Category: Estate Administration

Navigate estate administration with confidence. This blog category covers insights on probate, wills, executor duties, asset distribution, and legal requirements. Stay informed with the latest updates, best practices, and step-by-step guidance to simplify the estate settlement process.

  • Thrift Savings Plans and TSP Beneficiary Forms

    Thrift Savings Plans and TSP Beneficiary Forms

    Audio for Thrift Savings Plans and TSP Beneficiary Forms

    Thrift savings plans are assets requiring a different attention to detail than other financial products. This is true because TSP Beneficiary Forms are designed and managed by our federal government.

    Families contribute to these types of assets for obvious reasons. On the other hand, long term care issues, grandchildren, litigation, carelessness, and divorce are events that must be considered in various tools outside a beneficiary form.

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    As a result, veteran estate plans which include thrift savings retirement benefits, should consider the following:

    • The Federal Retirement Thrift Investment Board (FRTI) manages these benefits;
    • FRTI claims, they work flawlessly;
    • FRTI states they spend participant money wisely; and
    • TSP Beneficiary Forms unfortunately use a block lettering system.

    As great as these assets might be for Federal Employees and military families, I am fearful of unintended consequences.

    For example, voiding a beneficiary form because a name could not fit into their block system. Or, placing assets in a trust that isn’t prepared for a TSP asset. In other words, a beneficiary form that is incorrectly completed, might inadvertently get taxed at a higher rate or offered to a nursing care facility. Other times, families incorrectly expose an asset to a divorced spouse or a divorced adult child that had once married into the family.

    I like to see our military and civil service families weigh the following:

    • Has each Thrift Savings Plan or Beneficiary Form been updated?
    • Does the accumulation of wealth make a Bypass or Credit Shelter Trust more significant?
    • How might the SECURE Act impact each TSP Plan?
    • Could an accumulation or conduit trust help streamline a specific goal or outcome?
    • Does a durable power of attorney document address an opportunity to fix or change beneficiary forms in the future?

    Unfortunately, occupational hazards make these issues important for the young and old.

    Therefore, if you have a Thrift Savings Plan and need personal attention or advisement, or need support with certain estate planning tools, please consider the above mentioned issues as an introduction to Thrift Saving Plans.

  • EDB or Eligible Designated Beneficiary

    EDB or Eligible Designated Beneficiary

    There are 5 categories of an EDB or Eligible Designated Beneficiary. As described in Section 401(a)(9)(E)(ii) of the code, an EDB is:

    • The Surviving Spouse
    • A minor child of the participant (but only until the age of majority is reached, at which time the 10-year payout applies)
    • A disabled beneficiary
    • A Chronically Ill Individual
    • A person not more than 10 years younger than the participant.

    Of course, the idea of making this determination is such that the the participant or the person who owns the retirement plan can make planning decisions specific to a see-through trust.

  • RMD and Required Minimum Distributions

    RMD and Required Minimum Distributions

    RMD is an acronym for “Required Minimum Distribution”. RMD is a fancy term used to describe rules on time and money impacting retirement plans. In other words, how much money must a person take from their retirement product in any given year?

    Absolutely, RMD is important from an estate planning perspective too. But, if this is your first time addressing this, let us start slow.

    Rules and laws for RMD requirements come in two flavors:

    • Rules during a person’s life, and
    • Rules after a person dies.

    Where To Start with RMD?

    Really, you already started, so there is that. Now, let us add a second piece. What are the rules?

    What makes a rule easier to follow are those that are written down. Rules spoken about as if everybody knew them are unfair. Why? Because most people have never read RMD laws.

    Luckily, you are different and took it upon yourself to start reading about Required Minimum Distributions because you want to know how it impacts your retirement, spouse, and adult children. Thus, good for you!

    RMD Rules and Laws

    Like I mentioned earlier, I like rules that are written down.

    Here is a short, but not complete list of laws and rules that apply to RMD requirements:

    On the other hand, if you are looking for the specific law when everything started, you can begin your search with P.L. 99-514.

    Required Minimum Distribution Laws are Important

    From an estate planning perspective, RMD rules and laws are important for our trustees, beneficiaries, spouses, and us as owners of accounts.

    Certainly, leaning on professionals makes sense because these rules have long term impacts. On the other hand, these rules are important because they impact our money and tax bill.

    For this reason, I believe individuals and families willing to spend time to create a personal RMD roadmap are helping their trustees, spouses, and children in the long run.

  • Hennepin County Transfer on Death Form and Photos from My Visit

    Hennepin County Transfer on Death Form and Photos from My Visit

    Completing a Transfer on Death Deed and recording it correctly is not for the faint of hearts.

    Of course, there are lots of reasons why a TODD should be avoided. Putting this stress aside, if you need help with this process, you found the right place.  

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    For whatever reason, not enough people are visiting their local recording office. If this is your first visit and your intent is to file a Transfer on Death Deed in Hennepin County, I recommend getting there before the lunch hour and parking near City Hall.  Otherwise, traffic and waiting may become overwhelming.

    On the other hand, if you decide to visit the facility on your own, do not park in the adjacent east parking lot because the parking fees are ridiculous.

    Otherwise, avoid heading downtown entirely by recording documents online or by mail.  That aside, the team of people who work at the Recorder’s Office are awesome, very helpful, and extremely knowledgeable.

    With that, I hope this short post finds you well.

  • Your Half Sibling Might Inherit More Than You Bargained For

    Your Half Sibling Might Inherit More Than You Bargained For

    A Half sibling in Minnesota can inherit just as much as your full or whole blooded sibling.  Surprising, right?  For some, yes.  For others, like Prince’s half-siblings, not so much.  In Minnesota, we have statute 524.2-107, which says:

    Relatives of the half blood inherit the same share they would inherit if they were of the whole blood.”

    Luckily, you can work around this rule by utilizing a will or trust.  When a person dies without a will or trust, the wild wild west of “intestacy” laws kick-in.

    Half Sibling Gets No Love

    The level of love offered or shared between siblings and relatives makes no difference.  Here in MN, half is as good as whole.  Of course, the rules in other states, like Florida have a different set of rules.

    Really though, where we make our death bed does not matter either.  Instead, its where we have our assets that counts.  For those with assets in Minnesota, treating half-blood relatives as whole blooded takers can have unintended consequences.

    Half Sibling Workarounds

    Like I mentioned above, a purposely planned estate an reduce risk.  Giving away more than we expected or not as much as we hoped is hardly a plan.  

    Instead, I like addressing a half-blooded sibling by incorporating the law and expressing my specific wishes.  I like this approach because it is difficult to predict when or if the law on half relatives will change.

    Even more significant, in the history of Minnesota, the statute on half-blooded siblings has only been addressed twice with half-blooded relatives showing up about very infrequently.  In case you are looking for additional resources for assistance, check out these cases:

    • McDonnall v. Drawz
    • LamFramboise v. Day
    • Boeing v. Owsley
    • Atwater v. Russell

    Unfortunately, these case are so old, the only way to track them down is by visiting Minnesota’s law library.  Nonetheless, they are worth reading.  Nonetheless, an estate plan incorporating a half-sibling calls for exact and specifically expressed intentions.

  • A Mean Obituary Hurts Everybody and Accomplishes Nothing

    A Mean Obituary Hurts Everybody and Accomplishes Nothing

    Did you see the mean obituary floating around on the internet from a Minnesota family?

    Until now, I had not seen anything like it.  At first, I found the obit amusing because it was so unusual.  After 24 hours, I have come to my senses.

    Writing a Mean Obituary is Bad Judgment

    Writing an obituary is hard.  Using an obituary to send an ugly message is bad judgment on many fronts.  Here are a few reasons:

    1. The act of dying is a teaching moment.  Likewise, caring for our dead is a teaching moment too.
    2. Obituary notices are viewed as a legal notices to the general public.  Future generations need a clean slate.
    3. Writing a hurtful obituary breaches the Golden Rule
    4. Wishing another person damnation violates simple Christianity teachings
    5. Bearing a false statement (even in an obit) breaks the 10 Commandments

    Should You Criticise the Drafter?

    Of course writing a mean obituary is an easy trap to fall into.  Usually, these types of notices are written a few days after a person’s death.  Death inspires emotion, good and bad.  Unfortunately, an unclear mind led to bigger problems.

    To prevent this issue, I like the idea of using this example to inspire others to draft their own obituaries.  I get it, it sounds morbid.  But really, it is an opportunty to reflect and set future goals.  If it helps, call it a Legacy Letter.

    Either way, it is a sure way to avoid a mean obituary and reduce stress for our family.

    Elements of a Happy Obituary

    Writing a happy obituary means shooting for a Grimmy Award.  For those wishing to take on this exercise, here are a few tips:

    • Use a youthful picture,
    • Include a name, maiden nam, and nick name,
    • Identify a birthday and date of death,
    • Reference children by their first name,
    • Limit grandchildren to a number.
    • Embed a catch phrase used by the deceased,
    • Express talents and joys,
    • Describe what the deceased gave to others,
    • Include a reference to their military service, and
    • Make reference to a final resting place
  • 10 Really Complicated Informal Probate Steps

    10 Really Complicated Informal Probate Steps

    There are ten (10) informal probate steps in Minnesota.  Some folks need help from an estate attorney, while others do not.

    Nonetheless, lets quickly address a few quick steps to assist with this process.  So you know, everybody asks:  what is the difference between an unsupervised probate versus a supervised informal probate?

    If you had no idea there was a difference, no big deal.  Maybe these steps can help you too.  In my opinion, deciding and selecting the right probate process is a critical first step.   The major difference between both types of an informal probate is liability.  Generally, very few people want to be held liable for debts owed to a creditor.

    Thus, here is part of what I look at when trying to make this decision:

    First 5 informal probate steps

    Both an unsupervised and supervised informal probate starts the same.  The first five (5) steps are:

    1. Filing an application with the right court or venue,
    2. Having an informal meeting with the assigned Registrar (yes, the Registrar will review the application),
    3. Sharing the correct notice of appointment with every interested person,
    4. Fling an affidavit with the court, and
    5. Asking the court to issue letters appointing a personal representative.

    Next 5 informal probate steps: Unsupervised

    The next five (5) steps for an unsupervised process are:

    1. Asset collection,
    2. Inventory preparation,
    3. Settling claims with creditors,
    4. Tax returns, and
    5. Estate distribution.

    Next 5 informal probate steps: Supervised

    The next five (5) steps for an supervised process are:

    1. Asset collection,
    2. Inventory preparation,
    3. Settling claims with creditors,
    4. Tax returns, and
    5. Seeking a court order.

    What is the difference?

    Again, the major difference between both types of an informal probate is liability.  Generally, very few people want to be held liable for debts owed to a creditor.

    Yes, reducing liability owed to a creditor, taking the right steps to account for the assets of another person and distributing their assets accordingly to the rules of their will or a court is a responsibility imposed by law.

    Finally, consider reviewing these rules and laws to help your decision making process.

  • 8 Ways to Make an Estate Gift to Your Church

    8 Ways to Make an Estate Gift to Your Church

    Patrons wishing to make a gift to their church are running into problems when they try to incorporate wishes into an estate plan.  Luckily, there are some strong alternatives.

    Legal Forms to Help Gift to a Church

    Generally, an estate plan can utilize eight (8) different ways to make a gift to your Church.  Unfortunately, each method or form can bring with it a different set of problems.

    8.  Prayer,
    7.  Your time,
    6.  Cash gift before death,
    5.  Transfer on death deed,
    4.  Beneficiary forms,
    3.  Irrevocable trust,
    2.  Revocable trust, and
    1. Will

    Estate Gifts versus Tithe or Tithing

    I hope this doesn’t happen to your family, but entering an ICU or long term nursing care facility can really drain one’s assets.  In my experience, identifying a specific cash donation within a will or trust is a poor plan.  For one, nobody really knows how much we will have when we die.

    Instead of adding an exclusive cash gift, I like the idea of designating a strict percentage.  For example, I bequest five percent (5%)….to ___________.  For some, the idea percentage is a set percentage called tithing.

    Again, if we are lucky to die with assets, then contributing a specific percentage is easier to manage and is less likely to make life difficult for a Personal Representative.

    Best and Worst Way to Gift to a Church

    There isn’t a best way to make a gift to a church.  If folks are able, then great.  If they cannot, then that is okay too.

    That said, there are a few methods of gift giving that I discourage.

    The first method I discourage folks from making is the process of gifting their home.  Quite frankly, very few churches want to manage real estate.

    Personally, I like the idea of granting a Trustee an opportunity to sell a residence on behalf of a person and using the proceeds as desired.  In other words, making it easy on a Church to accept a cash gift versus a home.

    The second method I discharge folks from making is the process of making a church or a pastor an executor.  Again, most folks would agree that a church is by our side for spiritual guidance versus the estate transfer process.

    Thus, if gifting to a church is what a person desires, make the process easier by using a trust or will.

    If you need help with this process, please contact me.

  • My Corporate Trustee Increased Their Fees

    My Corporate Trustee Increased Their Fees

    When I meet with families for the first time, identifying a corporate trustee within a revocable trust is always an unusual conversation.

    Before describing why, lets quickly outline what it means to identify a third-party trustee that is unrelated to you and your family.

    A corporate trustee is a business or entity (like a bank or wealth management company) that agrees to manage and administer a trust.  As you might suspect, this agreement is based on paying a service fee.  Generally, this is where people back away.

    Really though, I like the idea of engaging an entity as a back-up to the back-up for one reason:  just in case we all die.  Here is what I mean.

    Corporate Trustee:  Everybody Dies

    Like you, I do not like to think about my death.  Taking this nightmare to the next level, I do not like the idea of thinking about dyeing in a car accident with my closest family matters (minus the one grandchild  or child hanging out with a babysitter).   Far fetched, but possible.

    Anyways, I love the idea of making sure my trust has the power to implement Minnesota statute 501C.074, versus making a trustee or guardian seek authorization from a court to fill a trustee vacancy.  I like this idea because I want my assets distributed amongst my beneficiaries versus court fees.  Also, I cannot predict the far fetched future (North Korea?).

    Even better than adding the Fancy in Trusteeship or Successor Appointment rule is helping out by selecting an entity to act as my corporate trustee.

    Thus, updating a revocable trust to account for vacancies makes sense.

    Corporate Trustee:  Running from Fees

    Of course, the one reason people balk at the idea of selecting a corporate trustee (even as a back-up to the back-up) is the fear of paying corporate fees.  Certainly, I agree.  If ATM fees make you go crazy, corporate trustee fees might make you sick.

    On the other hand, family dynamics can be the deciding factor.  Some realize their family is not sophisticated enough to manage a trust, while others are fearful of family members arguing over silly things.

    The intentions of the settlor (the person who made the trust and identified a third party to manage it) is what matters most.  In my experience, having a person with specialized knowledge to administer a trust can be a breath of fresh air.

    Corporate Trustee:  One of My Favorite Approaches

    The value of thinking through the issue of selecting a corporate trustee is sometimes overwhelming.  Although not for everybody, one of my favorite approaches is selecting a personal friend or family member as my trustee and making a corporate trustee their partner.  In other words, both serving as co-trustees.

    Personally, I think this accomplishes a handful of goals:

    • Reduces fiduciary stress,
    • My trustee can lean on an entity I pre-selected,
    • And, if my trustee gets sick or is no longer able to help, they have a back-up too.

    Final Thoughts

    Just to be clear, a person wishing to create a revocable trust is not required to select or identify a corporate trustee.  Instead, I only bring to your attention because it is a nice alternative for people concerned about selecting a trustee or not knowing enough trustworthy people to manage their affairs.

  • IRA Rollover Into a Trust Can Be a Huge Mistake

    IRA Rollover Into a Trust Can Be a Huge Mistake

    The rules for an IRA rollover change on an annual basis.  Because an IRA cannot be owned by a trust outright, this post is about identifying a spouse as a beneficiary of an IRA and thinking through who or what should be the contingent beneficiary.

    IRA Rollover:  Why Do We Care?

    It is very simple.  We care because we want to reduce taxes.  When our spouse dies, we have 60 days to roll the account over and reduce a tax penalty.

    IRA Rollover Intentions

    Assuming neither spouse has died, making choices to help reduce tax problems is a luxury.  If a rollover is intended, I like the idea of identifying a spouse as a primary beneficiary.

    I like this process for a few reasons.  First, it grants my spouse an opportunity to complete a rollover of an IRA.  Second, I want my spouse to utilize distribution options that favors prosperity.

    Would you believe people identify their trust as the primary beneficiary of an IRA?  Unfortunately, this is a huge mistake.

    IRA Rollover into a Trust

    The bad part about making a trust the primary beneficiary of an IRA is the fact doing so might accelerate withdrawal requirements.

    Without including specific language within a trust like a “pas through” clause, dumping our assets into a revocable trust might create an even bigger tax burden.  For this reason, I believe mapping out a distribution flow plan can help us and our loved ones from accidentally subjecting themselves to a 10% withholding penalty.

    Handling An IRA Rollover

    Ultimately, I believe there are three things to consider when discussing our estate with our spouse.

    • What happens if I die first,
    • What happens if we die at the same time, and
    • How can we preserve or reduce a tax burden for our children and grandchildren?

    My IRA Rollover Process

    When I meet with folks about these types of issues, the first thing I look for is obtaining written copies of the beneficiary designations for all retirement accounts.  Often, people do not remember who is named on their accounts or whether they selected a back-up.

    Additionally, I believe this process requires engaging a CPA or Certified Public Accountant.

    Thus, before you start naming a trust as the primary beneficiary of an IRA Rollover, please contact this law office.

  • Prevent Cyberattacks on Estate Plans By Doing 1 Thing

    Prevent Cyberattacks on Estate Plans By Doing 1 Thing

    Today’s news of a cyberattack on the banking system in Ukraine is a horrible reminder how vulnerable we really are.

    On the other hand, none of my Clients leave my office without understanding whether they should store their estate planning documents in the cloud.

    In my opinion, storing some or part of an estate plan in the Cloud can prevent problems down the road.  Provided hardcopies are not compromised by changes or edits, nothing beats a cyberattack like having hardcopies

    If you need help or advisement how to store, preserve and keep such things, please contact me for help.

  • Can my Ex Spouse Really Inherit my Stuff?

    Can my Ex Spouse Really Inherit my Stuff?

    Can an ex spouse inherit property from their former spouse after a divorce?  In Minnesota, absolutely yes.

    Although there are laws like the Ex Souse as a Beneficiary Rule, I believe it is critical to update every estate plan after a divorce.

    What is the Ex Spouse Beneficiary Rule?

    Minnesota has two important laws that help revoke an ex spouse from a will and trust.  The rules are:

    On the other hand, I believe failing to update an estate plan puts intended beneficiaries (like children, siblings or a future spouse) at risk of not recovering your assets.

    For one, there was a recent case reviewed by our US Supreme Court that says certain types of assets do not fall under the revocation laws referenced above.  Keep in mind, this issue was reviewed by the highest court in the land.

    Second, why take a chance?

    Minnesota’s Laws on an Ex Souse Inheritance

    I apologize for adding fuel to the fire, but Minnesota’s court system has produced two opposite opinions on this issue.  Can you imagine an ex spouse taking an inheritance issue to court because they stand to inherit something substantial?

    None the less, two cases come to mind:

    Even if you never read these cases, please notice this:  each case involves a financial institution.  In other words, even if we think our ex-sposue will never encourage a problem with an inheritance, we cannot rule out our banks and insurance carriers.

    In simple terms, making changes to update a will, trust, 401K, etc. is worth the effort to reduce conflict.

    Will my Ex Spouse Inherit from my Will?

    Right now, there is a strong law in Minnesota that revokes an ex spouse.

    On the other hand, I am worried about bigger assets like retirement accounts, insurance policies and real estate.

    If you need help with this issue, please contact me directly.  Otherwise, I hope you found value in the links shared above.