Establishing a closely held business entity during the estate planning process is one strategy to formalize business interests and to establish a plan for how the business is to be handled upon your death, and in some cases, even before your death. For example, establishing a LLC (limited liability company) for rental or vacation property to address day-to-day management, and operating procedures, or to mitigate liability; but also as a strategy to address how the property will be passed on to future generations. Baker Vicchiollo Law can advise on the use of this strategy, review business entity options, and facilitate the process of creating the business entity. Equally as important is then incorporating the business entity into estate planning documents to solidify your wishes.

Incorporating business succession planning into the estate planning process is essential for business owners. Planning for what will happen to your business upon your retirement or death can address how the business will be managed, who will own it, and whether or not it will be sold or continue. Business succession planning facilitates decision-making around these issues to ease the impact of a transition, which can be especially complicated because of the relationships and emotions involved in a closely-held or family business. Additionally, business succession planning can include strategies to minimize tax implications as well as strategies to limit liability.

Estate plan conveys your wishes for who will care for your minor children and how your money, property, and personal belongings will be distributed after your death or incapacitation. Reviewing your estate plan regularly is crucial as laws change and as life situations change.

Gifting assets to others can be a valuable tool in estate planning and can help reduce your taxable estate.

In Minnesota, gifting may eliminate the need to probate your estate by making a small estate even smaller; and may allow you to transfer tax obligations to your children who may be in a lower tax bracket, provide for a favorite charity or provide help to others.

By giving assets away before you die, you also get to see the recipient enjoy your generosity.

Establishing a trust allows for more specific instructions on how you want assets, or a specific asset, managed and/or distributed, and some trusts can even be implemented before death. Depending on your situation and wishes, there are several types of trust to consider: contingent will trust, revocable trust, irrevocable trust, charitable trust, special needs trust, and more.

Creating or updating beneficiaries on plans such as life insurance, IRAs, and 401(k)s.

Healthcare agents, Living Will, Do Not Resuscitate Order, Medical Power of Attorney, Physician Order, are directives that some people also consider at the time of establishing a will, but may also be added as components later. Understanding each directive and its implications is important so that decisions can be made in a timely and planful manner.

Designating someone who can legally act on your behalf can be customized to fit various situations, duration, and conditions. Clearly stating the range of authority is important as is knowing when and how to revoke the authority. Contact our firm to execute the proper documents customized to your specific circumstances or to revoke current authorizations.

MANAGING THE ESTATE

A personal representative, executor, or trustee is nominated in a person’s will or trust documents or, if not, will be appointed by the court to manage (estate administration) the estate following the person’s death. Nominated or appointed representative(s) may be an individual or a company, such as a bank.

The role of the personal representative in estate administration includes informing creditors that the decedent has died, defending the will if contested during the probate proceedings, collecting money owed to the estate, paying bills and expenses, and when necessary, hiring an estate attorney to represent them in the probate process and to consult or conduct estate administration tasks on behalf of the personal representative.

INVENTORY OF ESTATE

The personal representative is expected to document all of the decedent’s assets, property, and debt. This documentation is often referred to as the estate inventory.

DISTRIBUTION OF ESTATE

If there are any assets remaining after creditors have been paid, those assets are distributed according to the decedent’s will.

CLOSING ESTATE

The estate will be “closed” following the distribution of all assents and the filing of applicable tax returns.

GUARDIANSHIP OF MINOR CHILD

If you are taking care of the child on a long-term basis, you may want to consider becoming the child’s guardian. A guardian is appointed by the court. Without guardianship, it may be difficult getting medical care for the child, enroll him or her in school, or get assistance from other entities requiring parental permission.

GUARDIANSHIP OF INCAPACITATED PERSONS

If a person becomes incapacitated and lacks sufficient understanding to make decisions regarding one’s care, a guardian can assure that their needs get met including: medical, shelter, educational, etc. Guardianship powers are intended to be granted only to the extent necessary to accomplish what the incapacitated person cannot accomplish independently.

TEMPORARY GUARDIANSHIP

Document authorizing a trusted individual(s) to act on your behalf in the event of a medical emergency that results in your incapacitation.

Each state has different rules about guardianship. An attorney experienced in guardianship matters can explain Minnesota law, review the process, and assess potential hurdles.

CONSERVATORSHIP

A conservator is appointed, by the court, to make financial decisions for a protected person. You can identify a trusted individual within your estate planning documents to serve as your conservator in the event of your incapacitation, which typically the court will uphold unless found to not be in your best interest. The conservator typically has the power to collect all the conservated assets, pay bills, make investments, and perform other financial functions, as well as engage in estate planning, including the right to amend or revoke the protected person’s will.

PRENUPTIAL (ANTENUPTIAL) AGREEMENT

Negotiating and drafting a prenuptial (before marriage) or postnuptial (after marriage) agreement to for the purpose of defining the respective rights of the parties in the event of a divorce; a plan to define how both parties will handle income during the marriage, how to define marital and non-marital assets that are acquired during the marriage and to clarify how debts are paid during the marriage and how those debts will be characterized.

Furthermore, a nuptial agreement can determine the rights of each spouse if one of them dies. (Minnesota law states that one spouse may not deprive the other of their marital share in a will, but a spouse may waive their marital share within a prenuptial agreement.)

With an enforceable nuptial agreement in place, many conflicts can be avoided.

ENFORCEMENT

When a prenuptial agreement is properly created, Minnesota courts can enforce them. However, a nuptial agreement can only be enforceable if they adhere to certain criterion, which can be reviewed during the initial telephone or in person consultation with one of our attorneys.

ESTATE PLANNING COORDINATION

Following the establishment of the nuptial agreement, estate planning documents should be drafted or updated to coordinate terms and agreements in the event of your death or incapacitation.

AVOIDING PROBATE

There are some strategies and provisions to include in your estate planning documents to ensure that all, or some, of your assets and property passes directly to your heirs, without going through probate court. A skilled estate planning attorney will take into consideration the size of the estate and review options such as: estate gifting, establishing a living trust, joint property ownership, and other strategies to avoid probate if possible.

PROBATE PROCEEDINGS

Every state has different rules regulating the probate process and every county conducts their probate proceedings differently. In Minnesota, small estates with little-to-no property may not have to go through the probate process. The estate attorney can review information about the estate, include documents such as a will or trust when available, to determine how to proceed with probate or estate administration.

PERSONAL REPRESENTATIVE, EXECUTOR, TRUSTEE

People nominated or appointed as the personal representative, executor, or trustee of someone’s estate often hire an estate attorney to assist them in the probate proceedings and/or estate administration duties.

TESTATE or INTESTATE

If there is a will (testate), the probate process may be a little simpler, especially if the deceased named someone they know to be the estate administrator or executor. If there is no will (intestate), the court will assign a person or entity to be the estate administrator/executor and take on the role of settling the estate.

INFORMAL PROBATE

An informal probate proceeding usually involves filing paperwork with the court, having the court appoint someone to manage the estate (estate administration). There may or may not be any required hearings for an informal probate proceeding.

FORMAL PROBATE

In other instances, such as when a will is disputed, a formal probate proceeding may be required which involves more court oversight and usually requires one or more court hearings.