Why Married Couples Should Discuss All of Their Estate Planning Goals

Posted on May 18, 2015 by jlawyer

Most Minnesota estate planning attorneys encourage couples to create separate Wills since many of them enter marriage with separate property and others inherit it later on.

In addition, a number of today’s newlyweds often have children from prior marriages that they’d like to provide for in the future — and creating separate Wills makes this much easier.

Regardless of your age upon marrying, you and your spouse can more easily achieve your various estate planning and financial goals by discussing them prior to obtaining separate Wills. This often proves crucial since both spouses often work for many years and need to make early decisions about setting up employer-sponsored 401(k) and other benefits.

Your early discussions can facilitate saving up for discretionary travels and even a possible second, vacation home. Your Minnesota estate planning attorney can help you get started by explaining the different types of estate planning tools that are currently available.

Critical Topics Couples Should Discuss Regarding Their Estate-Planning Goals

Decisions involving any children you may have. Apart from discussing how many children, if any, you may want, it’s important to realize that you’ll need to agree on the best ways to provide for your children’s education – preferably in a manner that won’t interfere with your retirement savings plans. You should even specifically discuss what percentage of your children’s college or graduate school expenses you’ll be willing to shoulder, based upon your current and future income;
Where do you hope to live once you reach your 70s or later years – and how do you want to try and finance that lifestyle? Growing older always happens much faster than we expect. This is why you and your spouse should give thought early on to where you hope to live day once health and mobility issues make changes necessary;
Discuss your willingness to purchasing long-term care insurance policies now. These are often quite expensive and can usually only be purchased before you enter your “golden years.” If you don’t buy these, the surviving spouse may one day have to spend a considerable amount of your combined wealth to pay the inevitable “last medical” expenses so many health insurance policies always try to avoid covering. Of course, you should both also plan on buying the most comprehensive (yet cost effective) basic healthcare insurance policies you can afford;
What extended family obligations do you both need to address? Often at least one spouse will have an elderly parent needing some financial assistance. If that spouse doesn’t have any separate property or wealth, you’ll need to decide what the two of you can start doing now to try and provide for this person’s needs. Likewise, if either of you have a child who is disabled in any way, you must also discuss how to make future provisions for that person;
Travel and vacation goals. Do you have long-term travel goals you both wish to start financing now?
Future schooling for either spouse. Is there a chance either one of you will return to school one day — either to complete a degree or obtain training in an entirely new field? Be sure to discuss how you might create a highly flexible education savings plan that could accommodate this future possibility;
Investment decision making. Which one of you should possibly take the lead with making investments for the two of you?

Minnesota Estate Planning for Married Couples

Although this list isn’t intended to be fully comprehensive, it should help newly married couples start setting priorities early on – while also obtaining their Minnesota estate-planning attorney’s advice on which tools can best help meet most or all of these goals. It may also be wise to hire a financial planner who can provide additional insights while you’re obtaining a full portfolio of estate planning documents from your lawyer.

To talk more with a Minnesota attorney on this topic, call the law firm at 612-424-0398.

Minnesota Probate | Nomination of Personal Representative

Posted on May 12, 2015 by jlawyer

In every Minnesota probate estate, a personal representative needs to be appointed. At times, the process by which that person gets appointed can be complicated.

An important provision is the nomination of a personal representative as contained in Minnesota Statute § 524.3-203(c). This law permits people who are entitled to act as personal representative to be nominated. The question is, who gets nominated and why?

Nomination of a Minnesota Probate Personal Representative

“Interested persons” have priority to be appointed as a personal representative. The list of priority includes:

(1) the person with priority as determined by a probated will including a person nominated by a power conferred in a will;

(2) the surviving spouse of the decedent who is a devisee of the decedent;

(3) other devisees of the decedent;

(4) the surviving spouse of the decedent;

(5) other heirs of the decedent;

(6) 45 days after the death of the decedent, any creditor;

(7) 90 days after the death of the decedent and pursuant to section 524.5-428, paragraph (b), any conservator of the decedent who has not been discharged.

The persons who are “qualified to nominate” include:

the surviving spouse
other devisees of the Will
any other heirs of the estate.

If there was no Will, the heirs of the estate and the surviving spouse (if there is one) have the power to nominate a personal representative. Another important thing to keep in mind is that, if the heirs cannot agree on who should be nominated, that person nominated in the Will should ask the court for permission to serve in a “formal administration.”

Priority to Serve as Personal Representative

A nomination is preferable when a person has priority for appointment. When two people share priority, those people should renounce their right to serve and/or nominate the other person to be appointed. Again, if even one person is missing in the nomination process, a formal administration will be necessary.

Formal Probate Administration

Often, the siblings will not agree on who should serve and they do agree to nominate one particular person. In this instance, my advice to the person nominated in the Will (who is the person who most often comes into my office) is that they start a formal administration.

A formal probate administration is not necessarily a bad thing. It does, however, change how the estate is administered. If it is a formal administration, the personal representative must have their actions approved by a judge. Additionally, there must be a court hearing for many of the actions taken by the personal representative. At times, this can raise the cost of the probate estate.

In sum, it may not be possible to get all necessary nominations from the parties who have “priority” under the law. Minnesota probate attorneys understand this and you should speak with qualified lawyer if you run into this problem.

Minnesota Probate Attorneys

If you have questions about the nomination of a personal representative and/or Minnesota probates, contact Flanders Law Firm LLC at 612-424-0398.

Minnesota probate attorney fees: How much do they cost?

Posted on May 7, 2015 by jlawyer

Minnesota probate attorney fees, how much do they cost?

The law firm charges varying attorney fees on Minnesota probates.

The complexity and work involved in the probate dictates the cost of the estate administration. There are many different types of probates, including: informal, formal, unsupervised, and supervised administrations.

At times, the attorney fees will be much less because all that needs to be transferred is one asset. In this case, there will be minimal effort involved in the transfer that asset in the probate. Common asset transfer situations, which have lower attorney fees, include the transfer of title to a home, or liquidation of a single stock, insurance, or other investment assets from the name of the deceased person to their heirs and beneficiaries.

Examples of Minnesota probates with higher attorney fees include the estates which need to be administered from date of death to distribution of assets. This would include: payment of creditor claims, publication of notice in the newspaper, negotiation of contested issues, payment beneficiaries, starting an estate bank account, paying taxes, etc. These duties can be very time-consuming and must be done correctly or liability for the personal representative and/or the attorney will be involved. In these cases the attorney fees are often much higher than many people may like.

Minnesota probate attorneys lawyers

The firm works with individuals with the estates worth less than $50,000.00 and with the estates worth millions of dollars.

Different law applies to different estates. For further questions about Minnesota attorney fees in Minnesota probates, contact Flanders Law Firm LLC at 612-424-0398.

Minnesota Probate Laws | The Meaning of a “fiduciary”

Posted on May 6, 2015 by jlawyer

Many of my clients have questions about the meaning of the word “fiduciary” as it applies to probate law.

The definition and discussion often revolves around Minnesota probate and or Minnesota trust law. For this article I will discuss the definition as it applies to personal representatives and Minnesota probate (although the general rules apply in all cases).

Minnesota Probate Law

Minnesota statute 524.3-703 provides the legal definition of a fiduciary in terms of Minnesota probably law. Below are the pertinent portions of the statute:

524.3-703 GENERAL DUTIES; RELATION AND LIABILITY TO PERSONS INTERESTED IN ESTATE; STANDING TO SUE.
(a) A personal representative is a fiduciary who shall observe the standards of care in dealing with the estate assets that would be observed by a prudent person dealing with the property of another, and if the personal representative has special skills or is named personal representative on a basis of representation of special skills or expertise, the personal representative is under a duty to use those skills. A personal representative is under a duty to settle and distribute the estate of the decedent in accordance with the terms of any probated and effective will and applicable law, and as expeditiously and efficiently as is consistent with the best interests of the estate. The personal representative shall use the authority conferred by applicable law, the terms of the will, if any, and any order in proceedings to which the personal representative is party for the best interests of successors to the estate.

. . .

As you can see, the definition of a fiduciary and what the fiduciary duties are in a probate are clear and well defined. Basically, a fiduciary is a legal definition of a person was been appointed to care for the property and legal rights of another. This is a very serious position which should not be taken lightly.

Violation of fiduciary duties

If the personal representative of the probate estate is not following Minnesota law, that person can be held personally liable for any mistakes, fraud, or misrepresentations that may have been committed. The people holding the personal representative accountable are often the heirs, beneficiaries, and or creditors of the estate. Failing to comply with the law as it defines a fiduciary is a sure way to be sued. Some common examples of failures of a personal representative include:

failing to properly notify creditors of estate debts
failure to properly account for estate assets,
failure to file an accurate inventory and/or final accounting
failure to notify heirs of their rights
not paying taxes of the deceased person in a timely fashion

In my estimation, as an attorney was been practicing probate law for a number of years, the personal representative duties are often rather obvious, unfortunately, some individuals are unable to meet the standard of caring for others. This is unfortunate.

Minnesota probate attorneys lawyers

If you find yourself in a situation we have questions about your fiduciary duties as a new personal representative, or if your questions about a person representative who is not doing his or her job, contact the probate lawyer at Flanders Law Firm LLC, 612-424-0398.

Personal Representative Liability for Failure to Pay Probate Estate Taxes

Posted on January 26, 2015 by jlawyer

An important case was issued recently out of the Western District Court for the Western District of Pennsylvania, United State v. Stiles, No. 2:13-cv-00138.

This case provides and excellent explanation for why people should not administer estates (especially large ones) without the help of a lawyer.

Facts of the Case

Julia Stiles died in 2002. Her son was appointed executor (personal representative) of her estate (it is not clear whether he did so with the use of an attorney or not).

The tax return for the estate was not filed until June of 2008. On June 9, 2008, a representative of the Secretary of the Treasure Internal Revenue Service of the United States (IRS) assessed federal income taxes, interest, and penalties against the estate in the amount of $2,093,091. That is a lot of money in taxes.

The real property in the state of Delaware was sold in August 2002, for $379,000. Once the property was sold, the proceeds were distributed to the heirs shortly after the sale. The IRS did not receive any proceeds from the sale of the property.

Between 2002 – 2005, the son distributed approximately $775,000 from the estate to himself, and $425,000 to each of his two sisters. At the start of April 2008, the estate’s investment account was worth $1,787,660. In April of 2008, David Stiles distributed $110,635 from the estate to the Delaware Division of Revenue.

The IRS can Charge Interest on Late Payments

The IRS presented evidence to the court that interest was owed on unpaid income taxes. Interest on the income tax assessments is assessed under 26 U.S.C. 6601(a) and (b) from the date that the Stiles’ tax liabilities became due at a rate set forth in 26 U.S.C. 6621(a). Penalties are also allowed by federal law.

The law on failing to pay estate taxes

The IRS in this case filed for a summary judgment. In essence, this means that the IRS felt that the Stiles had not cognizable defense. The court agreed.

In seeking to foreclose its tax lien on the estate, the IRS argued in its summary judgment motion that there was a prima facie assumption of tax liability. Therefore, since the government had arguably met its burden, the Stiles had to file a responsive statement of facts. They did not do so – ostensibly because they did not appear to be represented by counsel.

Personal Representative Liability Law

The personal representative of the estate also argued that the estate was now insolvent and therefore the IRS could not foreclose in its tax lien.

The IRS argued that, because the personal representative of the estate was a fiduciary that it could hold him personally liable for the tax debt. The IRS cited law which provided that:

“Personal liability can attach, to the extent of the distribution, if the government establishes three elements: (1) the fiduciary distributed assets of the estate; (2) the distribution rendered the estate insolvent; and (3) the distribution took place after the fiduciary had actual or constructive knowledge of the liability for unpaid taxes.” United States v. Tyler, No. 10-1239, 2012 WL 848239, at *10 (E.D. Pa. Mar. 13, 2012). “

The court agreed with the IRS’s argument and found the personal representative liable for a tax debt in the amount of

What is even more confounding is that the personal representative admitted that he knew about the tax liability:

David Stiles admitted, through testimony, that he knew in 2002 about the estate’s federal tax liabilities. (ECF No. 35 ¶ 17); see Estate of Stiles, 2011 WL 5299295, at *6 (“[David] Stiles testified at trial that he knew as of 2002 that estate taxes would have to be paid in addition to the yearly fiduciary income taxes, but he made no affirmative efforts to pay those taxes or learn of the deadlines by which they should have been paid.”). On June 18, 2003, during a telephone call with his lawyer, David Stiles was informed that the estate’s tax returns were late. Estate of Stiles, 2011 WL 5299295, at *6. Based on the record before the court, David Stiles knew about the estates’ tax liability, at the latest, on June 18, 2003. David Stiles continued to distribute assets out of the estate through 2006.³ (ECF No. 35 ¶ 19.) The record before the court shows that David Stiles had knowledge of the estate’s tax liability and continued to distribute assets out of the estate rendering it insolvent. See Tyler, 528 F. App’x, at 200-02.

Finally, it appears that the personal representative was relying on a defense of bad legal advice. The court also did not find this argument compelling, providing that: “Relying on the poor advice from an attorney is not a defense. It is unfortunate that the Stiles received poor legal advice; however, poor advice does nothing to mitigate their liability for the decisions David Stiles made in managing the estate.”

Seek out competent legal counsel

Having experienced, competent probate attorneys for a Minnesota probate is a must. Personal liability is very real and must be taken seriously by all potential personal representative.

For further information, contact Joseph M. Flanders at 612-424-0398.

Minnesota Probate | Domicile, Residency, and Ancillary Administrations

Posted on November 18, 2014 by jlawyer

In this article, I wanted to discuss the legal doctrines of jurisdiction and where a probate should be submitted to court in Minnesota. There was recently an article about Minnesota tax law as it applies to this issue.

Residency and Domicile in a Minnesota Probate

In Minnesota, when a person passes away, their estate needs to be probated in the county where they resided.

The justification for probating in the county where the person resided is that they will have likely paid taxes on their home, on vehicles, and participated in the day-to-day operations of life in the county.

The legal word “domicile” is complicated but it can be boiled down to where a person intended to stay and live. As stated above, this can become complicated when a person may have a home in Minnesota but that person may spend a significant amount of time in Florida, Arizona, Texas, or some other state with much warmer weather the Minnesota in the winter. This creates complications associated with tax liability as Minnesota has a high personal income tax as a state.

Furthermore, at times, the deceased person may have had a cabin or other property in Minnesota.

Although the person may have had a cabin or other property, the laws of domicile and residency still provide that the person this day should be probated in the county in which they resided permanently. Again, this can create confusion people tend to move around a fair amount when they retire. If you have questions about the meaning of domicile and residency, a Minnesota probate attorney should be consulted.

As stated above, once a proper county court is chosen, the executor or personal representative of the estate needs to properly petition the court for a probate administration. I have previously written articles on what needs to be contained in a petition for a new probate.

Ancillary Administrations and Minnesota Probate Law

In addition to the discussion above about domicile and residency, the questions of ancillary probate administration comes into play. This is because a deceased Minnesota resident may have a home in a different state – for instance, Florida.

If the deceased person owned a home in Florida, then the title to the property will need to be transferred from Florida to the person’s estate in Minnesota. Again, this is because Minnesota law wants to control a person’s estate.

In this instance, an attorney in who is licensed to practice law in Florida should be consulted because a separate, “ancilllary” probate will need to be conducted. This is an extra expense but it is a necessary expense.

Further information about ancillary probate and residency

Contact the Flanders Law Firm LLC or attorney Joseph M. Flanders, a Dakota County Minnesota probate law firm, for more information about ancillary probates, domicile, and the meaning of residency as it applies to Minnesota law. Telephone: 612-424-0398.

Minnesota Probate Law | Publishing notice in the newspaper

Posted on November 13, 2014 by jlawyer

In every Minnesota probate estate administration, the personal representative is required to publish a notice to creditors and a newspaper of general circulation in the county in which the estate is probated.

We have discussed in previous articles that the county in which the estate should be probated is the county of the deceased person’s residency or “domicile”. Basically, this means the county where the decedent lived, had bank accounts, had vehicles titled, and where he/she paid bills from.

Why is publishing notice in the newspaper necessary?

Under Minnesota law, every personal representative must publish a notice to creditors in a newspaper of general circulation in the county where the decedent established residency. This is necessary because the personal representative is required to make extra efforts to identify potential creditors of the estate. Often times, a personal representative may not be aware of all the potential debts of the deceased person.

Common debts include credit cards, mortgages, utilities and other home payments, taxes, and other miscellaneous outstanding debts which one accrues during life.

A personal representative is taxed with the responsibility of being a fiduciary for not only the heirs but also the creditors. This can be a difficult and demanding job and it is one where the law needs to be followed very closely; otherwise, the personal representative could be held personally responsible for their failure to follow the law.

The publication process is rather antiquated and, in my opinion as a practicing attorney, a remedy that creditors are not likely to read. However, I was contacted by an heir who found out about a deceased person’s estate through an Internet search. The notice to creditors was published in a newspaper which showed up on the Internet. I was surprised that the heir found out about the estate and I was pleased that the newspaper publication worked.

The above anecdote outlines the reasons why notice is necessary. In a previous article, we discussed the meaning of due process when it comes to a probate administration. Essentially, all heirs and creditors are entitled to notice of the existence of a probate estate while it is winding its way to the court system. The heirs and/or creditors will not necessarily have their claims paid, but they are entitled to notice.

What should be published in the Notice?

The notice to creditors must outline the existence of the estate, the name and address the personal representative, the attorney representing the estate, any notice of upcoming court hearings to appoint the personal representative.

As we discussed above, this notice gives creditors and heirs due process to be able to know what is going on in the estate. This is a extremely important function of the court systems. After all, the court systems are a supervisor of court cases and people, and attorneys, so that everyone is following the law.

Notice published in the newspaper does not mean that the creditor claims will all be paid. There are many exemptions and different arguments to creditor claims in any probated administration.

For further questions about notice to creditors, publication in the newspaper, exemptions, and probate administration a Minnesota probate lawyer should be consulted.

Minnesota Probate Lawyer

Flanders Law Firm LLC and Joseph M. Flanders are experienced Dakota County Minnesota probate attorneys. From also represents clients throughout the state of Minnesota on probate and estate administrations. For further information, contact the law firm at 612-424-0398.