Estate planning aims to preserve your property and ensure that it is passed on according to your wishes after death. However, because Minnesota law is complex, those who do not obtain the assistance of an attorney risk the possibility of inadvertently violating the law during the process. For that reason, knowing how state law impacts your ability to provide gifts and inheritance will help make sure your intentions become a reality.
A will is an effective way to provide an inheritance or bequest to people or organizations. But, if the will does not meet the strict formalities set by Minnesota law, it is not valid and instead your assets will be distributed according to the state's intestacy rules. These rules prioritize your spouse first, then your children and grandchildren. Under state law, a will must be in writing and signed in the presence of at least two witnesses. It is important to note that even though a will may be valid, certain provisions of the will may be illegal or against public policy. These terms will be voided. An example would be a provision directing that your property go to support a narcotics operation or brothel.
Under state law, certain types of property pass automatically at death to a named beneficiary or co-owner. This is known as non-probate property and includes payable on death accounts, life insurance proceeds and certain types of jointly held real estate. The practical effect of this classification is that you cannot legally change the beneficiary through your will. For instance, assume you co-owned a home with your uncle and the deed listed you as joint tenants. In Minnesota, a joint tenancy results, with your uncle automatically becoming the full owner of this property after your death. This means that even if you left all of your property to your son in your will, he would not have a claim to this particular asset even if that was your intention.
In Minnesota, surviving spouses have a right to a portion of your probate property after death. This entitlement is referred to as the "elective share" and the percentage of the estate she is entitled to depends on the length of the marriage, going as high as 50% if you were married for at least 15 years. This means that if your will left all of your assets to your son, your spouse would have a claim to this inheritance even if you intended to cut her out.
If you provide any gifts during your life, you are responsible for filing the necessary state and federal gift tax returns and paying any applicable taxes. Further, under Minnesota law, if a deceased person's estate grosses an income of at least $600 in a given year, the individual appointed to settle your estate must file a state income tax return for the estate and pay all taxes. Failure to comply with the filing and payment rules is illegal and can open the estate up to penalties and interest assessed by the state revenue department. Further, many people benefit from the assistance of an attorney to ensure compliance with state and federal gift and estate tax rules.