BACKUS -- If you are already incapacitated, it's too late to decide who will handle your financial affairs or your health care. And, obviously, it's too late to write a will if you've already died.
Ted Lundrigan, Pine River attorney, therefore titled his Cass County Extension program last Thursday, "Settling an Estate," not "Estate Planning.
Planning, he said, is something you can put off.
Making these decisions is something no one should defer. It is just as important to 20-year-olds as those approaching their 90s, he said.
Besides a will, Lundrigan recommended selecting someone as durable power of attorney and to make health care decisions if an accident or illness prevent you from being able to handle your financial affairs or state the extent of health care you want.
Choose carefully, he warned.
People who can make tough health care decisions may not be the same as those who are good at handling finances. You may want to select different people for the two documents, he said.
Someone you appoint as durable power of attorney does your business if you can't, without court supervision unless that person breaks a criminal law, he said.
This person has complete control over all your assets. This document can be kept in a safe deposit box until you need it, he advised.
Without a named durable power of attorney, the court will appoint a guardian to handle your affairs if you become mentally incapacitated, he said.
A Health Care Directive names a person to make decisions about the extent of treatment you want if you are terminally ill or injured.
You have to assume in the case of injury or sudden illness that ambulance crews and intensive care health care givers will do their utmost to save your life. It is their job, Lundrigan said.
Assume you will be connected to some devices, he said. Your document should specifically state that devices used to save your life can be withdrawn if that is what you want, he advised.
This document can be used only when your condition is terminal, he added. It should be given to your home clinic and hospital.
If you are injured or become ill outside your home area, the first thing that hospital will do is request copies of your home hospital or clinic medical records, Lundrigan said.
Your health care directive, if filed with the home clinic or hospital, will be forwarded as a part of your medical records.
A will can be kept in a bank safe deposit box now, because Minnesota law does permit your personal representative access to that box only to obtain a copy of a will prior to the will being read, Lundrigan said.
It should not be filed with the county recorder's office where all documents are public record, but can be filed confidentially with the county court administrator's office, Lundrigan said.
Wills filed with court administration are stored indefinitely in a vault and will not be released to anyone until after your death. You will receive a receipt for your document filed there, he said.
Wills should include a signed, personally written attachment, listing personal property and how you want that distributed, he advised.
Property should be held in joint tenancy to avoid the time delay and cost for probating an estate or will, Lundrigan recommended.
If parents do not want children to have access to their banks accounts or certificates of deposit while they are alive, but want a smoother transition at death, any account can be set up as a joint tenancy account that transfers upon death, he said.
Probate is the court process for transferring property not held in joint tenancy. The court decides the distribution, he said.
It is for singly held assets of one person or validating and processing the will of a single person who does not have assets in joint tenancy with another person, he said.
If there is a will, the personal representative will dispose of assets and pay bills. That person then petitions the court for a court decision on how the balance of assets will be distributed, Lundrigan said.
Revocable trusts are beneficial only to couples who have more than $675,000 to $750,000 in assets and want to split them, bringing each person's assets under the current $675,000 taxable ceiling (scheduled to increase to $750,000), Lundrigan said.
There is no court oversight to how revocable trusts (also called living trusts) are administered, he warned. Your assets are still subject to financial claims against your property and would be used to pay for your care if you enter a nursing home, he said. The trust owns your assets.
Irrevocable trusts also become the owner of your property. You will receive living expenses from the irrevocable trust, but cannot re-gain ownership of the assets, Lundrigan said.
The irrevocable trust does shelter your assets from financial claims.
With either type of trust, only the assets assigned to the trust are covered. If you add new assets and fail to assign them to the trust, those assets will not be covered by terms of the trust, he said.
Assets like a house or car in the trust can be sold, but proceeds remain in the trust, he added. Administration of real estate in a trust costs more than that of financial assets, he said.
Either type of trust outlives the person.
A life estate involves deeding property to your children while you are alive with condition you may continue to live there. You cannot get it back unless your children agree to transfer property back, Lundrigan said.
Property in a life estate will be accessible to pay for your nursing home expenses or other financial claims, he added.
A qualified personal residence trust saves estate taxes if you have more than $675,000 in assets, he said. When you sell the home, that value transfers to a trust that you retain control over. You must reinvest the money in certificates of deposit, stocks, bonds, another house or other asset. You cannot spend the house sale proceeds, Lundrigan said.
An inheritance is not considered income for tax purposes and only involves an estate tax on that amount over $675,000 in assets.
"You will give your money to the government if you don't give it to your kids," Lundrigan said, recommending careful pre-planning and document preparing now.
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