If you have outdated beneficiary designations, remember that your WILL does not supercede the beneficiary designations. For example, if you provide in your WILL that your nephew Jimmy Johnson is to receive everything BUT the beneficiary on your $300,000 IRA is your uncle Jerry Jones, under law, your uncle Jerry Jones has the right to receive that $300,000 when you pass away – even if that is not at all what you wanted!
Beneficiary Designation > Will
In this posting, you will find the first page of a Will. Can you spot what is wrong with this Will? Hint: There are three problems.
Are handwritten notes valid?
Problem No. 1: Abraham Simpson decided a few years after having his Will prepared that he wanted to make sure his grandson Bart received his stamp collection. Abraham dated and signed his name and stated that Bart was to receive his stamp collection. Regardless of his good intention, Abraham Simpson’s handwritten addition will not be considered valid in Minnesota even though he signed and dated the handwritten note. Bart is out-of-luck 
Problem No. 2: Abraham Simpson decided one day that he no longer wanted Seymour Skinner to receive an inheritance. Instead, Abraham wished to have Waylon Smithers receive 5% of his estate. Abraham crossed out Seymour Skinner’s name. This cross-out does not mean that Seymour Skinner is disinherited! In fact, a probate court judge is likely to rule that Seymour Skinner is still entitled to 10% of Abraham’s estate despite the fact his name was crossed out by Abraham himself. Crossing out someone’s name is not a way to disinherit that person out of a Will. Waylon is out-of-luck
Problem No. 3: Abraham Simpson decides that Ralph Wiggum should also receive an inheritance. He adds in Ralph Wiggum without signing or dating that addition to his Will. It does not matter. A court is unlikely to consider Ralph Wiggum as someone who can inherit from Abraham even if it is in Abraham’s handwriting. Ralph is out-of-luck
Solution:
If Abraham Simpson wanted to make changes to his Will, he could have had the Will amended formally or else he could have had an entirely new Will prepared and this original Will destroyed.
If Abraham chose to have his existing Will amended, he would need to have those changes to his Will prepared on a separate document and signed/dated/witnessed and notarized to ensure that the Will Amendment (also known as a Will Codicil) was valid.
The process of amending or changing a Will should never involve handwritten changes on the Will itself. Even if those handwritten changes are done by the Will preparer or signed and dated, it is unlikely the court will consider those changes as valid. In fact, the court is likely to invalidate those changes and revert to the original typed language of the Will.
One of the most frequent questions I receive is:
Do I need a will?
This is a somewhat loaded question and you’re asking an estate planning attorney who prepares wills for a living. My general response is “yes”. Even if you don’t think you own much today or you don’t see value in having a will for any other reason, unless you don’t care where your assets go, then that would be a situation where you don’t need a will.
Ironically, I haven’t met anyone yet that didn’t care where their assets went. Most of us have people who we would prefer receive what we have and other people who we would sooner leave out of any inheritance.
In Minnesota, if you die without a will, your assets will be divided amongst your immediate family. This does not include your in-laws. This does not include stepchildren or other people who are “family” but not legally adopted. This does not include long-time boyfriends or girlfriends or live-ins.
For example, let’s assume that you’ve been divorced for 10 years. You met a woman, Miranda, 9 years ago and you’ve been living with Miranda for the last 7 years. Miranda has a 10-year old son, Marshall, and you’re the only father figure he has ever had. You’ve never had any children of your own but you’ve thought about adopting Marshall. He is like a son to you.
One day, you have a heart attack and you pass away without a will. The house you lived in with Miranda was in your name only. Many of your investments were in your name only. Your parents died before you and you had no brothers or sisters. But like most people, you did have a handful of cousins that you hadn’t seen in many years. You had no relationship with these cousins and they all lived out-of-state.
Under Minnesota law, the likely outcome would be that your house and investments would pass to your cousins. I am going to safely assume that this is NOT what you would have wanted. Yet, everyday, this happens. I have seen cases just like this come across my desk on several occasions. A will has a valuable function in many types of situations, particularly in today’s society where we see so many blended families and couples living together without marrying.
The lesson: Don’t assume!
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What would dear old dad want you to know about estate planning? When it comes to estate planning in Minnesota, I tell clients that there are basically three essential documents that most people need:
1. A Will
2. A Power of Attorney
3. A Health Care Directive / Living Will
In some cases, a Trust is a valuable alternative to the Will or a great compliment to a Will. Regardless, complete Estate Planning involves these three basic documents.
Frequently, I receive questions from individuals who are looking for a visual guide to assist educating others about Estate Planning. If you open this link, you will find a simple Estate Planning Chart that you may find useful when talking to a relative or friend about Estate Planning.
Remember, the foundation of estate planning is understanding the benefit of each of these documents. Think of the Power of Attorney and Health Care Directive as living documents that can help you while you are still alive. The Will (or Trust) then takes over after death and if prepared properly can prove to be a valuable guide for the next-of-kin.
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Understanding the law on Holographic Wills in Minnesota can be confusing and downright misleading. I visited a number of websites in preparing this article and read everything from the idea that Minnesota doesn’t recognize them under any circumstance to the conclusion that Minnesota does recognize them but only under certain conditions.
So what’s the truth? Holographic wills: valid or not?
First, I think you have to understand what a holographic will is because the definition isn’t always clear.
Traditionally, a holographic will or handwritten will was viewed as something written on your death bed or something you threw together on a napkin at a bar. You signed and dated it and that was that. You’re good to go, right?
Now, if you’ve prepared a will merely by writing or typing your wishes on a paper and then signing it and dating it with nothing else, I would say that your will isn’t valid and it won’t be recognized as valid by any court in Minnesota. I don’t think there is any question about that if you talk with any estate planning attorney.
But let’s assume, you took your will that you prepared yourself and signed it in front of a notary without any witnesses. Would that validate your self-prepared will? I would argue that it isn’t likely that your will would be considered valid yet because Minnesota statutes are clear regarding having two witnesses present.
Generally speaking, the threshold for validity is to have your handwritten will witnessed by two individuals at the time you sign it. I would say timing is key here as well. If you prepared and signed it and then a couple days later you had witnesses sign it, they really didn’t witness it when you signed it. They essentially need to be present when you signed it at that moment.
Now while you might be able to get away with not having your will notarized, I strongly encourage you and your two witnesses to sign the will in front of a notary. Again, your goal is to make sure your will is valid. Otherwise, what’s the point in even preparing a will if it isn’t going to be valid? You might as well make a paper airplane out of the paper you would have used to make your will!
When it comes to preparing your own will, you can do it. Minnesota doesn’t have any requirements barring you from doing it yourself. Don’t let any attorney, legal website or family member tell you otherwise!
Of course, what your will covers and doesn’t cover is a whole different matter! But the key here is how that will is executed/signed. Make sure to follow the law closely on that point and at the very least, you’ll substantially reduce any likelihood your will might be invalidated after you pass away.
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If you have a spouse, I generally recommend that you use the following primary beneficiary designation for your life insurance, IRAs, annuities, and pension or retirement plans:
“To my spouse, [Name of Spouse], if (s)he survives me”
If you have only adult children, I generally recommend the following secondary/contingent beneficiary designation for your life insurance, IRAs, annuities, and pension or retirement plans:
“To my descendants, in equal shares, per stirpes”
OR
“To my descendants, in equal shares, by right of representation”
Please note that “per stirpes” may also be phrased “by right of representation”.
If you have any minor children, I generally recommend the following secondary/contingent beneficiary designation for your life insurance, IRAs, annuities, and pension or retirement plans:
“To the trustee(s) designated to act under the Testamentary Trust established under the terms of my Will, dated ____________, as amended. If my Will is not probated or no trustee is appointed, to my children, in equal shares, with the descendants of any child who predeceases me taking such child’s share by right of representation.”
REMEMBER: You should never do anything to change title or ownership of your IRAs, annuities, or retirement plans, as ownership of those assets should remain in your individual name. Why? Changing ownership of IRAs, annuities or retirement plans would constitute a withdrawal and be a taxable event to you. You should, however, check the beneficiaries you have designated for each of these investment plans and, if necessary, change the beneficiary designations in a similar manner as described above.
If you need additional guidance in this area, never hesitate to contact your attorney or financial advisor.
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True or False:
Everyone needs a will.
False – Yes, ideally, in most cases, you should have a will. A will helps serve as a roadmap for your personal representative and the probate court. Without a will, your personal representative and the probate court must rely on whatever the default statutes under Minnesota law say regarding distributing your assets.
With that said, deciding whether you need a will depends on your financial situation, how your assets are classified (i.e. probate or nonprobate) and your family status (married, divorced, widowed, children, no children). There are a few people I’ve met in my office that I could say in all honesty didn’t need a will because they were comfortable with how the default statutes under Minnesota law would resolve distribution issues. And that’s fine. Nobody should upsell someone into something they don’t really feel comfortable having.
But as a reminder, a will serves as an excellent fall-back even for those people who don’t think they have a lot. Think of a will as a safety net or a catch-all. If it is properly prepared, your will can have the remarkable positive effect of protecting your heirs from the “what-ifs”.
Most people know that estate planning is something they should do. However, statistics suggest that as many as 85% of people never actually get around to doing anything about it before they die. In my experience, I would say that the large majority of situations where nothing was done result in a much higher degree of uncertainty and legal issues involving remaining loved ones fighting over what was left behind. This results in wasted time and money sorting out issues that could have been settled during life.
My colleague, Jim Bear, with J. Alan Financial has provided a short 60-second slideshow that I believe addresses estate planning from a unique angle. Jim Bear is a financial advisor who specializes in working with seniors addressing their estate planning needs from the financial and investment side of the equation. I’ve known him for several years, recommended him to close friends and family and consider him to be one of the foremost experts on safe money advising.
When it comes to estate planning both from a legal and financial standpoint, it is important to sit down, spend some time evaluating your portfolio and give your loved ones the peace of mind that you carefully took care of everything as best as you could before you pass away. Most people don’t know when or how they are going to pass away but having a well-drafted estate plan in place substantially reduces confusion or misunderstanding with remaining loved ones.
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Situation:
You and your sister jointly own lakeshore property in northern Minnesota.
Problem:
You want to divide that property 50-50 so that you can have your share and sell it. Your sister is not interested in dividing that property or selling it. She isn’t willing to be bought out and she won’t buy you out for fair market value. Are there any other options?
Solution:
Bring a Partition Action
One alternative you have is to bring a Partition Action through the court. Basically, through a Partition Action, a court order would be issued dividing the property in half to allow you to sell your share of the property. Of course, one disadvantage to a Partition Action is that in some cases, two properties divided are not worth as much as one property undivided. However, a Partition Action is a viable choice if you feel strongly that you need to sell your share and your sister simply won’t agree to pay fair market value. A Partition Action can be messy obviously because you are turning the matter over to a court. But most likely the result is predictable because you will get your interest in the land divided out to you to do as you wish.
Closing Note:
If you are looking to divide jointly-owned property so that you can pass on your interest to your heirs, bringing a Partition Action is a viable means to accomplish your objective.
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Article Submitted Courtesy of Jessica Croze, Attorney at Law:
When people think of estate planning, their first thoughts are usually that of a Will. Having a Will is a widely known staple because they are beneficial to both the deceased and the heirs. Some people also associate having a Trust in their plans as well. However, not many people know the difference between a Will versus a Trust.
The first and probably the most important distinction is that a Trust can help you successfully avoid probate. With a Will, the transfer of your property takes place at the time of your death (over a succession of several months possibly). Your assets will need to go through the court system (probate) to ensure the legality of your Will and the appropriate distribution of the property. During the probate process an appreciable portion of the estate (5-10%) is most likely taken by various expenses including court costs, executor compensation and attorney fees.
The alternative to a Will is to create a Trust. You can transfer all your assets into the Trust while you are alive and still retain control of the assets as a trustee. Since the Trust now owns the property, instead of you, as an individual, the assets no longer need to be processed through the court system upon death. Within the Trust you can spell out specific instructions and provisions for how you wish the Trust to be distributed upon death.
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