The Wealth & Wisdom Blog

Trusts as Beneficiaries of IRA Accounts

Posted on June 27, 2018 by Cory Wessman

In order to reduce the likelihood that a child or grandchild would make an unwise decision with regard to his or her “share” of remaining retirement account assets, many of our clients implement a plan in which they do not directly name a child or a grandchild as a beneficiary of the retirement account assets. Instead, these clients structure their estate planning documents (taking the form of either a Will or Revocable Trust) to create a trust following their death (or, if married, the death of the survivor of them) for the benefit of this child or grandchild, and designate this trust as the beneficiary of remaining assets.

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Income Taxes on Tax Deferred Accounts

Posted on June 27, 2018 by Cory Wessman

Tax-deferred retirement accounts are accounts that allow for investment appreciation and earnings free of any income or capital gains tax until the assets in the account are withdrawn. Taxes are imposed not when the investment inside such account is sold, or interest or dividends paid, but when the account owner decides to withdraw the assets from the accounts. The most common types of tax-deferred retirement accounts are Individual Retirement Accounts (“IRAs”), 401Ks, 403(b)s, and SIMPLE IRAs.

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Planning for Blended Families

Posted on May 25, 2018 by Cory Wessman

According to the Pew Research Center, more than 40% of American adults have at least one “step-relative”— that is, either a step-child, a step-sibling, or a step-parent. I estimate a similar percentage of my own clients belong to this demographic. Each of these blended families has a unique plan for how assets are to pass at death. Some clients want to treat each of their children, together with their step-children, on equal footing. Other clients say, “We have agreed to pass all of our assets to our own children at death.” That is, these client intend to omit one’s spouse altogether. Many of these clients are surprised to learn that, in the absence of a valid antenuptial or postnuptial agreement, Minnesota law is not well-suited for this plan. By reason of Minnesota’s “spousal elective share rules,” the surviving spouse is entitled to certain assets and can exercise certain rights to receive a deceased spouse’s assets even if a Will or Trust says otherwise.

Here are a few strategies that we have employed to assist our blended families to provide for their children:

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Spousal Elective Share

Posted on May 25, 2018 by Cory Wessman

By Ryan Damhof, Attorney at Veritage Law Group.

For a variety of reasons, clients may desire to leave their belongings directly to their children, bypassing a surviving spouse. This is most common when a spouse has children from a previous relationship and wants to ensure certain assets (family property or inheritances, for example) reach their biological children. In the absence of proper planning, Minnesota law may prevent this from happening. For married couples, Minnesota recognizes a “Spousal Elective Share,” meaning the surviving spouse has the right to a percentage of the deceased spouse’s assets. Through this law, property can transfer to the surviving spouse in one of two ways: as exempt property or as part of the elective share.

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Helping Grieving Families

Posted on April 28, 2018 by Cory Wessman

In my practice in administering trusts and estates, I have the honor to work with widows and widowers grieving the death of a spouse as well as children and grandchildren grieving the loss of a parent or grandparent. Through my own experience of losing my son Micah in 2009, I know firsthand about grief and loss. I try to utilize what I have learned in my own grief experience to help these grieving families. I thought I would pass along a few points I have learned and observed in my own life and practice.

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Estate Administration Checklist

Posted on April 28, 2018 by Cory Wessman

We are often asked for a “checklist” of tasks to complete following the death of a loved one. For “Do It Yourself” people, such a list will invariably be too broad, and potentially cause confusion as to what tasks need to be completed. We therefore recommend that every family grieving the death of a loved one consult with an attorney, financial advisor, and CPA. Nevertheless, here are a list of general tasks to be completed:

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Spring Cleaning

Posted on April 5, 2018 by Cory Wessman

In anticipation of the warmer weather that we hope is right around the corner, our family has been engaged in a bit of spring cleaning. Like many families we know, we have come to appreciate a home filled with more space and less stuff. In a new book, “The Gentle Art of Swedish Death Cleaning,” Margareta Magnuson describes a Swedish tradition known as dostadning (“death cleaning”). Swedish death cleaning is not about cleaning up after your death; rather, it is about your efforts, in your own lifetime, to rid yourself of unnecessary clutter to minimize the work imposed upon others following your own death.

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Full Utilization of a Donor Advised Fund

Posted on March 29, 2018 by Cory Wessman

The implementation of a Donor Advised Funds is at an all time high. Vanguard reported a 45% increase in new DAF accounts in the fourth quarter of 2017, with more than 80% of the gifts comprising non-cash assets, such as appreciated securities. Likewise, Schwab has reported a 59% increase in the number of new DAF accounts since July 1 of last year. Perhaps the increase in DAFs can be attributed to the significant appreciation in stock market portfolios. By reason of the 2017 Tax Act, some Americans who will be taking advantage of the higher standardized deductions may use a DAF to “bunch” charitable gifts in certain years. In any event, my observation is that the use of DAFs will only increase in the coming years.

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Tangible Personal Property Lists

Posted on March 29, 2018 by Cory Wessman

By Minnesota law, a Minnesota resident can direct by a written list how remaining items of tangible personal property should be distributed to and among friends and family following death. Unlike a Will or a Revocable Trust (also called a Living Trust), such a written list does not need to be notarized or witnessed, but need only identify the item owned by you and the intended recipient. While you can always give away items of tangible personal property during lifetime, such a list allows you to keep certain items throughout your lifetime, and then be certain that the friend or family member you wish to receive the item will receive it following your death. In most instances, a client’s Will direct that any items of tangible personal property not listed on such lists will be distributed to and among certain individuals (e.g., spouse, children or certain friends or family members), so that you can use the list to direct the distribution of items to others besides this “class” of beneficiaries.

A list could look something like the following:

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Personal Financial Statement

Posted on March 29, 2018 by Cory Wessman

If you don’t already work with a personal financial advisor or financial coach, you may have never completed a personal financial statement. From a recordkeeping perspective, creating and maintaining a personal financial statement summarizing your current assets and liabilities is a tremendously important estate planning matter. In creating a list of assets and liabilities in one centralized location, you are saving your friends and family members a tremendous amount of time trying to determine, following your death, the nature and extent of your assets and liabilities following your death. Below please find an example of a personal financial statement.

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