Many are overwhelmed by options when faced with estate planning. “Should I create a trust?” “Do I need to try to avoid probate?” “What are the tax consequences?” Individuals are left with the feeling that there is no place to start. When that situation occurs, some simply never start planning.
Deciding What Type of Will Is Needed
While every situation is unique, there is one question that I ask when considering the complexity of a testamentary document: Is the estate worth over $1,000,000? If the answer is no, then a simple will is likely sufficient. Minnesota currently does not tax estates smaller than one million dollars, and there are exclusions up to five million dollars for qualifying small business property and homestead farmland.
Type of Will Needed For Estates Worth Less Than $1,000,000
If an estate is below one million dollars, then the concerns over tax planning are lifted, and one can focus on what really matters: planning for those that you care about. Most people in this category can address their concerns and reach their planning goals effectively through a simple will. Not only does a well written simple will direct the transfer of personal property and real estate, but the testator (the individual creating the will) can select a personal representative to manage affairs after the testator’s death.
What Should a Will Include?
The most important aspect of any will is the designation of guardians for minor children. A simple will can name individuals or couples to care for minor children. It can also designate alternate guardians, should the primary guardians be unwilling or unable to take on that responsibility. No matter what the size of the estate, every individual should have a plan in place for the care of his or her children. Even if the value of the estate is modest, or even nonexistent, a simple will can ensure the proper care of minor children.
How a Simple Will Can Protect Your Children’s Assets
Not only can a simple will ensure the best care for a testator’s children, but it can also manage assets on behalf of the children in accordance with the testator’s wishes. When considering the transfer of property, individuals with young children are often best served by creating a testamentary trust in their wills. This testamentary trust can be designed to ensure proper management of the assets and shield the children’s inheritance from most creditors. A testamentary trust does not require the transfer of title to the name of the trust while the testator is alive, and it can be easily written into a simple will.
While it is true that there are a wealth of options when planning one’s affairs, that does not mean that estate planning is reserved for large estates. For many, a simple will is an effective tool to make sure that your personal and financial affairs are in order.