Probate is the legal process of settling an estate in court after a person dies. It includes the identification and inventory of the deceased person’s property, payment of debts and taxes, and distribution of the remaining property as directed by the will. If there is no will, the property will be distributed according to state law. The probate process transfers legal title of property from the decedent to his or her beneficiaries. The personal representative nominated in a will is responsible for probating the will. If no personal representative was named or there is no will, the court will appoint one.

If a person dies with a will (“testate”), the probate court determines if the will is valid, hears any objections to the will, and supervises the process of paying creditors and distributing the remaining property according to the terms of the will. If a person dies without a will (“intestate”), the probate court appoints a personal representative, determines the decedent’s heirs, and supervises the process of paying creditors and distributing the remaining property in accordance with the laws of the state.

Having a will does not avoid probate. The need for probate depends on the property owned by the deceased person and whether they owned it alone or with other persons. For example, if a person owned a piece of real estate in Minnesota solely in their name at the time of their death, probate would be required to transfer title of that property from the deceased to the beneficiary. However, if the real estate was owned by the decedent along with another person in joint tenancy with right of survivorship, then a probate proceeding would not be necessary to transfer title of the property to the surviving joint tenant. In Minnesota, if an estate is worth less than $50,000, it may be possible to avoid probate by the use of an Affidavit for Collection of Personal Property. If the value of a decedent’s personal property exceeds $50,000 or they owned real estate in their name alone, then the estate will need to be probated.

Probate begins by filing an application with the probate court and ends when all debts and taxes are paid and all assets are distributed. The applicable probate laws are generally those of the state in which a deceased person resided at the time of their death, as well as any state in which the deceased owned real property. Multiple probate proceedings may be required if a decedent owned real property in more than one state at the time of their death.

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You can revoke a power of attorney at any time if you are not incapacitated or incompetent.  In order to do this, you will need to sign a written document stating that you revoke the prior power of attorney and that the previous named attorney-in-fact no longer has power to act on your behalf in any way.  The document should be notarized and meet the requirements of Minnesota Statute § 523.11. You can find those requirements in their entirety here.  The revocation will not be effective until the attorney-in-fact has received notice of the revocation.

If you have a durable power of attorney and it is not revoked, it would remain in effect until your death.  At the time after your death, the personal representative of your estate will be responsible for winding up and concluding all of your financial affairs.  A will is the document in which you would appoint a personal representative; you will be given an opportunity to appoint this person when you create your will.  In the event that your power of attorney is not “durable,” it would no longer be effective if you become incapacitated or incompetent and are unable to make your own decisions, so it is important that you understand if this type of power of attorney is something that is right for you.

If you named your spouse as your attorney-in-fact and you later get a divorce, your ex-spouse’s authority to act on your behalf is automatically terminated.  If you have not named anyone else to serve as your successor attorney-in-fact, the power of attorney would no longer be valid.  You have the option of naming a first and second successor in your power of attorney in case your primary choice for attorney-in-fact is no longer able or willing to act on your behalf.

A power of attorney is a document in which you can authorize someone to act on your behalf.  In a power of attorney, you are considered to be the “principal”, and the person to whom you assign the power is your “agent” or “attorney-in-fact.” Your attorney-in-fact does not have to be a lawyer, but it should be someone in whom you have a great deal of trust.

A power of attorney may be a general or limited type.  You can determine how much power the person appointed as your “attorney-in-fact” will have over your affairs.  Having a power of attorney set up for yourself does not restrict you from doing these things on your own, but instead shares these responsibilities with someone else.  A general power of attorney can authorize your agent to conduct all of your business and affairs, whereas a limited power of attorney can authorize your agent to perform only specified acts or make certain decisions on your behalf.

A power of attorney may also be “durable.”  An ordinary power of attorney expires if a person becomes incapacitated and is unable to make his or her own decisions.  Conversely, a durable power of attorney remains valid even if a person becomes incompetent or incapacitated.  If you become incapacitated and you haven’t prepared a durable power of attorney for finances, a court proceeding for conservatorship will likely be necessary.  Your spouse, relatives, or close friends will have to petition the court for a ruling that you cannot take care of your own affairs and request that the judge appoint a conservator to manage them for you.  Having this in place ensures that someone can take care of your assets and pay your bills in the event of a sudden illness or injury and will also ease the burden on your loved ones.

If you have a special needs family member who is receiving government benefits such as social security or medical assistance, you may be concerned about the effect the receipt of an inheritance would have on their eligibility for such benefits. Government benefit programs for disabled persons such as Supplementary Security Income (SSI), Medical Assistance, and Medicaid consider the resources and income of an individual for purposes of determining eligibility for such assistance and the amount of assistance that will be provided. Therefore, the receipt of assets by the disabled individual could cause a loss of eligibility for the benefits he or she had been receiving.

As a result, many parents and grandparents of disabled children believe that if they leave any money or property to the disabled individual, it will cause a loss of all government benefits. Although leaving assets outright to the disabled individual may cause a loss of eligibility, a Supplemental Needs Trust is an option that should be considered. A Supplemental Needs Trust is a trust created for a beneficiary with a disability, by someone other than the person with a disability, which allows assets to be placed in the trust for the benefit of the disabled individual without jeopardizing his or her eligibility for government benefits.

The general purpose of a Supplemental Needs Trust must be to provide for the reasonable living expenses and other basic needs of a person with a disability when benefits from publicly funded programs are not sufficient to adequately provide for those needs. A Supplemental Needs Trust may allow distributions only for purposes that supplement the benefits available under the government programs for disabled persons, rather than supplant those benefits. For example, expenditures could include items such as entertainment, education and travel, or special medical care not covered by publicly funded benefit programs available to the beneficiary. The Trustee should make payments directly to the providers of allowed goods and services rather than to the beneficiary.

The trust should also contain provisions that prohibit disbursements that would have the effect of replacing, reducing or substituting the government benefits otherwise available to the beneficiary or that would render the beneficiary ineligible for such benefits. As a Supplemental Needs Trust must be properly set up to be valid, and government officials will likely review all trusts with a suspicious eye, it is important to work with an experienced estate planning attorney.

A will can be changed by writing and executing a new one. Another method of changing a will is by adding a “codicil,” which is an amendment to a will. The codicil must be written, signed and witnessed in the same way as the will. All of the requirements which must be met to make a valid will should be followed when writing a codicil. The original codicil should be kept with the original will.

Do not try to change your will by simply crossing out language or writing in new provisions. Crossing out language raises the question of whether you intended to revoke your whole will or just a part of it. Writing new provisions will be ineffective unless they are properly signed and witnessed. A will is effective until you formally change, revoke, or cancel it, so it is a good idea to periodically review your will.

You may want to update or change your will if any of the following have happened:

• Your marital status changes;
• A child or grandchild is born;
•  There is a death in the family;
•  You move to a new state;
•  The value and kind of property you own changes substantially;
•  Your wishes on who should receive your property change;
• Your personal representative moves away or dies; or
• Tax laws change.

Minnesota law now allows the use of Transfer on Death Deeds (“TODD”). A TODD can be used to transfer real property to another person upon the owner’s death. The use of a TODD allows the property to pass to the named beneficiary as non-probate property and thus can avoid the probate process. This is a procedure similar to transfer-on-death or pay-on-death accounts which are widely used at banks. 

With a TODD, an owner of real property can designate someone as the beneficiary of the property, and upon the owner’s death, the property will then pass to the named beneficiary. The property owner also has the option of naming more than one person as beneficiary. In order for a TODD to be valid, it must be recorded during the lifetime of the owner. However, the transfer of the real estate does not become effective until after the death of the owner. The named beneficiary must then record a death certificate and affidavit of survivorship to have the property put into their name.

In addition to the avoidance of probate, an advantage of a TODD is that the designated beneficiary has no rights to the owner’s property during the owner’s lifetime. As such, the beneficiary cannot transfer, mortgage or pledge any interest in the property as long as the owner is alive. Another advantage is that the owner of the property also retains the right to change his or her mind about who should receive the property on their death. The property owner can revoke the TODD or record a new one naming a different beneficiary. The revocation must be recorded prior to the owner’s death.

The use of a TODD does not avoid estate taxes. It also does not protect the property from creditors, as mortgages or other liens that are attached to the property will carry over to the beneficiaries. TODDs can be useful estate planning tools in the right circumstances. You should contact an experienced estate planning attorney to determine if using a TODD to transfer your property is right for you.

By placing your assets in a revocable living trust  instead of a using will, you can avoid the time delays and expenses that are typical of probating a will. Trust assets, in most situations, can be distributed to beneficiaries almost immediately after your death. If you own land in another state, a revocable living trust might help avoid a probate proceeding in the other state for that property. For example, if you live in Minnesota and own a cabin in Wisconsin and place it in a revocable living trust, you may be able to avoid a Wisconsin probate proceeding. 

A revocable living trust can also protect your privacy regarding the distribution of your assets. With a will, the probate laws may require that an inventory of the estate’s assets be filed with the court. The will and the inventory are public information. With a living trust, generally only the beneficiaries of the trust are informed of the nature and the value of the assets.

A revocable living trust gives you the option of having a trustee who has financial expertise manage your assets during your lifetime. This arrangement is particularly useful if you are having difficulty managing your financial affairs. A trustee could invest your assets, arrange for payment of bills and debts, and file your tax returns. A trustee who has financial experience will likely charge a fee based on the amount of the property in the trust. If you wish, you can establish yourself as a co-trustee.

However, there are some potential drawbacks to an revocable living trust. Since it is a more complex legal document, it is often more costly to establish. Ownership of your assets must be transferred to the trust in order for it to be effective. Deeds and other documents required to transfer title must be prepared to transfer your assets to the trust, a process which can require a substantial amount of your time. In addition, the use of an revocable living trust requires more ongoing monitoring to ensure that your assets remain in the trust and that newly purchased assets are titled in the trust.

Further, when you are also the trustee, you have a fiduciary obligation to the beneficiaries for both present and future income. A fiduciary duty is a high standard that requires you as the trustee to follow the terms of the trust and the law in good faith and with loyalty, confidence and candor to the beneficiaries. The use of an revocable living trust, by itself, does not shelter assets from federal or state taxes. These trusts are often considered tax-neutral as the tax consequences for you are usually the same whether or not the property is placed in a trust. A revocable living trust is not for everyone, but it can work extremely well in the right circumstances.

• Proceeds of a life insurance policy or funds held in a retirement account for which you have named a beneficiary. This property will pass directly to the named beneficiary upon your death regardless of any provisions in your will leaving your estate to someone else.  
• Property you own in joint tenancy with right of survivorship, such as real estate. Your share of the property will automatically belong to the surviving co-owner at your death.
• Funds held in a payable-on-death (POD) or transfer-on-death (TOD) bank account will be transferred directly to the beneficiary you have named upon your death. 
• Real estate for which a transfer on death deed (TODD) has been filed. This property will pass to the beneficiary named on the deed.
• Property that you have transferred to a living trust will be governed by the terms of that trust and not your will.