Estate planning is a way to plan for the future and make sure your property is distributed in the way you intend. While the process can be complex, it’s important to ask the right questions to make informed decisions. Each person’s estate is unique — and every estate plan should be specifically tailored to their circumstances. However, there are some common questions that many people have when they begin the estate planning process.

Here are five of the most commonly asked estate planning questions:

1. Do I Need a Large Estate to Make an Estate Plan?

Everyone should make an estate plan no matter how small or large their estate is. Even if you have just a few assets, an estate plan can be used to ensure your wishes are carried out and to lessen the potential for disagreements among your loved ones after you are gone.

2. Isn’t Having a Will Enough?

“Isn’t having a will enough?” is among the most common estate planning questions. While a last will and testament is the foundation of every estate plan, it isn’t the only tool available, and different tools are needed for different jobs. Although a will can nominate an executor, nominate a guardian for any minor children, and provide instructions regarding the distribution of your assets, they are often subject to the probate process and are not good tools for tax planning for larger estates. Other estate planning vehicles to consider can include trusts, beneficiary designations, and Transfer On Death Deeds (TODDs). Learn more about choosing a will-based estate plan or a trust-based estate plan in our blog Will Or Trust: Which Is Right For You?

You can choose among several types of trusts, based on your goals and objectives. Trusts can help you avoid the probate process, protect your assets from creditors and predators, and help you fine tune how your assets are used and distributed. Certain trusts can also offer tax advantages. Some common trusts that can be established include the following:

• Revocable Living trusts — These types of trusts can allow you to remain in control of your assets during your lifetime and pass the property to your chosen beneficiaries when you pass away.
• Special Needs trusts — Special Needs trusts can be used to provide financial support for a loved one with a disability without impacting their ability to receive government benefits.
• Charitable trusts — Charitable trusts can allow you to bequeath assets to a charity of your choice. These trusts have significant tax benefits while allowing you to achieve your philanthropic goals.
• Bypass trusts — Also referred to as a “credit shelter trust,” a bypass trust can be used by married couples to minimize estate taxes when assets are transferred to beneficiaries upon the passing of both spouses.
• Asset protection trusts — An asset protection trust with a beneficiary other than yourself can be established to shield assets from creditors and future legal claims.

Beneficiary designations can be used to specify who will receive your assets in specific financial accounts, such as retirement accounts, life insurance policies, and certain bank accounts. These designations can transfer assets directly to the beneficiary and avoid the probate process.

Finally, Minnesota allows real estate owners to execute and record Transfer On Death Deeds, which can automatically transfer ownership of real estate to named beneficiaries when you pass away, avoiding the probate process.

3. Does an Estate Plan Only Go Into Effect Upon My Passing?

Certain estate planning tools — such as your will — only go into effect when you pass away. This is why a comprehensive estate plan should also include a plan for incapacity. This can allow you to give someone else the authority to make financial and healthcare decisions on your behalf in the event you become incapacitated. By having powers of attorney and a healthcare directive in place, you can ensure your wishes are carried out if you cannot communicate them.

An incapacity plan can also help your loved ones avoid the court process that might otherwise be necessary to appoint someone to manage your financial affairs and make healthcare decisions for you.

4. What Happens if I Don’t Have an Estate Plan?

If you don’t have an estate plan, intestate law will direct how your assets are distributed after you pass — meaning, the state will determine who receives your assets. This may result in consequences you had not intended. Your estate will also likely need to go through the court-supervised probate process, and a personal representative would be appointed to manage the process of distributing your property. To ensure your wishes are carried out after you pass, it’s crucial to at least have a valid last will and testament in place.

5. Can I Change My Estate Plan?

One of the most frequently asked estate planning questions is, “can I change my estate plan after it has been created?” You can make changes to your estate plan at any time during your lifetime as long as you are of sound mind. In fact, you should review your estate planning documents at regular intervals, or when there are changes in your family or financial circumstances. For instance, you may need to revise your estate plan upon any of the following:

• The passing of an individual who has been named a beneficiary
• The birth or adoption of a new family member
• Marriage or divorce
• The acquisition of any major asset
• The disposal of an asset or piece of property
• Estrangement or remarriage of family members
• A significant increase or decrease in your net worth
• A significant change in your income, such as retirement
• A change in your health condition

Importantly, you should also review your estate plan periodically to determine if there have been any changes in state or federal law that could impact whether and how much your estate will be taxed when you pass away.

Learn More About the Estate Planning Process

If you have estate planning questions, it’s best to consult with a knowledgeable estate planning attorney who can guide you through the process. Here at The Law Shop Minnesota, we work with individuals and their families regarding a wide range of estate planning matters. Regardless of the size of your estate, we can help you create a customized plan that will give you the peace of mind you need.

The Law Shop Minnesota is dedicated to helping families with a broad scope of legal issues. Louise Livesay has over twenty years of experience guiding clients in the Twin Cities and greater Minnesota reach peaceful, out-of-court resolutions for their divorce and family law matters. Whether you’re exploring collaborative divorce, mediation, or unbundled legal services, we can provide you with a variety of flexible, client-centered options.

Peter Ladwein is passionate about protecting families and their legacies. With firsthand experience with a special needs family member, Peter brings a deeply personal understanding to his legal practice. Peter is licensed to serve clients across Minnesota and Illinois. Peter also practices Collaborative family law and is committed to helping clients reach out-of-court resolutions..

To schedule a consultation — either in person or via Zoom, anywhere in Minnesota — please contact us online or call (651) 344-6100.