Groshek Law Blog

Procrastination with estate planning could lead to problems

Some people in Minnesota might dislike talking about money or death. This natural emotional resistance, however, could leave a person and family unprepared if an unexpected event leaves someone incapacitated or dead. A lack of financial planning could also make an elderly person vulnerable to financial abuse, which strikes approximately 20 percent of people over age 65.

Financial matters represent the first issue that an estate plan should address. In addition to writing a will, a person should prepare a financial power of attorney. That document assigns someone to make money decisions if the person can no longer function. Beneficiaries on trusts or other assets need to be clearly named as well.

Are you worried about getting audited by the IRS?

Filing income taxes is painful for some people. This could be because they have a complex filing or because they have to pay in. Some people also dread having to do this because they are worried about getting audited. While this is a real concern, most people don't have anything to worry about.

Typically, only a very small percentage of the individual tax returns filed will go through the audit process. More large corporations will face this possibility than small businesses. Still, it can be frightening to find out that you are being audited.

Choosing trustees for trusts

Minnesota residents can use a trust to help ensure that their financial legacy will be protected. A trust is also useful for managing inheritance taxes. However, when individuals create a trust, they should make sure that they select the right person to serve as trustee.

The provisions of a trust can be used to dictate how the trust should be managed. For example, provisions can require that distributions from trust assets be issued according to a certain schedule or when the beneficiary has reached a specific age or accomplished a certain milestone. There may also be provisions that explain exactly what the trust assets are intended for, such as to fund a grandchild's education.

Lack of an estate plan could ruin your children's relationship

As a parent, the only thing you really want after you pass away is for your children and their families to have the best lives possible. You love your family. You want your grown children to get along and stay close. You enjoy thinking about them all getting together for Christmas brunches or family reunions for years to come.

Your estate plan could play a huge role in whether that happens. If you do not have one or if you do have one and it doesn't include aspects that are important to your children, it could lead to problems.

Estate planning mistakes lead to costly delays and bad outcomes

Unfortunately, too many people in Minnesota procrastinate about estate planning. This sometimes means that people die without a will, or intestate. Without an executed will, state and local laws arbitrarily manage the distribution of assets. This process generally requires family members to incur court costs. Furthermore, some relatives may have to prove their relationships to the deceased so that the court can designate them as heirs.

Another common mistake involves the failure to develop plans for the event of temporary or continual incapacity. By assigning someone ahead of time to make health care or financial decisions, an estate holder prevents delays in the event of an emergency. Otherwise, family members must petition the court to determine who has power of attorney or guardianship.

About charitable trusts

Minnesota residents who would like to leave a part or all of their estate to organizations that support their favorite causes may consider using charitable trusts. As estate planning tools, trusts can provide attractive tax incentives for the donors. While charitable trusts are regulated by the same principles as other types of trusts, individuals who want to benefit from the estate or tax advantages that charitable trust can offer should be aware of some important distinctions.

Charitable trusts can be simply defined as trusts that have charitable goals. According to Uniform Trust Code Section 405, those charitable purposes may relate to the advancement of religion or education; the relief of poverty; the advancement of governmental, municipal or health purposes; or the promotion of any other purposes that can benefit the community.

Estate planning and digital assets

Minnesota residents should make sure that their estate plans include provisions for their digital assets. Doing so can prevent surviving loved ones from having to handle the frustrating and sometimes expensive process of properly managing the digital assets left behind by a deceased loved one.

A comprehensive list of all of the different devices and online accounts one owns should be created. It should include all relevant access codes, usernames, encryption keys and passwords.

What should be included in an estate plan

According to a 2016 survey from Rocket Lawyer, 64 percent of Americans don't have a will. While those living in Minnesota could struggle dealing with their own mortality, estate planning can make it easier for survivors to carry out a person's final wishes. An estate plan can also have benefits for people while they are alive. For instance, it could contain language that prevents unwanted medical treatment if a person becomes incapacitated.

Creating a will gives an individual more control over where his or her assets go after passing on. Without a will, assets may be transferred according to rulings made by a probate court. Even if family members or other intended beneficiaries get their inheritance, it could take more time and effort to get it. The first step to creating an estate plan is gathering documents such as 401(k) or bank statements.

What you need to know about tax audits

IRS with magnifying glass.jpeg

It's tax season, and one thing that might be on your mind is an audit. What are audits and how might one affect you? Does an audit mean the Internal Revenue Service (IRS) thinks you did something wrong?

The reality is that tax audits are fairly common. If you're selected, you need to cooperate. However, you do need to minimize the effect the audit may have on you by taking steps to limit the audit to the items that the IRS requested to review.

What to know about probate

When a person dies, it may be necessary for their estate to go through probate. While there is no guarantee of how long it will take to complete the probate process in Minnesota, most take about 24 months to finish. The process starts when an estate holder passes away. At this point, the executor will petition for probate. This can be done anywhere the deceased lived or owned property.

Individuals have the right to name their own executors. If one is not listed in a will, a court will represent someone to do so. During the probate process itself, the executor will inventory the deceased person's assets, send out notices to creditors and pay any bills or taxes owed. If creditors make claims, the executor will need to either accept them or issue a denial if there is not enough evidence that they are credible.

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