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The Wealth & Wisdom Blog

Information on Estate Planning, Estate and Trust Administration and Unique Asset Planning

Revocable Trust Planning

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Do I need a revocable trust?  While a revocable trust has become a common estate planning strategy, it is also the subject of much confusion.  The late Harvard Business School professor Clayton Christiansen taught that businesses must precisely distill the objective that customers are hiring the service or product to accomplish; that is, what Christiansen termed “the job.” Businesses failing to understand “the job” for which the product or service is being hired will flounder. In this month’s update, I summarize “the job” that is being accomplished through a revocable trust, and distinguish this job from other jobs accomplished through other estate planning strategies.

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Portability of Tax Exemptions

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Each of my three middle-school children recently came to my wife and me with two “first-world” problems.  Ahead of various upcoming trips away from home this summer, each of them asked for more portable pillows and more portable electronic devises. These portability problems remind me of certain planning discussions about the portability of one’s estate tax exemptions.  In this month’s update, I summarize the portability of federal gift and estate tax exemptions, and what factors should be considered in implementing a plan relying solely on a portable federal exemption.

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Debts Following Death

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“My estate planning goal is to bounce my last check.”  Numerous clients, in jest.

Most of the estates we represent hold sufficient assets to pay all the deceased loved one’s debts, including the last check written.  In some cases, however, the remaining debts of a decedent exceed his or her remaining assets.  Just last week, President Biden and Congress agreed to raise the federal debt ceiling, news that brought the federal debt to the nation’s attention once again.1 In this month’s update, I segue from the recent national debt ceiling news to briefly summarize the legal implications of personal debts owed at death.

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The Minnesota Electronic Wills Act

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Can’t we just e-sign our Wills?  Clients are surprised to learn that under Minnesota law, a Will must be signed on physical paper, in ink, and in the physical presence of two witnesses.  Since many legal contracts can now be signed by electronic signature, Will signing formalities might seem to be stuck in the 1950’s.  I was once told by a woman at the end of our last date that I belonged in the 1950’s.  I therefore deem myself a good fit for the estate planning bar.

To bring Will signing formalities out of the 1950’s, Minnesota Governor Walz recently signed into law the Electronic Wills Act (“Act”).  This month’s update summarizes how to sign a valid electronic Will (“E-Will”) under the Act, but also explains why, as a firm focused on the implementation of client-specific, comprehensive, and tax-efficient estate plans, the Act will have little relevance to our firm’s estate planning practice.

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The Disposition of Your Remains

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I am sorry to report that you missed it again this year.  A few weeks ago, the 21st annual Frozen Dead Guy Days (the “FDGD” as it is known by the locals) occurred in Morstoel, Colorado.  The weekend’s annual festivities commemorate the deceased Grandpa Bredo, whose remains are currently cryogenically frozen in a shed near Morstoel.  In this month’s update, I share a few sordid stories of the bodily remains of the rich and/or famous, and then get serious by summarizing legal rules for the disposition of bodily remains.

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Charitable Planning with Retirement Accounts

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It Ought to be Simpler than This! 

I have patience for those tasks that I expect ahead of time will be difficult to complete.  I have less patience for those tasks that I expect to be easy, and turn out to be difficult.   This is sometimes the case with various estate planning and administration matters.  Consider the following common planning scenario that one might expect to be simple to implement, but in actual legal practice is difficult to implement:

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Multi-Purpose Accounts after Secure Act 2.0

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“The correct lesson to learn from surprises is that the world is surprising.  Not that we should use past surprises as a guide to future boundaries; that we should use past surprises as an admission that we have no idea what might happen next.”[1]

Since life is indeed full of surprises, it is advantageous to be able to use an asset or account for a different purpose than originally anticipated.  By reason of the Secure Act 2.0 signed into law by President Biden on December 29, 2022, owners of college savings accounts (“529 Plans”) and traditional tax-deferred individual retirement accounts (“IRAs”) can now modify the purpose of a modest amount of account assets. In this month’s update, I highlight how the Secure Act 2.0 provides modest flexibility gains to 529 Plan and IRA owners.

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Post-Death Task List

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If you’ve struggled to keep up with the names of the players on your favorite low-budget professional sports team, you would appreciate “Whose on First?,” the classic comedy routine by Abbott & Costello.  Confusion over proper roles, titles and responsibilities related to the administration of a trust or estate can similarly arise following the death of a loved one.  Our law firm is currently administering a greater number of trust and estates than normal.  According to the CDC, mortality rates are 8-12 percent higher in winter months than in other seasons.  As occasioned by winter, the most morbid season of the year, in this month’s update I share a brief overview of the tasks associated with administering assets following death.  Surviving family should involve the appropriate professionals and have a clear understanding of “who is on first” when it comes to trust and estate administration.

While every situation is different, here are three general categories of the tasks, and who should e involved in each task to be completed:

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Administration Timeline

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Administration Timeline
Timeframe:Task(s):
Beginning of Administration Process “Certificate of Trust” and “Acceptance of Trustee” documents prepared and signed.
By April 15 year following deathFile final income tax return of deceased.
As soon after death as may be reasonableNotify social security, V.A. and any institution making payments to decedent.
Within reasonable time after deathDetermine and pay all outstanding bills of the decedent.
Within 6 months of deathLocate all assets, notify of any changes in address, and prepare inventory and appraisement of same
During trust administrationMake changes in investments and holdings as may be prudent.
Maintain accounts.
Nine months from date of deathEstate Tax return due
Fiscal tax year end of trust (any month-end)First fiduciary income tax return due
Nine months from filing estate tax returnDeadline for making estimated estate tax payment, if any.
3 years after filing of final income tax returns End of claims period for potential liability for income taxes

 

Post-Pandemic Probate Proceedings

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Since the COVID-19 pandemic, most “informal” probate proceedings are now being held via virtual “Zoom” hearings or by telephone.  While no two situations are alike, we generally follow the following steps whenever a probate court proceeding is needed:

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This blog is intended to provide the reader with assistance in understanding various estate planning and trust estate planning concepts. In an effort to keep things as digestible as possible, I have tried to keep each blog post as short as possible.  As a result, an astute reader would see that I often fail to address various exceptions to rules or principals, or how various principles relate to one another.  There are a number of moving parts associated with various planning structures summarized on this blog.  In order to achieve your estate planning objectives, it is important that you receive the assistance of an experienced estate planning attorney.  Otherwise, your family may be in a worse position for your having attempted these strategies on your own.  Until we form an attorney-client relationship, you should be aware that your visiting this blog has not formed an attorney-client relationship, and none of this information can be taken as legal advice.  To contact my office about scheduling an appointment, contact us at 612-465-0080.