We have two dogs, Moose and Ruby. I’m only a little embarrassed to say that we fall into the “pets are a part of the family” category of animal owner . . . our dogs pretty much go where we go, to the point where they may be the determining factor as to whether we go on a vacation or take a weekend trip. For those who know us, this is probably not surprising. We have been active with local animal rescues and at the local municipal animal care and control center. Our animals are a big part of our lives; it probably also isn’t surprising that making sure they are cared for if something happened to us is a pretty big deal.

Yep, that's us.  Philip and Mary Ruce, pictured with Moose Ruce (L) and Ruby Ruce.  Photo via Cara Lemmage Photographs.

Philip and Mary Ruce, pictured with Moose Ruce (L) and Ruby Ruce. Photo via Cara Lemmage Photographs.

Some states make it very easy to provide for your pet in your estate plan, usually by creating a pet trust. Sadly, Minnesota is not one of these states. A pet trust is a legal entity consisting of a trustee and some trust assets (usually some money you leave to the trustee in your will). The trustee manages the trust assets for a human beneficiary who has agreed to care for the animal, and to use those trust funds for the animal’s care. This arrangement is perfectly allowable in Minnesota too, except in the pet trust states, the agreement is an enforceable obligation.

The problem lies in the status of pets as personal property.  This makes sense, of course; dogs, cats, parrots, and ferrets are not people. They can’t make contracts, they can’t consent to legal agreements, and they certainly can’t hire a lawyer and sue when they are having a problem. Pets, in the eyes of our legal system, are property on the same level as your couch or dining room table (though certain states are becoming enlightened ). Sometimes that doesn’t feel right because of the personal nature of our relationship with our animals . . . surely a living, breathing thing that depends on me for food and shelter isn’t on the same footing as my refrigerator. But it’s the reality, and it’s something we need to work around when we are planning our estate.

Your Pet’s Care

You can still set money aside for your pet’s care. I mentioned that you can create a trust for your pet, but it is not enforceable in the same way as it is in states that have pet trust laws. But if there is someone you know of who you trust to care for your pet if something happens to you, make sure you leave instructions in your will indicating that this person has agreed to accept the animal and to provide care. You could then leave this person some money outright, or you could create a small trust for the benefit of this person. The trust could be written to reimburse that person for all animal-related expenses, such as vet bills and pet food.

If you do not have someone who can care for your pet, that is okay. There are organizations with whom you can make arrangements; contact pet rescues in your area. Oftentimes, in exchange for a donation in your will, they will commit to caring for your pet when you are gone and they will work towards finding a new home for your animal.  Make sure you have an arrangement with the pet rescue in writing before assuming your pet will have care.  Here is a downloadable .PDF with more information from the Animal Humane Society.

Changes Coming?

Minnesota is considering changing its trust code to conform to the Uniform Trust Code, a set of model rules that many states are adopting as their own. The Code does allow for pet trusts, but it is up to the Minnesota legislature as to whether the pet trust provisions will be included. As an animal advocate and pet owner, I would love to see pet trusts become part of the estate planning landscape in Minnesota. Until then, let’s make sure we remember our furry friends, and let’s not forget the commitment we have made to care for them.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will

You need to consider many things when creating your estate plan . . . .  Who would get your favorite family heirloom?  What would be the best way to transfer your house to your spouse? How would your retirement accounts be taxed? And if you have young children, who would care for them?  Most people plan on leaving an inheritance to their children, but many fail to consider how they will give it to them. Giving it outright is not always a great idea . . . have you ever seen an eighteen-year-old with a $100,000 check?  I have. The result of this type of windfall is about what you’d expect.

Business advisory meetingNot everyone realizes that you have a choice about when your kids will receive your money. The money can be doled out over a period of years, or for specific things like college, a down payment on a home, funds for starting a business, or for emergency medical care. You can accomplish this in a very straightforward way by creating a testamentary trust in your will document.

Keeping Control

Testamentary trust provisions allow you to control your money even after you are gone.  The provisions create a trust entity that will be managed by the trustee, who is an individual (or sometimes a professional trust company) that you choose.  The trustee works with your child or the child’s guardian to pay for certain expenses which you specify in the trust document.  Eventually, at a time you’ve determined, the trust pays out its remaining balance; this could be when the beneficiary is twenty-five, thirty-five, fifty, ninety, or any age in between.  Funds could also be left in the trust for the child’s whole life, and then paid out to the next generation (or held in trust for them too).  You can also attach conditions to the money, such as a bonus distribution upon the completion of a college degree, or instructions to keep funds out of the hands of a child who is struggling with substance abuse.  Provisions can be drafted that will prevent the trustee from distributing the money if the child is going through a divorce or a bankruptcy, thereby protecting the child’s inheritance from these proceedings.

Expensive Mistakes

If you leave money to a minor child outright — either through your will or by listing the child as a beneficiary of you financial accounts or life insurance policies, you could be making a very expensive mistake.  Rules vary by state, but funds left outright to minors are held by the probate court and administered by a conservator.  This isn’t cheap, and the court will give the child the funds outright when he or she turns eighteen (sometimes twenty-one, depending on the circumstances).  I have watched eighteen-year-olds spend their entire inheritance within a year on cars, electronics, and misplaced generosity to their friends.

I don’t mean to generalize the behavior of an entire group of people based solely on their age, but I look at myself at eighteen and I look at myself now, and I can tell you unequivocally that a windfall of cash would be handled much differently today than it would have been handled when I was a teenager.

A word of caution: these provisions must be drafted in a very specific way if they are to qualify with the IRS to receive retirement plan funds, and the other provisions in the will have to be very specific as to how the trust will be created and how it will be managed.  This is not a do-it-yourself project.  Drafted properly, these provisions can ensure that your children will be set to succeed and will have access to these funds for a lifetime.  Set up improperly, and you can disinherit them altogether.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will

I have mixed feelings about do-it-yourself estate planning.  I think that in certain cases, when a person has very few assets and no minor (or irresponsible adult) children, and when they receive assistance in filling out the forms, it works fine.  I also think that if the alternative to discounted legal assistance is no legal assistance, well, I understand.  But these circumstances are limited.  The frequency with which these plans go wrong, and the number of disclaimers pasted all over websites like Legalzoom, gives me serious pause.

closeup of a Last Will and Testament document

My own disclaimer: there is some dispute about whether Legalzoom is even a true competitor of estate planning attorneys.  Either way, when it comes to discussion of this subject, I’m an interested party.

Your estate plan is a big deal.  Even if you don’t have to worry about estate taxes, the probate process, or nosy relatives (three very good reasons to have a professional estate plan), you are at the minimum appointing the people who are going to care for your loved ones, including a guardian for young children, your personal representative (“executor”), and possibly the trustee who will make sure your loved ones aren’t victimized.

I generally consider comparing lawyers to other professionals like physicians as silly and even a little distasteful.   Doctors, after all, save lives, prevent early death, and manage your pain.  Attorney obviously can do literally none of these things.  But there is something we have in common: we take a complex situation that has the potential to really screw things up and we can make it better . . . if someone actually comes to us with the problem before it’s too late.

The point I’m getting at is: even when surgery looks very straight-forward, it isn’t, and you are probably going to want to have that looked at.

Your Will is Not a Refreshing Sports Drink

I think the biggest issue I have with do-it-yourself estate planning is that you are buying a bulk product, and it’s like any other bulk product you buy.  Let’s use a silly example and say I am in the market for some Gatorade.  If I go to Target (I love Target), I can choose the flavor I want, the size that I want, and how many of bottles I want and be on my way — but I’ll pay a bit more for the ability to make these choices.  Alternatively, I can go buy it wholesale at Costco, and get a sizable discount (I love Costco too).  But if I go the wholesale route, I better be prepared to be told what I want, and not the other way around.  I’m going to get two dozen bottles of lemon-lime, all the same size.  My preferences and any changes that might occur after the purchase (like getting sick of drinking lemon-lime Gatorade) are not taken into account . . . I can’t have a few lemon-lime, a few orange, and a few cherry.  And I can’t limit my purchase to, say, six bottles.  I’m told what they have, and it’s up to me to decide if that works for me.

Broadly, legal documents can be purchased the same way, but with stakes are a lot higher.  If you want a ready-made will (or, shiver, a trust), you can get it super cheap because these documents are churned out en-masse, with form data. But unlike a trip to Costco, how are you supposed to know if a particular legal product works for you?  You won’t get a choice — or have very little choice — as to how trust provisions will read.  You won’t have a choice about which powers you want to give a trustee, and which powers are specific to your children’s care, etcetera. You are told what is available, just like Costco, and you decide if it will work for you. But unless you are a financial, tax, and estate professional, how do you know it will work for you?  Legalzoom’s own disclaimer says that they will help you choose the right form, but if they are wrong, they are not responsible. This guy ended up disinheriting one of his kids . . . and he’s a lawyer. This is your family we’re talking about, not a refreshing sports drink.

You are not a one-size-fits-all family, and while a one-size-fits-all estate plan may work as a Band-Aid, you don’t get to pick and choose what you want, and eventually you are going to have to re-do this plan.  Will having an estate tool custom-made for you cost more?  Of course it will.  But it’s an incredibly important part of your overall financial plan, and it’s worth the investment.

Put simply, paying for an attorney is not the same thing as paying for a document. Yes, the attorney will fill in the blanks of a document (a document that is customized to your specific state’s laws), but that is secondary.  You are paying for the advice that goes with the forms.  Your minor children likely need a trust drafted into your will, otherwise any money they get will go to the (expensive) court system until they are eighteen.  You can’t make a minor a primary or contingent beneficiary of a retirement plan or insurance policy, but you can leave it to a trust, which has to be worded in a very specific way  (as do the beneficiary designations of the retirement plan and life insurance policy).  You need trustees, personal representatives, and guardians . . . and backups. You may need to word the document so that your growing family is taken into account so that you don’t have to redo this every time you introduce a child (or grandchild) into your family.  You have to take into account changing laws and construct the documents to be flexible.  You have to plan for incapacity — powers of attorney and a health care directive that speaks plainly about your wishes. The documents must be executed properly based on your individual state’s laws (each state has its own requirements), which usually includes a self-proving affidavit (so the probate court doesn’t have to track down your witnesses and bring them in to confirm that it was you who signed the documents). Icing on the cake: your assets all have to be titled properly for your estate plan to work at all.  Et cetera, et cetera, et cetera.

And all of this assumes you have an estate that is small enough where you don’t have to do any real tax planning — federal estate and gift  tax, state estate and gift tax, and income tax.

It is perfectly legal to perform surgery on yourself, but it is not generally recommended.  Be careful, and don’t end up like these guys.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will

Do I Need a Will?

Here’s something I don’t think people ordinarily expect to hear from me: not everyone needs an estate plan.  No will, no trust document.  I was one of these people up until recently — let’s see why.

closeup of a Last Will and Testament documentI was single, with no children. If something were to happen to me, I would have wanted everything I own to go to my parents.  My family, though not wealthy, is secure and does not “need” my money or anything else I own, so I’m relatively sure no one would fight over my things.  I also trusted that anything I own with sentimental value would stay in the family and be given to family members who would appreciate these things as much as I do.

In other words, I did not need to appoint a guardian for minor children, and I was totally okay with my state’s intestate succession statute (the state law that tells a probate judge and your estate’s personal representative where to send your things if you do not have a will).  Non-probate assets — things with beneficiary designations, like IRAs and life insurance — are not affected by a will document.  In situations like mine, the state’s intestacy statutes would take the place of a will.  This “default” plan largely reflects what I would have put in a will anyway.  If this situation describes you, then as far as controlling who gets your stuff is concerned, you don’t need my services.

In Minnesota, the intestate succession laws work (broadly) like this: if I don’t have a will and am unmarried, then everything goes to my parents.  If my parents are not living, or if they disclaim (tell the court they don’t want my things), then it goes to my siblings.  If no siblings, then the court would go up a “branch” in my family tree and see if I have any grandparents living. If no grandparents, then to my aunts and uncles . . . if no aunts and uncles, then to my cousins.  If no cousins, then it goes up another branch, starting with great-grandparents, and then on down the line until they get to my second cousins.  Etcetera.

But life changes; we grow.  We get married, we have kids and grand-kids, we get a promotion and make more money, or maybe we start a small business.  Once married, the intestacy statute divides my assets between my spouse and my other heirs.  The percentage depends on whether my spouse or I have children from other relationships (we don’t).  In my case, my wife Mary would get everything, since we don’t have kids (yet).  Guess what?  That’s how I  want my will to read.  Minnesota’s laws still reflect my estate plan.

But my estate plan does more than just divide my things.  An integral part of estate planning is incapacity planning.  What happens if I am unable to make financial decisions for myself, or unable to make decisions about my health care?  A proper estate plan will create documents to address both of these issues by appointing an attorney-in-fact (“power of attorney”) and a health care agent.

And what if I want to give some money to my favorite charities?  I’ve been active with animal rescues, and supporting them is important to me.  What if I want specific things to go to specific people?  I’d like my great-grandfather’s cuff links and my childhood collection of old baseball cards to go to my brother.  Again, I trust my family, but I won’t have any real control if it’s not in a properly executed will.

What about  a business?  Do I want my family to take over my law practice?  They’re not lawyers, so that’s a resounding no. I need to plan for this with language in my member control agreement or possibly a buy-sell agreement.

And, importantly . . . what happens when we have children?  My will is where I appoint the guardians of our children if something happens to both of us.  This is not an issue for us right now, but it might be later.  If you do not have appointed guardians, then it is up to the probate court system to decide who will care for them.  The court will act in the interest of your children, but they’ll do so without your input. I think deciding who will take care of your children is important to everyone.

To sum it up, if you have minor kids or if you have specific ideas for where you want your stuff to go, you need a will.  Give careful thought to who should make financial and health care decisions for you if you are unable to do so for yourself; if you don’t have documents appointing these people, the court will have to conduct an expensive proceeding to appoint a guardian and possibly a conservator.  A little planning now will give you the security of knowing everyone would be protected later.

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will

Welcome to Stone Arch Law

It’s been a ten-year process, and I am so excited to announce the opening of Stone Arch Law Office, PLLC.  This is my first blog post, so I thought I might tell you a little about me and how Stone Arch Law came to be.  I’d also like to take a moment to thank my wonderful wife (her name is Mary, and you’ll probably be hearing a lot about her) for her support as I work to make this dream a reality.

In 2003, I was working for TCF Bank in their (now defunct) investments and insurance department.  I started out selling annuities, but I eventually joined the compliance area. I worked with banking clients to make sure they understood their mutual fund, stock, bond, or annuity purchases.  Many — if not most — of my established clients were at a place in their lives where they were considering whether they needed to have a will or a trust.  I had no idea how to answer their questions, and soon found myself making calls around the city to find some local attorneys who could help them.  I began to (and, indeed, still do) see estate planning as an extension of a responsible financial plan; it was through this process that I realized I wanted to go to law school, and that I wanted to create estate plans for Minnesota families.  I was going to be a lawyer, and was going to open my own practice.

Well, bad news for any aspiring law students out there — law school is a wonderfully intellectual experience, but even a school that emphasizes ‘practical wisdom’ won’t give you everything you need to start from scratch (and my hat is off to those who make a go of it right out of school).  Compound this with (another) crashing economy in 2008 and a miraculous job offer from a large national bank in its estate and trust department, and I found myself managing the trust funds of families and their beneficiaries.  I can’t explain how valuable my time as a professional trustee was to my understanding of the law, family dynamics, and every aspect of estate planning, but I’ll be telling some stories in future blog posts, and I think you’ll find the stories to be pretty informative (and entertaining).

Welcome to Stone Arch Law Office.  It’s been a long time coming, and now that it’s a reality, I can’t wait to work with you.  Please contact me through the website or give me a call . . . you’ll know my story, and I would love to hear yours.

Phil

creates wills and trusts for families who want to feel secure that their loved ones are cared-for. Philip is a trust and estate attorney based in Minneapolis, Minnesota. Philip is the author of Trustee University: The Guidebook to Best Practices for Family Trustees. available at Amazon.com in paperback or Kindle edition (free chapter available here!) He also works with trustees and beneficiaries who need help with their trusts. You can contact him here.

Keywords: trusts and estates, Minnesota wills, revocable trusts, estate attorney, probate, estate planning, will