WILLS
Do You Have a Will?
Do you want specific property to go to certain individuals? Do you have children? Do you have real estate, retirement assets, business interests, and life insurance worth in excess of $1 million? If you answered yes to any of these questions, a will is an essential tool for you and your family.
Without a will, state statute determines what happens to your property and that may not be what you expect or want. If you are in a first marriage your spouse should inherit. If you are married with no children or you have had children with your spouse, your spouse will inherit. If you are in a second marriage with prior children your estate will be divided between your spouse and your children. If you have no children or spouse (or your spouse dies in the same event) your parents will inherit. If your parents are not alive then your siblings will inherit. If you are in a second marriage, a non-traditional relationship or want your assets to go to a particular person, a will is a necessity.
If you have children and something happens to you and your spouse, who will raise your children? If you have not designated a guardian the court will make that decision. The court is obligated to act in the best interest of your children, but that might result in choices that you would not be happy with. Worse yet, your family may end up litigating to determine who will raise your children. The best way to control the decision of who will raise your children is to appoint a guardian in a will. Additionally a will can provide for a trust to assure that your estate is spent for the benefit of your children.
Estate tax avoidance has been practiced for many years by the affluent in our society. Asset preservation is a matter of choice in many cases. Estate taxes are a second tax on assets that have already passed through the income tax system. If your combined assets and the death benefits of your insurance exceed $1.4 million, your estate will be subject to Minnesota estate tax. The federal government has substantially expanded estate tax exemptions, and is currently at $5.43 million. In addition, if you have been making gifts in excess of $14,000 per year, those transfers may be subject to federal gift tax laws, and now Minnesota gift tax laws as well. Needless to say, this is a time of changing tax liability.
A will can be the vehicle to ensure that the government does not get a “second bite at the apple” and that your family is the ultimate beneficiary of your lifetime efforts.
Do Your Parents Have a Will?
Preparing or reviewing your own estate plan provides an ideal reason to see where your parents stand in terms of retirement and estate planning. A conversation with Mom and Dad about what they have in place and what they have done while soliciting advice for your own planning allows a child to assess what their parents have done and when. If your parents feel secure in their estate plan that was drafted in the 90s, perhaps some revisions are in order. If your parents respond with a comment such as “what is an estate plan?”, chances are more substantial work is needed. Asking your parents about what kind of planning they have done and where and how that information can be accessed is much easier when their health is good. By asking about their situation you can not only determine what they have in place but can also determine what else they might need to help them in their golden years. Some basic planning can help them ensure their affairs are in order and make things easier for you as your parents get older.”