The easy way to avoid Minnesota probate is to never die. No, seriously – if you never die, then probate will not be an option.
On the other hand, if you think you might die someday, grab an adult beverage before you read the next line: nobody can avoid probate 100%. Instead, our goal is to reduce the risk of probate.
Now, I know what you are thinking….your friends told you they have a revocable trust and they are going to avoid the headache they experienced when their parents died.
I agree, a trust is an excellent way to reduce the risk of making your family stress over the probate process.
On the other hand, there are generally three reasons why your trust will not necessarily help your family avoid Minnesota probate:
- You forgot to fund an asset (maybe you decided to make a purchase in your 70’s or 80’s),
- Pain-in-the butt family members, or
- Creditors (like hospitals, nursing homes or credit card companies).
Avoid Minnesota Probate the Cheap Way
In a class I teach, I stress one sure strategy on the cheap end (meaning it should not cost you any money) to reduce the risk of probate in MN: make sure your financial accounts have beneficiaries.
For example, if you have a bank account, please please please make sure you identify a beneficiary to acquire your account when you die. In my experience, most banks call this type of beneficiary a POD or Pay on Death.
Of course, I prefer transferring a bank account into a trust, but we are talking about the cheap way, not the right way.
In case you are stuck on who to choose, let me give you some fantastic examples:
- Your spouse,
- Children, or
- The cable company.
I admit, naming the cable company is crazy talk. That said, it is crazy how many people fail at naming a beneficiary. Thus, get it done and come back to my article.
Avoid Minnesota Probate Another Way
Just because you saved money in a retirement account doesn’t mean you need a heavy-duty financial planner to name a beneficiary for your 401(k) or 403(b).
Of course, if your beneficiary dies at the same time you die (in a car accident) or you want to assist your spouse and children in making the transfer of your retirement account a little easier, likely a revocable trust is strong option.
As you muster up time to think this through, please please please contact the financial institution holding your account and name a beneficiary for your retirement accounts too.
Avoid Minnesota Probate the Drastic Way
A popular method to avoid Minnesota probate is to create a trust and inside the trust have a clause that looks like this:
If any person or entity challenges my revocable trust and they lose, their interest in my estate will be expressly disinherited
Of course, there are better ways to do reduce the risk of having your estate challenged. None the less, this is one of many different options.
Avoid Minnesota Probate the Right Way
It wasn’t by accident that I chose a picture of people sharing a beverage with one another while sharing a laugh. In my experience, the strongest way to avoid Minnesota probate is to create a plan and share it verbally with your loved ones.
For example, share with your elderly parents who will be taking care of your children if you die and what to do first in case of an emergency.
Or, maybe this means sharing with your spouse tha your power of attorney document is kept on the book shelf or your health care directive identifies a list of medications you take on a regular basis.
The bottom line: talk about your plan as if you were going to die someday versus pretending everybody else other than you is doomed for a bad day.