the last year. Over a half-million of our fellow countrymen and women have died in a pandemic of a virus that very few of us even knew the name of 13 or 14 months ago. Aside from the political atmosphere that has developed around this medical crisis, that’s flat-out scary. For the rest of this year, we will be working through a series of newsletter articles and blog posts called Lessons From a Pandemic. Of course, being that we are a law firm, all of these articles will pertain to the legal realm. More specifically, they will pertain to estate planning and business law. You can count on us to continue doing what our job is.

For those of you that have been with us and following us for a period of time, we’d like to welcome you back. For those of you that are new to us, we welcome you and hope that we can provide you with useful information. If you need us to help with legal needs, of course, we are here to help. Please reach out to us if you need to create your estate plan or business, update your plans or if a new legal need arises.

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Updating Your Titles, Deeds and Beneficiaries

Many times, when people think about estate planning, they think only of their will and trust. We have tried to educate people on why they need to plan for other situations as well.

Yes, your will and trust help you when you die, but what about when you are still alive and just need a little bit of help. You need to think about your health care directive and your financial power of attorney. Earlier this month, we debuted A Guide to My Life: My Advisors, Digital Assets and Documents which is a guide to help you keep track of your online life that helps your loved ones keep your affairs in order in life and death. There are many, many other facets to estate planning, but today we cover why you need to update the deeds and titles of your assets and the beneficiaries of your financial accounts. Each of those need to be covered separately.

First, let us talk about the deeds on your housing properties. Typically, clients want to avoid probate courts as much as they can so that their loved ones avoid the headache that comes along with it. The stage in life that you currently reside, and your unique situation will make a bit of difference, but as a rule of thumb a Transfer on Death Deed (TODD) is an essential part of your estate plan. For most people, their house is the most valuable asset that they possess, and it is one that many times will drive their estate into probate when they pass away.

So, what does a TODD do? A TODD simply is a type of deed that takes your house and transfers the ownership of the property to a specified person. That means you keep the ownership of the house to yourself and when you die, it goes to your children or some other person rather than a court deciding what happens during the probate process. You then file the deed with the county (usually in the land records department). When you die, your house automatically passes on to the next person with out going through the process. It really is as simple as that.

Some people may have extremely valuable vehicles or boats. You can do the same thing with those assets as well. When it comes to large assets, you can put transfer on death designations on vehicles with the DMV and on boats/yachts with the DNR. They work in the same way as a Transfer on Death Deed with your house.

The last thing we want to talk about is beneficiaries on your financial accounts. This includes everything from your life insurance to your 401(k) to your savings accounts at your bank to your checking account. You want to make sure there is a beneficiary listed. Why you may ask? It is simply to ensure your assets get transferred to the right person or entity. Again, this is a great way to avoid the probate process. Say you are 40 years old and you have $100,000 saved in an IRA, you may want to put your spouse on the account as a beneficiary. That means that there is no need to go to the probate court to decide who gets it. In most cases your spouse would gain access to it anyway if you didn’t designate the beneficiary, but it could take months or years for that to happen and the value of it would likely be substantially decreased because you would have to pay fees to courts and attorneys. In another scenario you may set up a trust for your kids if something happens. If the beneficiary does not get labeled correctly, your accounts again go through probate and your children will not be taken care of the way you want.

The message is simply this, the little things make a difference. The cost is either extraordinarily little or nothing to do these things, but not completing them can be extremely costly and time consuming.

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Protecting Your Digital Assets

Earlier this year, the app developer, NordPass, conducted a survey around online passwords. They found that the average person keeps between 70 to 80 passwords. They must memorize, write down, reset that many passwords just to function in their life online. You may ask, “why is an estate planning law firm talking about passwords?” Honestly, it is a great question. The answer to that is a relatively new term called “Digital Assets”.

Normally when we talk about assets, we only think about physical items or financial accounts. In today’s world, everything seems to be shifting online. We do not get bills in the mail; we get it automatically taken out of our accounts and never see a bill. You can always look up the bill on your online account…which leads us back to your passwords. Nearly every bank and financial company in existence provides you with an online account to access your funds…which leads us back to your passwords. Maybe you were fortunate enough to invest in cryptocurrency like Bitcoin. That is not physical, you must purchase it through an online account…which leads us back to your passwords. Many people are forgoing physical pictures and just saving them online in their own account…which leads us back to your passwords.

So, what does this mean? It means that we need to start thinking about our passwords and our online accounts as assets. They are digital assets and they need to be protected like any other asset. This is a concept called Digital Asset Management. There are services that are out there like NordPass that sell their app to help you do this, but it does not need to be that intricate. It can be as simple as writing down all your passwords. In fact, we have created a document that you can download and fill out. Of course, we have added a few other helpful pieces of information like your closest advisors, your account information and where you keep your physical documents.

We call the document A Guide to My Life: My Advisors, Digital Assets and Documents. As we tell clients, you want to leave a way for someone to step into your shoes and take care of your life if you need help. That could mean that you are stuck in the hospital from COVID-19 for 3 weeks and need to focus on recovering. Even worse, if you die, you want to make things as easy as possible for your loved ones. Having all your affairs in one place is extremely important, especially as our lives become more and more digital. Again, you are collecting digital assets and that is great because it makes your life easier, but it also makes it more difficult for your loved ones to know where everything is kept.

For this document, we suggest printing it out and keeping it in a safe place. We understand that it would be easier to make it a fillable document that you can save on your computer. Frankly, we advise against that for 2 reasons. One, if you have it saved on your computer, someone is going to have to be able to access your computer, which can be difficult if it is password protected itself, and if they do get access, they need to know what to look for and where it is. Secondly, if it is on your computer, it could theoretically be hacked into. If it is hacked, again, your entire life is on there and people you do not want to have access to it will have access to it. Instead, we suggest printing it out, filling it out with pen or pencil and then keeping it in a drawer in your desk or somewhere else that your loved ones will look (or that you’ve told them about).

Even if you decide to use some other form of tacking your digital assets and other important information, we still feel it is important and recommend it to all or our clients. Communication is key with your loved ones and digital asset management is just one more aspect of estate planning that can make life, and death, easier for your loved ones.

What Does a Charitable Remainder Trust Do?

The last in our series of articles on trusts is a Charitable Remainder Trust, or a CRT. This very specialized trust is typically used by people that are interested in philanthropy. They often want to create a legacy both while they are alive and after they die. They are planning to make donations to their favorite charity, but still need to have money to spend during their life.

In terms of how a CRT works, it is good to go through a primer on how a trust in general works. In simple terms you create the trust, or your box. Then you will title your assets in the name of the trust. From there you will name a trustee, or the person that will put things into the box or take things out of the box. The trustee will have the ability to sell the assets in the box so that it becomes liquid cash. While the person writing the trust (also known as the grantor) is living, they will still get cash to live off. The intent of the trust is to make sure that person is taken care of and will lay out the details of what is expected while the person is still living. Once the grantor of the trust dies, the trustee will then take the assets that are in the box and distribute the proceeds to the specified charity or charities. Obviously, the mechanics of this arrangement are a little more complex, but this is what happens in its simplest form.

You may ask, why would someone want to do this? Why would you create a CRT instead of just “willing” the assets or cash to the appropriate charities? Like any other legal question, there are a many different reasons. We will not get into the details of each of them specifically. The reasons could span from wanting to convert an appreciating asset such as land into lifetime income. From a tax perspective, you may want to reduce or eliminate estate taxes. It’s also possible that you are in a position that you want to decrease your current income taxes with a charitable income tax reduction or you may want to avoid a capital gains tax when selling the asset. You also have the assurance that when you die, you know that your money is going to go to fulfill the objectives that you set. There really is no room for anyone to object to your donation if the trust is set up appropriately.

From the charity’s perspective, they would be in favor of this sort of a plan simply because it helps them to be able to budget in future years. They may not know the exact timing, but they certainly would know the approximate amount that they are set to receive in the future. Once the trust is developed and put into place, they know that can plan on fulfilling the mission of their organization whether it is a medical research group, a church, a scholarship or any other directive that they set out accomplish.

When it comes down to it, the process of setting up a charitable remainder trust is just like every other part of estate planning. You need to work with professionals to make sure your goals are accomplished. You need to think about what you want and build your estate plan appropriately. The government gives you avenues within tax codes and legal devices to accomplish most of your goals. You just need to plan wisely and that includes benefiting your favorite charity.

What Does A Special Needs Trust Do?

Imagine you have a child that, for whatever reason, you are concerned does not have the capability to care for themselves when they grow up. It could be that your child is autistic or has muscular dystrophy or any other condition. Whatever the reason, they just will not be able to care for themselves when they are adults. In most cases, we, as parents, are not able to be there for our kids for their entire lives. It is the sad reality that we, those of us that have kids with disabilities, must live with.

That is where a special needs trust comes in to play. Obviously, a trust cannot make you live longer so that you can be there. It cannot magically make it so your child can care for themself. What it can do is provide a financial structure your child’s life so that they can be taken care of. They will be taken care of financially. They will be taken care of physically. And if structured well, it can help them to get services that they may need from social services.

You may be asking yourself, “how in the world can this work? I feel all alone in taking care of my kids now, how can anyone possibly take care of my kids after I am gone?” If you remember back to our last few posts, you will recall what a trust is. If not, we suggest you read this blog about how a trust is structured as it will help to understand this specific type of trust. Essentially, a special needs trust is an empty box that has your child’s name on it. Everything that goes into that trust is there to benefit your child.

For example, say that when you die, you have a life insurance policy. Of course, you want your child to have that money. On the other hand, you do not want your child to oversee that money because it could lead to a litany of bad outcomes. You may be opening your child up to have to pay more for medical treatments rather than the state pay for it in which all that insurance money will be paid to a hospital or health care facility. You may be disqualifying your child from receiving the services that they need because now they “have too much money”. You may be opening your child up to predators that are going to try to fraudulently take that money from your child.

Any of those reasons are scary enough to make you want to plan. Rather than giving your child that money outright, the government has given you the ability to create that box, a special needs trust, to store all that money that you have given them. This holds true for any asset that they may accumulate from you, grandma and grandpa, your rich uncle, or any other means. When you create this box, you also designate someone to be the person who controls the box. They are called the trustee and is usually someone that is close to you and is very trustworthy. The trustee can determine how much money comes out, when it comes out and why it comes out. They can be required to give an accounting each year so you can guarantee that even the trustee must answer as to where the money is going.

Additionally, you can determine who is the guardian of your child. They would be the person that oversees the actual care of your child. By splitting up the duties, you can make sure that each of these people are accountable. Again, it is not that you do not trust the people you put in charge, but it is a checks-and-balance to make sure that your child is well taken care of.

While planning for this may seem like a bit of a stressful exercise, it is well worth it. Again, you can make sure your child is taken care of physically, not going to financially devastated by someone fraudulently stealing from your child, and make sure they receive the services that they need to be a productive

adult. It does take some advanced planning, but it is worth it to make sure your child has every opportunity even after you are gone.

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Why Do I Need a Revocable Trust?

We previously discussed what a trust is and how it functions. Please read that post first to better understand how a trust works.

A revocable trust is probably the most common type of trust that we see. A good way to think of a revocable trust is that it is the trust that is used in most situations. You may have a special circumstance such as a special needs child or want the trust to distribute your assets to a charity, but most people that want or need a trust will write a revocable trust. 

So, what is a revocable trust? Well, first of all, we’d suggest reading our blog on what trusts are. If you recall, we compared a trust to an empty box to store your assets in. A revocable trust allows you to put your assets into a legal device to protect those assets, but still allow you to control the asset. For example, you may want to put your house into a revocable trust so that when you pass away, it can more easily pass to your heirs. The nice thing about a revocable trust is that you are able to change whether an asset is held within the trust. That’s what makes it revocable, you can move your assets in and out of that metaphorical box.

That begs the question, why would you WANT to put your stuff into that trust? That’s a question that has multiple answers. This is why it is the most flexible, it can solve a lot of different problems. A huge driver for people wanting a revocable trust is their family. People want to protect their family and they want to take care of their family financially into the future. 

Some people may want to leave a legacy for their family. If you have more than $3 million in assets, you may want a revocable trust. Why? Simply put, it is the random number that the state of Minnesota has decided estates get taxed. So, if you want to pass assets on to the next generation and want to limit the amount of taxes that are paid, a trust is one avenue to do that. We won’t get into the specific details on this as this post would end up being way too long and dry. 

Along the same lines of wanting to pass on your assets to your kids, you may have an adult child that is not very wise with money. Say for example, you have a child that has a drug or alcohol problem, the last thing you want to do is give them a boatload of money to feed their habit. Sure, you may want to take care of them, but you don’t want a windfall to be a detriment to them. What you may be able to do is set conditions so that your gift to your children is used wisely.

Maybe your gift to your children is the family cabin. A revocable trust would allow you to keep that cabin in the family and would allow you to pass it down to future generations. It’s a great way to make sure that taxes don’t eat up the entire value of something that you worked hard and can continue to bring your family together.

The last reason that we’re going to touch on is protecting your family. Placing your assets in a trust provides privacy. The figurative box blocks your nosy neighbor from seeing what you have and what you’re passing on to your kids. Any assets that are placed into trust do not have to go through the probate process. That means it is not public record and people won’t just be able to go online and know all of your financial business. That also means that the probate process is typically shorter and, in fact, may allow you to avoid probate. Your trust will lay out what should happen to your stuff and it won’t need to go through the legal proceedings. It will likely reduce the potential issues that may arise legally and reduce the heartache that your family has to go through.

Regardless of your goals, you will want to do a full evaluation along with your attorney so you can make sure a revocable trust is the correct option for you. There is no one-size-fits-all in estate planning so it’s very important to make sure you’re using the correct tool. A revocable trust is one tool, and it is a good one, but it may or may not be the right tool. Make sure you work along with your trusted advisors to make sure you are doing what’s best for you.

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What is a Trust?

Estate planning is complicated. There are many different tools, methods and strategies that can be used. And none of them are necessarily wrong. Each tool and method has its place and if they aren’t used correctly can lead to wasting your money or, even worse, may not accomplish the goals you are setting. 

One of the best ways to think about the tools and strategies is to think of them like cars. Imagine you own a Chevy Impala. A new Chevy Impala is a VERY NICE car. It gets the job done. It’s a nice vehicle with a lot of features that make you comfortable while you’re driving to your final destination. It can’t, however, be compared with luxury vehicles like BMWs or Mercedes. Luxury vehicles get the job done and they do it in more luxurious ways and usually do the job more efficiently and effectively. The next class includes Lamborghinis or Ferraris. Again, they are just a little bit nicer and do a few more things.

You can think of estate planning in the same way except that with cars we look at preference of vehicle whereas with estate planning strategies we look at what is needed. Wills are a great way to accomplish the goals of most people analogous to the Chevy Impala. Wills make sure your stuff goes to the right people and who takes care of your kids if you die. In estate planning trusts are a good way to accomplish additional goals including keeping your estate private or taking care of a special needs child. Trusts do all of the things that a will does, but adds other benefits. This is analogous to the Mercedes. It’s gets the job done, may do it more efficiently and can make things easier for your heirs. Lastly, we have the Lamborghini like advanced strategies that work along with will and trust. This can include planned giving strategies or family gifting strategies. All of these strategies and tools have their place. 

For now we’re going to focus on the Mercedes, or the trust. To be clear, there are many different types of trusts each of which are structured to accomplish a specific goal. There are revocable trusts, special needs trusts, charitable remainder trusts and irrevocable life insurance trusts among others. In the future we will get into specific trusts. Today, we’re just going to learn what a trust is and what it does.

Simply put, a trust is like a box. The trust itself is just a container that you put stuff in. So rather than putting shoes or a phone or food or any other retail item you can name into the box, you place (or title) your assets in the trust (ie the box). A trust is useless if no assets are placed into. Just like a box is just full of air if you don’t put anything in it, a trust is empty if it doesn’t “own” your assets. This all begs the question of why on earth would you want a different entity from yourself to own your house or your bank accounts or any other valuable asset?  

Again, there reasons are endless. You could be planning for a seamless transition of your house or business to your son or daughter. You could be attempting to minimize estate taxes. You could be attempting to shelter your assets so that you can more cost effectively pay for a nursing home or assisted living for yourself. You could be caring for your special needs child so that they can receive disability benefits. 

Like previously stated, the end goals can vary. Within an estate plan, you still need a will, a power of attorney and a health care directive. A trust is an addition to your estate plan. It takes a bit more work and paper work, but it offers additional benefits. In the next couple of months we’ll dig into some more specific reasons for a trust and specific types of trusts, but understanding what a trust is and how it is structured is the first step in evaluating if you need a trust. You may not NEED the Mercedes, but we want to make sure why you may need one and help you to figure out if you actually do need one.

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Power of Attorney

In our last blog, we talked about the importance of a health care directive in the context of the COVID-19 world that we are living in. Additionally, we want to talk about another part of your estate plan, the financial power of attorney. We talk about these two documents together because they are useful while you are still living, opposed to your will and/or trust which are useful after you pass away.

To be sure, COVID has made planning more prevalent for a lot of people, but that doesn’t mean that when the virus is gone, we should forget about it. COVID is top of mind for many of us, but tragedy can strike at any moment. You could be in a car accident or have a heart attack or get struck by lightning and be stuck in the hospital for months. Frankly, the cause is irrelevant. What matters is that you have planned beforehand, so that your loved ones can take care of your matters while you aren’t able to take care of them.

The financial power of attorney allows someone, called the “attorney-in-fact”, to speak and act on your behalf. Imagine you are in a car accident that leaves you with severe injuries and lands you in the intensive care unit. Unfortunately, the companies that you do business with won’t cease their operations. If you owe them money, they are still going to ask for it. Your mortgage won’t go away. Your electric bill will keep coming. For that matter, Netflix will continue to take money out of your account. What the power of attorney allows is for someone else to be able to keep paying the bill if you want or shut off the account if it is not needed.

Something that may be a bit more important than Netflix or your cable is that your attorney-in-fact can work with your insurance companies on the claim on your car. Or they can work with your disability insurance company to make sure that money continues to get paid to you. The goal is for the attorney-in-fact to keep your life moving so that when you get out of the hospital, you can go back to life and not have to dig out of past due bills or spend time where to start financially.

The reality is that tragedy does strike people. Some of us will get hit harder than others. Some of us will need to leave a roadmap for our loved ones on how you want your affairs handled if you are incapacitated. We always recommend that you plan to make sure that your wishes are considered. We don’t want people guessing what we might want or doing what they think is best for us. Their intentions are good, but what you want is what matters. Financially, a power of attorney is how you explain what it is that you want.

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