Estate Planning: (Three-Part Series)“Top 3 Legal Documents Every Adult Should Have” – PART III (Last Will and Testament)

1. Power of Attorney
2. Health Care Directive
3. Last Will and Testament

In Minnesota, these are what I refer to as “foundational estate planning documents” – and, everyone should have them.  Why?  If you want a stress-free retirement and aging process, plan ahead!  If you have a family, take care of them if something happens to you, and help them care for you with documents that allow them to make decisions for you. These three important documents cover the basic issues of choosing who will speak for you if you become incapacitated and how you would like your assets/belongings distributed upon your death.

NAELA (National Academy of Elder Law Attorneys) just published a press release saying the same thing – it inspired me to write this entry.  NAELA talked about 4 documents because some states deal with Health Care Directives differently than we do here in Minnesota, but it’s the same plea – plan ahead and make sure you have these foundational documents for living your life free from the fear that comes from wondering “what would happen if…..”

Last Will and Testament

This document has a good deal of flexibility, and different wills may look very different from each other depending on who is making them, what they need to distribute upon their death, and to whom they are distributing those things. Needless to say, they can be anything from fairly simple to rather complicated. An attorney will assist you in thinking through your assets, your relationships, and your wishes. Your attorney will then draft those wishes, explaining your choices and the law that defines those choices.

It’s important to realize that not everything that belongs to you passes to others through your will when you die. Only “probate assets” pass through your will. In short, those are things that need to have the court supervise (through the probate process) the changing of ownership from you to someone else (titles, bank accounts, etc.).  “Non-probate assets” have already had that change of title directed by you before your death (beneficiary designations like life insurance, payable-on-death accounts, etc.).  Lastly, anything owned as a “joint asset” will simply pass to the surviving joint owner(s) upon your death and will not pass through your will. So, your will handles your probate assets while you handle your beneficiary designations and your joint assets on your own while you are living.

It may interest some readers to understand why the court is involved in your death and your possessions at all.  Basically, the probate process in the courts is the State overseeing the distribution of the assets of one of its citizens, in whom it has an interest in making sure that the citizen’s assets are distributed either according to his/her wishes, or according to state law if the citizen dies without a will (“intestate”).

But, not all wills need to go through the probate process. When you die, if you have a will (this means you died “testate”), the court will not insist on smaller estates going through the probate process, if they are without financial complications or contests.  Each County in the State will likely have its own requirements. But, if your will does need to go through the probate process, your attorney will have asked you to select either an “informal” or a “formal” probate process. And, also whether you would like the court to “supervise” your process.

The difference between formal and informal processes has to do with the involvement of a Judge or a Court Registrar. The formal process is in front of a Judge, while an informal process is through the Registrar. Both processes take place at the courthouse. And, although you may state in your will which process you prefer, the Registrar has the authority to change your wishes from informal to formal if the Registrar is aware of something that may require a Judge to step in. The difference between supervised and unsupervised is essentially whether the court has to sign off on all calculations and distributions. Obviously, the supervised requires the Judge’s approval.

What if you die without a will? Your stuff still gets given away, but like the other two of the “3 most important documents,” someone else will make the decisions for you about who gets what. Each state has its own laws that explain what happens when you die without a will. Each state is allowed to decide which of your heirs receive your property in what priority. Your legal obligations matter first (spouses, minor children, dependents), but if there are none of those, then the court looks to more distant heirs until they find a way to distribute your assets/belongings. Again, why on earth anyone would want the State to decide for them is beyond me! Although I know many people who just find this topic so difficult, they ignore it and hope it goes away.

All three of these foundational documents must be drafted and executed (signed by you and notarized and/or witnessed) while you have the capacity to make your own decisions. That means, if you wait until there is a problem, you may lose your opportunity to make them.  As I’ve explained in other entries, although there are court appointed alternatives, they can be impersonal, impractical, costly and unpleasant, to say the least.

Don’t delay.  A phone call to make an appointment with an Elder Law or Estate Planning Attorney can get the ball rolling. You may be surprised how reasonable the cost and how straight-forward the process.

ALL READERS:  This blog is not, nor shall it be deemed to be, legal advice or counsel. This blog does not create an attorney-client relationship with any reader.  It is designed to encourage thoughtful consideration of important legal issues with the expectation that readers will seek professional advice from a licensed attorney.