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Minnesota Estate Planning Essentials
Why Estate Planning?
It is essential to make plans for your estate prior to any illness or your eventual death. Not only will you have the peace of mind that there will not be any unanswered questions after you are gone you will provide your heir with an efficient and effective way to transition to the next phase of their lives without you. While it may be difficult to talk about and plan for your demise there is no escaping that eventuality and the efforts that you make will provide your loved ones much assistance in coping with their loss of you as a spouse, father or other next of kin. Generally speaking, the grieving process for your loved ones will be much easier if you have set forth your wishes long before there are any doubts as to your mental capacity. Legendary WCCO newscaster Pat Miles wrote a book about the process of grieving and dealing with the loss of a loved one which is a great resource for those experiencing the loss of a loved one. – More Information
Estate Planning basics
The estate of any person who dies in Minnesota will need to be probated. There are several ways to avoid the probate process and depending on your individual financial situation there are options which may be available to you such as a Trust, Pay on Death Account and/or a Life Insurance policy. Any assets that are not removed from your estate prior to your death through one of these types of accounts or others not mentioned will need to go through probate.
Benefits of a Will
If you create a will prior to your death, you can specify what individual(s) should receive your assets after you are gone. If you do not have a will your property will pass to your heirs under the laws set forth in the Minnesota Probate Code and those assets will be divided in accordance with that system. (View Additional Info)
The system is set up to provide a surviving spouse with a life estate in the homestead, a family allowance for up to a year and an initial sum of money equal to the first $225,000 from your accounts with any further division being amongst all heirs equally.
Benefits of a Trust
If you create a Trust prior to your death which is irrevocable at the time of your death those assets which are placed into the Trust do not need to go through probate. This can save a considerable amount of time and expense which would otherwise be incurred in the probate process and ensure that your wishes are fulfilled. The downside is the costs to set up the Trust and management of the Trust during your lifetime.
Benefits of Pay on Death Accounts
If you have financial accounts in which you specify the beneficiary who is to receive your assets at the time of your death those accounts will avoid the probate process. (Learn More – Investopedia) Certain types of accounts and/or institutions will allow you to set up a pay on death account. The downside of these accounts is that certain beneficiaries may inherit large sums of money with little to no control over their use of those funds after your passing.
Life Insurance
The benefit of a life insurance policy on your life is that the value of the insurance policy will pass to your designated beneficiary upon your death without needing to go through the probate process. (Learn More – Wiki) The downside is the cost of these policies which you must pay during your lifetime.
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