Frequently Asked Questions
What is a will?
A will, also called a last will and testament, is a legal document that gives instructions as to what should happen to your personal property and your minor children after you die. A will appoints an executor or personal representative to distribute your property and a guardian for your minor children.
Should I have a will?
Yes, everyone should have a will. Life is terminal. A will is not for you, but it is for those that you leave behind. A will provides comfort and clarity to your loved ones by directing the disposition of your personal property and security for your children.
What happens if I die without a will?
If you die without a will, your family members and loved ones may need to probate your estate. They may need to go to court to determine who is in charge of distributing your personal property and who will care for your children. It may cause them to experience additional heartache and grief over your death.
Who inherits when there is no will?
According to Minnesota Statutes Chapter 524, if you are married your spouse can elect to take a spousal share of the estate. If you have dependent children, they may be entitled to an allowance for support. If you have no spouse or children, your parents will inherit your estate.
What is the difference between a will and a trust?
A will is only good when you are dead. A living trust is a document that can be used to control your assets while you are alive and may provide beneficial estate planning and tax consequences.
What is a health care directive?
A health care directive lets your loved ones know your health care wishes when you can and cannot speak for yourself. A good estate plan always includes a health care directive to assist when needed.
How does a health care directive work?
A health care directive, also known as a medical directive or medical power of attorney, provides a list of who should be contacted. It may also provide instructions to those people about your health care goals.
How do you write a health care directive?
In Minnesota a health care directive, also known as a medical directive or medical power of attorney, can take many forms. Some only name a person to call, others provide health care instructions in greater detail. The important thing is that they are legally signed. Some hospitals have forms to complete. It is also part of a complete estate plan when working with a good attorney.
What is power of attorney?
A power of attorney, also known as a financial power of attorney, is a document that gives another person the ability to act financially on your behalf.
How does a power of attorney work?
The Attorney in Fact, the person you nominate to act for you, brings an original copy of the Power of Attorney to the financial institution or document transaction. With a copy of the power of attorney document, they sign their name as attorney in fact. The signature is legally binding.
What is a trust?
A trust is also known as a living trust. This is because you can title assets and accounts into the name of the trust while you are alive. You are the original grantor, the person who creates the trust, and trustee, the person who is charge of the property in the trust, of the trust. When you die, the alternate trustee becomes owner of the trust assets.
What is the main purpose of a trust?
The main purpose of a trust is to allow you to control your assets while you are alive and pass them to someone else when you die without having to go through probate.
How does a trust work?
You can title assets such as your checking account into the Trust. You are the only one who has access to those funds. When you die, the successor trustee takes your death certificate to the bank along with a copy of the trust document. They are then named as the trustee on the account in control of all funds in the checking account.
What is better a will or a trust?
A will may be better for some people, a trust may be better for others. It is important to speak with a qualified estate planning attorney to help you create an estate plan to meet your goals.
What are the advantages of having a trust?
If created and funded properly, a trust avoids probate. A trust can provide greater control as to the distribution of assets when you die. A trust may help avoid negative estate tax consequences.
Why would a person want to set up a trust?
If you want a distribution of assets to be less costly and time consuming when you die, you may want to set up a trust. If you have people in your life that are not good with your money, you may want to set up a a trust. If privacy is important to you, you may want to set up a trust.
What are the different types of trust?
The most common types of trusts include: Revocable trust, irrevocable trust, asset protection trust, charitable trust, constructive trust, special needs trust, supplemental needs trust, and spendthrift trust.
What is the difference between a living trust and a revocable trust?
There is no difference between a living trust and a revocable trust. They are two different terms used to describe the same thing.
What is a Supplemental Needs Trust?
A Supplemental Needs Trust is a type of special needs trust. Supplemental Needs Trusts are designed to supplement the aid of a disabled individual receives from government benefits like Medicare and Medicaid.
How does a Supplemental Needs Trust Work?
A disabled individual cannot control the assets in the supplemental needs trust that was created for their benefit. The trust cannot be a source of income. The disabled individual then stays below income standards and receives government assistance. The trustee of the trust uses the trust asset to supplement the aid provided by the government.
Who is eligible for a Supplemental Needs Trust?
A Supplemental Needs Trust is for individuals with physical, psychiatric, or intellectual disabilities, who are under the age of 65.
What are the benefits of a Supplemental Needs Trust?
Supplemental Needs Trusts are designed to supplement the aid that a disabled individual receives from government benefits like Medicare and Medicaid.
What can the funds in a Supplemental Needs Trust be used for?
The funds in a Supplemental Needs Trust can be used for anything that an individual may need in their daily life. A partial list of what this entails can include everything from an automobile, appliances, internet service, laundry services, dental or medial services NOT covered by Medicare or Medicaid, furniture, gas for vehicles, purchasing a home, cell phone services and vacations. It is best to work with an attorney to understand what a full mist may look like.
What can a Supplemental Needs Trust not be used for?
These count as an In Kind Support or Maintenance. ISM. Funds from a Supplemental Needs Trust cannot be used for things that are covered by government assistance like food, rent, a mortgage, electricity, and city utilities. These items are considered “In Kind Support or Maintenance” (ISM).
What are the different types of business structures?
There are five main legal ways that you can structure your business. They are:
- Sole Proprietorship
- Limited Liability Company
- Non Profit Corporation
Additional variations of each of the five main structures exist such as a DBA, a C Corp and an S Corp
What is the best business structure for my business?
Determining your business structure is a very important decision when starting your business and varies depending on your situation and goals. Below are a few factors to keep in mind about which one is best for you.
Should I start a Sole Proprietorship?
You should start a Sole Proprietorship if you want to ensure that you have complete control of your business. They are easy to form, but they do not shelter your assets from liability. Another consideration is that profits are taxed on a personal level.
Should I start a Partnership?
Partnerships are meant for two or more people that want a simple structure to own a business. In a general partnership, each of the individuals share the liability in case they are sued and their personal assets can be considered. In a Limited Liability Partnership, all partners have limited liability while in a Limited Partnership, a general partner has unlimited liability. Additionally, their income may be subject to self-employment tax and/or personal tax.
Should I start a Limited Liability Company?
If you want to protect your personal assets, Limited Liability Companies (LLCs) are designed to protect the personal assets of every owner from business liabilities. Additionally, LLCs are flexible enough that they allow the owners to elect to pay personal or corporate taxes.
Should I start a Corporation?
A corporation is a legal entity that is completely separate from its owners. Owners of corporations own shares of the company. Corporations pay taxes, can sell stock and pay dividends to shareholders.
Should I start a Nonprofit Corporation?
Nonprofit Corporations also known as 501(c)(3) corporations are designed to benefit the public. Because of this, they can apply for a tax-exempt status from state and federal taxes. Profits cannot be distributed and the owners are not personally liable for the actions of the corporation.
Is a Limited Liability Company (LLC) or S Corp better for small businesses?
The best way to determine if an LLC or S Corp is better for your small business is to evaluate the tax benefits and determine what will save you more money. You will likely need to research what is a reasonable salary for your position and compare salary to the projected profits of the company. If the company will not make money after your salary, an S Corp may not benefit you. If your company will show a profit after paying salary, an S Corp may save the company money.
What does a Limited Liability Company (LLC) protect you from?
Other than fraud or cases of misconduct, a Limited Liability Company (LLC) protects the owner from most personal liability for the actions of the company. The only risk of financial loss is what you have invested into the company.
How do you start a Limited Liability Company (LLC) in Minnesota?
To create a Minnesota Limited Liability Company (LLC), you need to register with the Minnesota Secretary of State on their website (www.sos.state.mn.us). Additionally, a lwaywer can assist you through the process. If individuals fail to observe corporate formalities, leave the shareholders liable to legal consequences under the legal concept of piercing the corporate veil.
What does it mean to Pierce the Corporate Veil?
Minnesota courts apply a two-prong test to determine whether an individual shareholder may be liable for corporate obligations. The first prong focuses on the shareholder’s relationship to the corporation. The second prong requires proof that veil piercing is necessary to avoid injustice or fundamental unfairness.
What is the difference between an abstract, a deed, and a title?
An abstract is a collection of legal documents about the history of a percel of land. Deeds are the legal documents that transfer land title. Title is a term that means ownership of the property.
What are the different types of deeds?
There are many different types of deeds in Minnesota. In general they fall into the categories of Warranty Deed, Special Warranty Deed and Quitclaim Deed.
What does a warranty deed do?
A Warranty deed is a document that transfers the title of property from the grantor to another party. In a warranty deed, the grantor promises that the title is clear of any claims.
What does a quitclaim deed do?
A quitclaim deed is a document that passes any title, interest, or claim the grantor has in the property to another party. A quitclaim deed does not make any representations or guarantees as to the validity of such title, interest, or claim
What is a transfer on death deed (TOD)?
A transfer on death deed (TOD), or beneficiary deed, allow the transfer of title to real property without it going through probate.
Does a transfer on death deed avoid probate?
A transfer on death deed (TOD) allows for the transfer of title to real property without it going through probate. However, other assets in the estate may still be subject to probate.
How do I probate an estate?
The first step should always be to speak with a probate attorney. The types and amounts of assets and property in the estate make a difference as to the probate process. There is a legal process that an attorney will be able to help you work through.
What happens when an estate goes to probate?
If you die with real property, land, or significant assets in your name alone, the estate is subject to probate. The probate process is to allow for someone other than the deceased to transfer their property. The court needs to verify who has proper authority to sell a dead persons home.
What is probate?
Probate is a legal process that dermines how the assets of a deceased person will be distributed. The steps are to authenticate the last will and testement if there is one, appoint an executor or personal representative, locate all the decendent’s assets and determine the value, notify the creditors of the decendent, pay debts and taxes, and distributing the remaining assets, if any, to the beneficiaries.
What types of assets are subject to probate?
All assets that are only titled in the name of the decedent, any assets that are held jointly as tenants in common, household goods and personal items must be listed and bank accounts and investments that don’t qualify as an excluded asset (Such as those with beneficiary designations) may be subject to probate.
What types of assets are excluded from probate?
Assets that are excluded from probate include property that is held jointly with survivorship rights, property with a designated beneficiary (such as a TOD), and Trust Property.
Is probate necessary when a spouse dies?
If all assets were titled jointly, probate may not be necessary. However, it always best to ask an attorney about your individual situation.
Does a will avoid probate?
No, it only distributes your assets when you die. A will has to go through the probate process.
How long does probate take?
Every probate is different. Depending on the size and complexity of the estate, it could take a year longer.
What happens after probate is closed?
It means that the personal representative or executor has done everything they can do to inventory the estate, pay the final debts, and distribute the remainder, if any. They provide the court with a final inventory and their actions are finalized.