Estate planning – a term most believe is reserved for the ultra wealthy or those planning for their retirement. On the contrary, estate planning is an incredibly important tool and something every adult should do. Estate planning can help you accomplish any number of goals, such as appointing guardians for minor children, choosing healthcare agents to make decisions for you should you become ill, minimizing taxes so you can pass more wealth onto your family members, and stating how and to whom you would like to pass your estate on to when you pass away.
While planning for one’s future should be at the top of everyone’s to-do list, it can be an overwhelming topic to dive into. To help you get situated, below are some important terms you should know as you think about your own estate plan.
Assets
Generally, anything a person owns, including a home and other real estate, bank accounts, life insurance, investments, furniture, jewelry, art, clothing, and collectibles.
Beneficiary
A person or entity (such as a non-profit organization) that receives a beneficial interest in something, such as an estate, trust, account, or insurance policy.
Distribution
A payment in cash or asset(s) to the beneficiary, individual, or entity who is entitled to receive it.
Estate
All assets and debts left by an individual at death.
Fiduciary
A person with a legal obligation (duty) to act primarily for another person’s benefit, e.g., a trustee or an agent under a power of attorney. “Fiduciary” implies great confidence and trust, and a high degree of good faith.
Funding
The process of transferring (re-titling) assets to a living trust. A living trust will only avoid probate at the trustmaker’s death if it is fully funded, meaning it contains all of the trustmaker’s assets.
Incapacitated/Incompetent
Unable to manage one’s own affairs, either temporarily or permanently; often involves a lack of mental capacity.
Inheritance
The assets received from someone who has passed away.
Living probate
The court-supervised process of managing the assets of an incapacitated person. (Also known as a conservatorship.)
Marital deduction
A deduction on the federal estate tax return that allows the first spouse to pass to leave an unlimited amount of assets to the surviving spouse free of estate taxes. However, if no other tax planning is used and the surviving spouse’s estate is more than the amount of the federal estate tax exemption in effect at the time of the surviving spouse’s death, estate taxes will be due at that time.
Settle an estate
The process of winding down the final affairs (valuation of assets, payment of debts and taxes, distribution of assets to beneficiaries) after someone dies.
Trust
A fiduciary relationship in which one party, known as the trustmaker or settlor, gives another party, known as the trustee, the right to hold property or assets for the benefit of another party, the beneficiary. The trust should be memorialized by a written trust agreement, outlining how the trust assets will be distributed to the beneficiary.
Will
A written document with instructions for disposing of assets after death. A will can only be enforced through a probate court. A will can also contain the nomination of guardian for minor children and the nomination for executor (aka personal representative) to administer the estate.
If you have any additional questions about estate planning, please contact our office at (952) 658-6503. We can make sure you have a comprehensive plan that is tailored to your unique needs and goals.
Zach Wiegand is a Minnesota probate attorney and estate planning attorney and the owner of Gold Leaf Estate Planning, LLC. Gold Leaf Estate Planning is an estate planning law firm that also handles probate and trust administration in Minnesota. We serve the Twin Cities metropolitan area with a focus on estate planning for clients in Burnsville, Eagan, Savage, Prior Lake, Lakeville, Apple Valley, Eden Prairie, Farmington, Rosemount, and the South Metro as well as clients in Woodbury, Lake Elmo, Maplewood, Oakdale, St. Paul and the East Metro. Our firm has offices in both Burnsville and Woodbury (Lake Elmo). The firm also handles probate in Dakota County, Washington County, Scott County, Hennepin County, and Ramsey County and most other counties in the Twin Cities Metro area. Zach has been named a Super Lawyer – Rising Star for 2017, 2018, 2019 and 2020. In addition, Zach is a member of the Society of Financial Service Professionals, the Twin Cities Estate Planning Council, and WealthCounsel – a national organization of estate planning attorneys dedicated to practice excellence. You can contact Zach via e-mail at zach@goldleafestateplan.com or by calling (952) 658-6503. Gold Leaf Estate Planning is located in Burnsville at 3000 County Road 42 W., Suite 310, Burnsville, MN 55337 and in Woodbury/Lake Elmo at 8653 Eagle Point Boulevard, Lake Elmo, MN 55042.
