Wednesday, May 27, 2015

Throwback Thursday: The Power of Joint Tenancy

FILE UNDER: THROWBACK THURSDAY

This was originally posted in July 29, 2009

One of the many vehicles to transfer real property, or real estate, outside of probate is through owning the property in joint tenancy.

There are two forms of real estate ownership in Minnesota when there are multiple owners. The first is tenants in common. In this form of ownership, the parties each own a distinct percentage of the total ownership in the property. For example, if a husband and wife own property, husband owns 50% of the total property and wife owns 50% of the total property. In this form, if one of the parties dies, their distinct percentage transfers through probate.

The other main form of ownership in Minnesota is joint tenancy. In this form, the parties have an undivided interest of the total ownership of the property. In this case, both husband and wife each own 100% of the total property. This may seem like a minor distinction, but it has a big effect. Upon the death of one party, the other party automatically owns the entire property without the probate process.

In order for the property to be owned in joint tenancy, the deed must specifically state that the property is owned as such. For example, "Property X is granted by Mr. X. to Husband and Wife, as joint tenants." If the deed does not specifically state that it is in joint tenancy, then it is owned as tenants in common.

If you own property with another person, and both of you intent that the other should automatically receive your interest without the probate process, review your deed. If the deed does not state "joint tenancy", contact a licensed attorney to execute and record a deed that does.

Update: I've gotten in the habit of asking couples to bring in a copy of their real estate deeds. In most cases, they want their property to automatically go to the survivor. Double checking their deeds now, can help prevent what would be an unnecessary probate. Keep in mind however, that joint tenancy isn't for everyone. It essentially means "survivor wins" and usually isn't a good fit for ownership between siblings.

Friday, February 27, 2015

Myth Buster: Not Everyone Needs a Trust (but for some people they can solve a lot).

FILE UNDER: QUICK TIP
Thanks Gwendal Uguen, for Creative Commons use of your pic!
https://flic.kr/p/8NmBrd
Another month in 2015. Another myth I'm going to bust.

A common myth I run into is that everyone should have a living trust. A related myth is that having a trust (but not funneling all assets into that trust either during or lifetime or setting them up to distribute to the trust upon your death) will guarantee that you will not have a probate.

First, let me lay out a golden rule of organizing your estate. If you are told by a professional "everyone needs [x]". Run from them. Everyone's assets, tax liability and family dynamic are different. Work with a professional who will take your particular needs and balance them against the cost of creating and managing particular types of planning tools. [Rant over].

A trust can prevent probate, but doesn't necessarily guarantee that a probate won't be needed. What matters is what assets are your probate assets. For example, if you set up a trust, but don't have your real estate assets retitled in a way that gets those assets out of your probate estate, those assets alone will trigger a probate. Even if you and the professionals you work with get all of your assets into or set up to automatically go into your trust, if you don't do the same with new assets, you might have a probate. It's a great tool to minimize the likelihood of a probate process, but there's a lot more to avoiding probate than simply creating a trust.

In Minnesota, a trust won't always be cheaper or easier to deal with than a probate. In some states, probates mean going in front of a judge, which costs the estate both in time and money. they may have other costly requirements that apply to most or all estates. If you live in one of those states, the cost of creating and managing a trust may look pretty good compared to probate. In Minnesota, most estates go through an informal process that can cost less than creating and managing a trust. That's something to keep in mind when you hear "everyone needs a trust", particularly if they aren't from Minnesota.

There can be some great uses for a trust. Maybe you don't want your distributions to be in a public probate court file. Maybe you know your kids will have costly probate court fights. Maybe you want the simplicity of giving one person control of your real estate while a group of people receive the benefits. Maybe your estate is large enough that both you and your spouse need both of your estate tax exemptions to prevent estate taxes. For people in those situations, the costs of creating and managing a trust can absolutely be worth it.

Not everyone needs a trust. However, for people who want to keep their distributions confidential, expect an heir to contest their gift, need to ensure particular management of assets over a long period of time or need an option to use both spouses' estate tax exemptions, trusts can be a valuable tool. Myth (sort of) busted.

Wednesday, January 28, 2015

Myth Buster: Wills Don't Solve Everything.

FILE UNDER: QUICK TIP
Thanks Gwendal Uguen, for Creative Commons use of your pic!
https://flic.kr/p/8NmBrd
So, I had all these great plans to post all sorts of interesting and enlightening things at least on a weekly basis.... so much for plans. Whew, let's just get back on that monthly horse shall we? If I'm feeling extra special, maybe I'll get in a few more.

Anyway, I thought I'd start out the new year by trying something new. Every so often, I'll take a commonly held myth, and bust it. For the first such post, I'll bust this myth: Wills solve everything.

Every once and awhile, I'll get a variation on that myth such as, "But, he died without a will! What will we do?" Or, "The bank won't let me take out the account, because she didn't have a will!" Or, "I won't have a probate, I have a will. I'm good."

Wills are good (obviously, or I'd be ethically in trouble for doing them). They have a few particular purposes; purposes that can be super important for a lot of people. They can appoint guardians for your children, allocate your probate assets to the exact people you want and have the exact people you want control and distribute your estate. Some of the things they won't do is effect how non-probate assets, like life insurance that lists individual recipients and other things that transfer without court action, are distributed. It also won't in and of itself prove authority for someone to act on your estate's behalf.

If you don't have a will, but have probate assets to distribute, state law will fills in who has the authority to manage your estate and who gets it. These estates are called "intestate", Latin for "no will".

The will doesn't prevent a probate process. It tells the court what you want to have happen if a probate action is needed. Myth busted.

Wednesday, October 15, 2014

There Still Hasn't Been a Will Reading. What Gives!

FILE UNDER: LAND OF 10,000 LAKES

So you have a loved one who died and there still hasn't been a will reading. In Minnesota, our probate code has no chapter, no rule about will readings. Sitting family members down to hear final wishes isn't required or even governed by laws, in the state of Minnesota.

So how do you know what's in a will, or even if there is one? Wills govern what happens and who controls property that doesn't automatically transfer to other people like life insurance or jointly owned property would. You'll need a probate process to transfer these "stuck" assets. That's where a will comes in. The will says where things should go and who manages those assets.

In Minnesota, next of kin are required to receive notice of probate proceedings if the probate asset includes real estate or is larger than $50,000.00. The next of kin can then find out if a will exists and what it says.

Will readings. They make for dramatic scenes in movies and TV. But, they're just not required or even common in the state of Minnesota.

(photo credit: Thanks hikingartist.com for allowing creative commons 2.0 use of your pic!)


Friday, October 3, 2014

10 Things My Husband Learned From His Father's Death (so far)

My much beloved father-in-law died suddenly and unexpected a few weeks ago. As I shared on my personal facebook page, I was a daddy's girl who lost her gregarious father at 14. At 21, I met my father-in-law who, if I couldn't have my dad, well he was the next best thing. The separation and shock, like every loss of a loved one, is indescribably tough.
 
My husband put this together a few days ago and all of these non-legal lessons are just as important as all the stuff we lawyers learn in our wills and trusts classes. Here's a republication of what he wrote.
 
As I'm processing my father's way too early passing, I thought I'd share some of the lessons I learned. If these are useful to anyone, I can at least find some additional purpose in all this.
 
1. Know your final wishes. Know the final wishes of your loved ones. I am so relieved my mom and I knew what my dad had in mind for his funeral. Nothing was written down, but just weeks before he died, my parents were on their way back from my uncle's funeral and happened to discuss their own ideas. If it wasn't for that conversation, my mom and I would have had a major headache on our hands last week.
 
2. Don't put off conversations about death until you're old or your loved ones are old. My dad was ripped out of our midst at 66. No one saw it coming, including him. My goal is for Jen and I to have things discussed by the end of the year. This includes simple things, such as "Would you be able to handle finances after I'm gone?", "Would you know all our passwords?", "Would you know where to find our will?", "Would you know what home/car maintenance is coming up?", "Would you know how to get a hold of key family members and friends?", "When is the kids' next check-up?", etc. Simple things that could turn into big problems, if you have to start from scratch.
 
3. Don't be strong for anyone. The advice to be strong after your dad dies is not always fitting. My dad died. I don't want to be strong. I want to cry and let out my emotions, too. Sure, my mom and I are leaning on each other for strength, but we each grieve differently and should each be able to not have to worry about how the other expresses it. Truth be told, it probably won't really hit either one of us until I return to the U.S., which will be the real beginning of the new normal.
 
4. Lean on your support system. My mom and I are fortunate to have a massive support system in place, thanks to family and a huge circle of friends. Many are offering to help in different ways... to listen, to take care of certain paperwork, to help haul stuff, to cook meals. Take advantage of it and don't be shy to ask for help. It also lets the person offering the help grieve in their own way. 
 
5. Take pictures of your loved ones. My mom and I had to pick a picture of my dad to be put up next to the urn at the funeral service. Thanks to our photo-happy family, this was easy to do, but from now on I'll always have a pic or two in mind in advance. Do you?
 
6. Let people know where you are. In my dad's case, my mom and I knew where he was. He was hiking on a marked trail and talked to my mom via cell phone just an hour before he was found. But he was alone. It's questionable if anything could have been done if anyone had been there. Even though knowing where my dad was and being able to reach him likely didn't make a difference, it could mean the difference between life and death for others.
 
7. Cherish every visit, every conversation. I last saw my dad when we came to Germany in May. I last talked to him the day before he died. I now regret that I was kind of short with him and suggested we chat more the next day, as Jen, the kids and I were about to go on a bike trip in Lanesboro. That next conversation never happened.
 
8. Show compassion. My dad was a master at this. He was able to build relationships with anybody. He put himself last and had a hard time saying no. I'm proud to have been carrying on that legacy already. But most importantly, this compassion will come back at you manifold in the situation my mom and are facing now. My dad cared about everybody, and now everybody is caring about us as a way of saying thank you.
 
9. Don't try to find all answers. Learn to live with the questions. My mom and I have been struggling with the big WHY. We don't know why my dad died or why it happened so early and suddenly. Even when we find out the official cause of death, we will likely never know why things played out the way they did. It's extremely hard to accept, but we know we have to. We try to focus on the happy memories and tuck away the what if's.
 
10. Grieve how you see fit, not how society might expect. My mom and I have talked a lot about how people might expect how we should grieve. Should we wear black? Can we watch TV? Can we laugh? Can we get groceries like normal? Should we act like nothing happened? We quickly realized that unless we shed ourselves of any societal pressures, the grieving process will only get more difficult. If we feel like laughing, we'll laugh. If we feel like watching a comedy show, we will. The point is only we know how to best process this horrible turn in our life. Advice from anybody should be taken with a grain of salt.

Friday, September 26, 2014

Is There a Tax on All Those Jeter Gifts?

News outlets are buzzing a bit about the gift tax consequences for all those gifts given to Derek Jeter during his farewell tour.

I'm a bit disappointed the articles didn't talk about those infamous gift baskets.

(H/T U.S. Chamber of Commerce)

Friday, September 12, 2014

To Do, Hug Your Family

Last Friday, I was drafting a post to publish for Monday. On Sunday, we unexpectedly lost a much beloved family member. So, in light of that, the number one thing you should do to plan your estate? Hug your loved ones. Then talk to professionals to plan.