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Sometimes redundancy is better than gaps in estate planning

If there is anything that is sure in life, it is that one day we will all pass away. Some people in Minnesota may have already given this life certainty thought and have executed a will. However, this is not the only estate planning document that should be in their arsenal. Here are some other documents that could prove helpful to ensuring one's end-of-life wishes are met.

First, there is a living will. This instrument states what types of medical treatment a person would want in certain situations. Not to be confused with that is a power of attorney for health care, which allows another person to make health care decisions for that person should that person become incapacitated.

Some propose raising the threshold of the estate tax exemption

The issue of the estate tax has come to the forefront of American politics lately, as the government looks to revamp U.S. tax laws. Therefore, it is important for people in Saint Paul and across the nation to have a basic understanding of what the estate tax does and who it affects.

Currently, if an individual's wealth amounts to $5.49 million or more, their estate will be taxed by the federal government when they pass away. Since it is set at such a high level, in actuality, few people are subjected to the estate tax. The Tax Policy Center reports that in 2013, while 2.6 million individuals passed away in the United States, merely 11,300 of their estates were subjected to the estate tax. To put it another way, the estate tax affected under 0.2 percent of all those who died in the United States that year.

Getting your business in Saint Paul started on the right foot

Many people in Saint Paul have a moment of brilliance, in which they come up with a great idea for a business. While they may be excited to make their dreams a reality, business planning should be done with care. After all, improper planning could lead to liability issues, unwanted tax consequences and expensive litigation.

There are a lot of aspects of business planning to consider. Potential business owners will want to make sure they understand applicable taxes. They will also want to make plans to protect their hard-earned assets and shield themselves from liability, as much as possible. It can also help to have a plan for passing your business on to others in the future should you decide to exit it.

Do your homework before purchasing a short-sale home

A short sale takes place when a person, with their lender's consent, puts their home up for sale for less than what they still owe on their mortgage. Home buyers in Saint Paul interested in a short-sale home may feel like they have found the house of their dreams at a real bargain. However, there are certain issues they should look out for before purchasing a short-sale home to ensure the deal isn't too good to be true.

First, a buyer should not ignore problems with the home. Sometimes, homeowners selling their property in a short sale will let the house go to waste or may even purposely damage it. Moreover, if a home has been vacant for a while, issues such as insect or rodent infestations, broken pipes, mold or even thieves or squatters could damage the property.

Can a parent have multiple executors of their estate?

Parents in Saint Paul are often very conscientious about treating all their children equally. This is especially true when it comes to estate planning. For example, they may draft their wills in a way that divides their estate equally between all their children. However, there are certain aspects in which treating their children equally could cause problems.

For example, when a person drafts a will, they will need to appoint someone as executor of the will. Parents may want to have all their children named as executor in an effort to be fair. However, there are some points parents should consider before naming multiple executors.

Estate tax serves an important role, but may not affect many

Many people in Minnesota may have heard of the estate tax but may not have a very good understanding of it. In essence, the estate tax is the tax the federal government levies on your assets when they are transferred to your heirs upon your death. However, for the most part, it only affects the wealthy, as it only applies to the part of a person's estate that amounts to more than $5.49 million. Nevertheless, the federal estate tax is a significant component of our nation's revenue. Therefore, it is important to understand how it works.

First of all, residents of Saint Paul may be surprised to hear that nationwide in 2017, only 0.2 percent of people in the United States will owe estate tax after their death. This is due, in part, to the fact that the exemption amount has risen significantly over the years. In 2001, it sat at $650,000. By 2017, that number had jumped to $5.49 million.

Don't forget to fund your trust when estate planning

There are so many different kinds of trusts available to people in St. Paul, that it may seem like there is a trust out there to meet every person's needs. These trusts can name beneficiaries, whether it is a person's loved one or a favorite charity, and are meant to distribute a person's assets to their beneficiaries. However, are those trusts always effective? For a trust to do what a person wants it to do, there must be funds in it. An unfunded trust is like an empty box -- you may have the vessel, but there's nothing in it to give away once you die.

Sometimes, a person's trust will be funded upon the happening of a particular event. For example, some people might have a trust and a pour-over will. Once the person dies, their probate assets will "pour" into the trust (although this means that, despite the trust, the assets will still go through probate). Or, in an Irrevocable Life Insurance Trust, the life insurance policy has language that funds will only be distributed to the trust once the policyholder passes away and the proceeds of the life insurance policy are doled out.

Too young for estate planning? Think again

When some people in Saint Paul think of estate planning, they imagine an elderly person, wrinkled and frail, dictating to an attorney what their last wishes are. However, since death is no respecter of age, it is best for even young people to be prepared for the inevitable through estate planning.

For example, while parents are authorized to take care of all financial and health care issues for their minor child, once that child turns 18, they are considered adults and have the exclusive right to manage their own financial and health care affairs. If they do not have an estate plan and become incapacitated due to an illness or injury, parents might not be able to obtain medical information on their adult child due to the Health Insurance Portability and Accountability Act rules. However, if a young adult designates their parents as the decision makers in their health care and financial powers of attorney, then the parents can make these important decisions if their adult child no longer has the capacity to do so.

Homeowners underwater may benefit from a short sale

Sometimes, a homeowner in Saint Paul is in a situation where they place their home up for sale but the only offers they receive amount to less than what the homeowner owes on their mortgage. If they decide to accept such an offer, it is known as a "short sale."

As the name implies, in a short sale, the lender agrees to let the homeowner pay less than what is owed on their mortgage. Short sales aren't entirely uncommon. In early 2016, just over 5 percent of all single-family and condominiums sold were sold through short sales. Especially since the 2008 housing bust, many homeowners found that when they put their homes up for sale, the only offers they received were less than what they owed on their mortgage.

Contribute to a favorite cause through a charitable trust

Many people in Saint Paul have a favorite charity, whether it is a school, a museum, a hospital or a non-profit organization. In fact, Charity Navigator reports nationwide that, in 2016, almost $400 billion was given to charities. While some people simply write a check or give supplies to their favorite charity during their lifetime, others choose to set up a charitable trust to benefit their favorite charity after they pass on.

When it comes to making a charitable trust, it is important for one's goals to be outlined. For example, some people may want to make a lump-sum gift, while others prefer to give numerous donations over the course of time or to a number of causes. Also, it is important to make sure family members understand your intentions when it comes to setting up a charitable trust.

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Chandler and Brown, Ltd.
332 Minnesota Street
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St. Paul, MN 55101

Phone: 651-964-6087
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