Estate Planning: Where to Begin?

Wills, trusts, probate—these are terms you may have encountered when considering whether to prepare an estate plan. But what do they mean? Do you even need an estate plan? This article is designed to clarify the estate planning process, to help you understand the tools available to you and your family, and to explain how the attorneys at Patton, Hoversten & Berg can assist you in achieving peace of mind.

What is an Estate Plan?

An estate plan is a collection of legal documents that identify you, your family, and your assets, and provide guidance on how those assets should be distributed to your beneficiaries after you pass away. Estate plans often include additional documents that take effect during your lifetime, such as powers of attorney and healthcare directives, to ensure your wishes are honored, even in circumstances in which you are unable to make your own decisions.

Key Components of an Estate Plan

Wills

A Last Will and Testament is perhaps the most familiar estate planning document. A Will allows you to:

• Name a Personal Representative (executor) to administer your estate.
• Specify any gifts or inheritances you wish to distribute.
• Outline how remaining assets should be divided among your beneficiaries.

While a Will provides clarity and direction, it does not avoid the probate process.

Healthcare Directive and Power of Attorney

A complete estate plan goes beyond distributing assets after your death. It also addresses your care and decision-making during your lifetime if you become incapacitated.

Healthcare Directive
A healthcare directive, sometimes called a living will, allows you to:

• Appoint a healthcare agent to make medical decisions on your behalf if you are unable to do so.
• Specify your preferences for medical treatment, including life-sustaining measures, pain management, and organ donation. It also allows you to indicate whether you wish to be buried or cremated, and whether you have prearranged for those services.

This document ensures that your healthcare wishes are respected and provides decision-making guidance to your loved ones and medical providers, particularly in circumstances where those decisions are often difficult to make.

Power of Attorney
A power of attorney grants someone you trust the authority to manage your financial and legal affairs if you are unable to do so.

• Durable Power of Attorney: Remains in effect if you become incapacitated and allows your agent to handle tasks such as paying bills, managing bank accounts, or dealing with property.
• Limited or Specific Power of Attorney: Grants authority for specific tasks or a limited timeframe.

Having these documents in place provides peace of mind and helps avoid the need for a court-appointed guardian or conservator, both of which fall under the category of probate.

What is Probate?

Probate of an estate is the legal process through which a Will is validated, and the court appoints your Personal Representative to administer your estate. This involves gathering assets, paying debts and taxes, and distributing the remaining property to beneficiaries.

In Minnesota, probate is required if:

1. The total value of your solely owned assets exceeds $75,000 (excluding any assets with beneficiary designations).
2. Your estate includes real estate, regardless of its value.

Probate can take anywhere from six months to a year or longer and often involves significant court costs and legal fees. While some estates may benefit from court oversight, most families prefer to avoid probate when possible.

Avoiding Probate

Avoiding probate can save time, money, and stress for your loved ones. There are several tools available to help you achieve this goal:

Transfer on Death Deeds (TODD)
In Minnesota, you can use a Transfer on Death Deed to specify who will inherit your real estate without going through a probate proceeding. By filing this document with the County Recorder during your lifetime, you ensure that the property transfers directly to your chosen beneficiaries upon your death. Sole ownership of real estate is likely the most frequent cause for estates ending up in probate.

Beneficiary Designations
Many financial accounts, such as life insurance policies and retirement funds, allow you to name a pay-on-death (POD) beneficiary. Upon your passing, these funds are transferred directly to the named beneficiaries without requiring probate. This can also apply to bank accounts and other assets. However, if your beneficiaries predecease you and there is no contingent beneficiary named, it is likely that the funds will revert to your estate when you pass.

Revocable Trusts
For larger estates or those with more complex distribution plans, a Revocable Trust is a powerful estate planning tool. With a Trust, you transfer ownership of your assets into the Trust during your lifetime, allowing them to bypass probate entirely because your Trust owns the assets.

Key benefits of a Revocable Trust include:

• You maintain full control over your assets as the Trustee during your lifetime.
• You name one or more Successor Trustees to manage your assets if you become incapacitated or pass away.
• You ensure your estate is distributed according to your wishes without court involvement.

What is Right for Me?

While this guide provides an overview of common estate planning tools, your estate plan should be tailored to your unique circumstances. The attorneys at Patton, Hoversten & Berg can help you design a plan that protects your assets, fulfills your wishes, and provides peace of mind for you and your loved ones.

It is never too early to plan ahead. Contact us today to schedule your estate planning consultation.

About the Author: Hayden J. Roslansky

Hayden J. Roslansky is a shareholder and attorney at Patton, Hoversten & Berg, P.A., where he focuses on estate planning, wills, and trusts. Working from the firm’s Janesville, MN law office, Hayden is dedicated to helping clients secure their legacies and provide for their loved ones with tailored legal solutions. To learn more about his services or schedule a consultation, visit his profile.