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What if one cannot find a deceased loved one's will or trust?

Some people in Saint Paul may have taken the wise step of creating a will or trust years ago, but as time marches on, what happens to these documents? Are they in a safe deposit box? Are they being held by an attorney? Were they simply stashed away in a filing cabinet in the home office?

Not being able to locate a person's original will or trust document can cause issues once that person passes away. A person's will or trust provides the directions on how they want their estate distributed upon their death. If a person does not have a will or trust when they die, their estate will be subject to the laws of intestate succession. This means that the state will dictate which of the deceased's survivors will inherit the deceased's estate and it may not be who the deceased would've chosen.

Business start-ups may benefit from a business plan

Many people in Minnesota may dream of one day owning their own business. Some will even leave the "rat-race" of their current job to open their own business. One part of business planning that should be completed before the business opens its doors is the creation of a business plan. A well-drafted business plan guides the business as it starts up and serves as a reminder as to how the business should be set up, how it should operate and how it can grow. In addition, investors and partners may want to see a business plan before getting involved in the enterprise.

There are two types of business plans: traditional business plans and lean startup business plans. Traditional business plans are detailed and comprehensive. There are generally nine items a traditional business plan can address (although it is not necessary to include every single item). Traditional business plans can include: an executive summary, a description of the business, a market analysis, a description of how the business will be organized and managed, a description of the business's service or product line, the business's marketing and sales strategy, any requests for funding, financial projections and an appendix.

Potential homeowners in Minnesota face financial challenges

Many young adults in Minnesota may have once anticipated becoming homeowners. After all, owning a home is a sign that a person is able to manage their finances responsibly. Moreover, people just like the idea of having a house and land that is theirs and theirs alone to do with as they wish. However, for some young adults, homeownership is becoming a distant dream.

Two years ago, homeownership across the nation dropped to its lowest rate since the 1960s. After the housing bubble burst in the mid-2000s, many people had to foreclose on their homes, and the number of people owning their own homes, which sat at 69.2 percent in 2004, tumbled. While the rate of homeownership has experienced a slight rebound, rising from 62.9 in 2016 to 64.2 in 2017, those wishing to buy a home still face challenges.

Estate planning with the federal estate tax in mind

Like just about any financial transaction these days, the handing down of property through a will or intestacy in Minnesota does not necessarily happen tax-free. In fact, depending on the value of one's estate, the federal estate tax may apply.

Calculating a person's taxable estate starts with determining what their gross estate is. The gross estate includes all of the decedent's property, including cash, real estate, trusts, annuities, business interests and insurance, among other pieces of property. For purposes of the estate tax, the value of the decedent's assets will be what the fair market value is, even if the decedent paid more or less for them when they acquired them.

Why are revocable trusts a useful estate planning tool?

Some people in Saint Paul may have executed a will and think that their estate planning duties are done. After all, the will specifies who will inherit what once the testator dies, so what more is needed? While a will can certainly accomplish that goal, it will have to go through the time-consuming, public, and costly probate process before the person's assets can be distributed to their heirs. Therefore, those who want to avoid probate and keep their financial information private may want to consider executing a trust, either in place of or in addition to, a will.

Some people may think that trusts are only for the mega-wealthy who have many valuable assets to pass on. However, a revocable trust could prove to be useful for a person of just about any financial means. Revocable trusts bypass probate, meaning they are shielded from the public and can immediately pass on funds to the trust beneficiaries.

Don't rush into business planning without help

Maybe it started with a spark of an idea for a new product. Or, maybe you believed you could offer the public a valuable service. In either case, many people in St. Paul decide to form a business of their own. While this is a worthwhile endeavor, it is important to make sure you make legally sound decisions from the get-go, so that problems can be avoided down the road.

For example, it is important to choose the right business entity. Because a sole proprietorship exposes the business owner to liability if the business is served with a lawsuit, potential business owners may want to explore other types of businesses that will shield them from liability. It can also help to execute restriction agreements. These agreements can come in handy if there is more than one business owner. They can address restrictions on stock or membership interests, so that ownership will remain in the hands of the right people should one partner die or get a divorce. Businesses will also want to develop a succession plan in which the business will be transferred to new owners once the business owner decides to retire.

Changes to estate tax laws may thwart the purpose of one's will

People in St. Paul may have gone through the process of drafting a will and have considered the matter done. However, recent changes to estate tax laws may warrant a dusting off of a previously created will. For wills drafted prior to 2018, this could be especially important if the will does not contain a specific amount of money that is to be funneled into a trust for one's children. These wills might simply have broader language stating that their children should inherit per the current amount of the federal estate-tax exemption, and that the rest of the person's estate (usually a bigger amount) should be funneled into a trust for the person's living spouse.

However, recent tax law changes have made this matter potentially problematic. This is because the estate tax exemption has gone up two-fold starting in 2018, from $5.49 million to $11 million. Therefore, the broad language used in the above example could make it so that a person's children inherit more than the person's living spouse, which may go against the person's wishes. This may be especially true for smaller estates.

Minnesota homeowners facing foreclosure may have options

No one in Minnesota can predict the future. For example, when a person buys a home, they do so believing they will be able to make their mortgage payments on time and in full until the house is paid off. However, sometimes unexpected financial events take place that make paying one's mortgage difficult, if not impossible. For example, a person could rack up significant expenses in another area of their life, such as medical expenses. Or, a person could lose their job leaving them without a source of income.

When a person misses mortgage payments, they may find themselves facing the threat of foreclosure. This can be very intimidating, and a person may believe that there is no way out and they will lose their home. However, there may be ways homeowners in such situations can work with their lender to avoid foreclosure.

The world of trusts is wide, with many choices to consider

Many people in Minnesota may have a will, but they may not know much about how a trust works and how it will benefit them. Trusts can be an integral part of a well-rounded estate plan. The following are some types of trusts that Minnesotans may want to consider executing.

One basic type of trust is a revocable living trust. This trust is executed and funded during a person's lifetime. When the person dies, the trust assets are not probated, but, instead, are distributed directly to the trust beneficiaries. Compare this to a testamentary trust, which is part of a person's will and is probated.

Watch out for these estate planning mistakes

St. Paul residents may do a lot of planning for their futures. They plan for vacations. They save money for a rainy day. They plan for retirement. However, how many have taken the step of planning for the inevitable -- death? It's not pretty to think about, but, if there's anything we can all count on in the future, it is that someday we will pass away. We can plan for this eventuality through estate planning. However, it is important to look out for certain estate planning mistakes.

One mistake is to procrastinate. If a person puts off estate planning and dies suddenly without a will or trust, their property will go through probate and the state will decide who is to inherit through intestacy laws. Since it is quite possible that a person might have a different idea about how they want to pass on their assets, it is important to execute an estate plan sooner rather than later.

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