Tuesday, December 8, 2015

ARCHIEVES

An Organized (after)Life is a blog I started as a new attorney, navigating through the ins-and-outs of what professionals call "estate planning", but what really is just the process of organizing your affairs so that your assets go to the people you want, in the easiest way possible. Look around at the over 6 years worth of information to give you some background in the organization process.

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.