The Wealth & Wisdom Blog

For many Minnesota families, this is the time of year in which the family cabin is the physical epicenter of family life and the source of many great family memories. A few years ago, I outlined how a matriarch and patriarch might transfer the cabin to their family following their deaths.  In this month’s update, I offer a list of questions to those families who are already the co-owners (or anticipate being co-owners) of cabin property with family members.

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Effective August 1, 2026, it will be possible for Minnesota residents to electronically sign certain estate planning legal documents.  In this month’s update, I briefly summarize the “Uniform Electronic Estate Planning Documents Act”¹ that allows for Minnesota residents to e-sign and electronically store legal documents.  As with many areas of life, just because it is now legally possible to use technology does not mean that it is in your family’s best interests to do so.  Even after the new legislation, Minnesota residents may continue to sign estate planning documents in a traditional manner and have their executed documents stored with their law firm.  Our firm’s general approach to signing formalities does not include any quills or powdered whigs, but these formalities might otherwise resemble the signing formalities that occurred in Philadelphia in July of 1776.

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At the suggestion of several clients, I recently read John Grisham’s 2025 novel, “The Widow.”  The book has numerous estate planning references, most of which are accurate. In this month’s advisory update, I summarize three estate planning issues referenced in “The Widow,” but without spoiling the suspense of the story line.

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Arizona Estate Planning

Our family enjoyed another spring break trip to Tucson, Arizona.  As in each of the past six years, we broke the monotony of Minnesota winter through golf, hiking, and pickleball in the warm sun. ¹   While I was not paid for this tourism advertisement, I pay annual dues to maintain my Arizona law license.

In this month’s update, I note three distinctives of Arizona estate planning law relevant for your clients who are Arizona residents.

Community Property Characterization for Married Residents.  First, Arizona law considers most assets owned by a married couple as community property. Community property is deemed to be owned equally between a husband and wife regardless of the title of the property.  Upon the first death between a married couple, the deceased spouse’s estate plan controls the transfer of the one-half interest owned by the deceased spouse.  This property characterization allows for a married couple to jointly create a revocable trust to achieve their shared estate planning objectives. In many cases, this legal framework allows Arizona residents to keep their estate planning relatively simple.²

Assets characterized as community property receive a full step-up in cost basis at the first death between a husband and wife.  This step-up in basis allows for a surviving spouse to avoid capital gains taxes on any appreciated assets. At the surviving spouse’s subsequent death, all remaining assets owned by the surviving spouse receive a second full step–up in cost basis.

In blended family situations, or in cases where one spouse inherits property and wants to provide for children even if this spouse dies before a spouse, community property characterization can be problematic.  In such situations, it may be wise for the couple to make a community property agreement to characterize certain assets as separate property and certain assets as community property. The assets characterized as community property can obtain the step-up in cost basis, and the assets characterized as separate property can be distributed to the appropriate beneficiaries.

Health Care and Mental Health Care Powers of Attorney. Second, as in other states, an Arizona resident can use a health care power of attorney to name a health care agent who would be authorized to make most medical care decisions if the resident became incapacitated.  In Arizona, a resident might also want to sign a mental health care power of attorney, which would authorize an agent to make psychiatric care decisions on behalf of the resident.

No Arizona State Estate Tax.  Finally, Arizona imposes no state-level estate tax.  Our wealthier Arizona clients may face federal estate tax exposure, but there are no state inheritance or estate tax.

I’m glad to help you and your Arizona clients with their estate planning matters.  Of course, our law firm is happy to help you or your clients with Minnesota estate planning matters as well. We look forward to hearing from you.

Large language models (“LLMs”) have become increasing useful.  But there is still hope for humans.  According to MIT Finance Professor Andrew Lo, LLMs are not suitable for providing financial advice because “they are the digital equivalent of sociopaths—smooth, persuasive, and devoid of empathy.”¹ Clients appointing key legal decision-makers as part of their estate plan (“fiduciaries”) would be wise to avoid naming sociopaths, whether human or digital.  In this month’s update, I provide a summary of the fiduciary roles that generally comprise a comprehensive estate plan, and a list of the human attributes to look for in naming a fiduciary.

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Now that both my parents have died, what is the legal effect of that big check that my mother wrote to my brother a few years ago?  Was that big check meant as payment for my brother’s work on my mother’s house, or was it a gift to him when he was going through difficult financial times that my mother did not want considered part of my brother’s share of the inheritance?

Ambiguity surrounding lifetime transfers to children might result in significant legal and relationship issues following death.  In this month’s update, I summarize the three different ways in which disproportionate lifetime transfers can be characterized – that is, as compensation, as a loan, or as a gift— and briefly describe the legal and tax implications of each such characterization.

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