Just Having a Will Doesn’t Avoid Probate
Leave it to the experts.
by Chris Dahlberg
The Family Cabin
The family cabin or lake house is more than a
valuable family asset; it’s a tradition and a legacy to
many Minnesota families. Frequently, clients come to
my office asking how they can assure their cabin stays
in the hands of family for years to come. There are
generally two methods used: a cabin trust or a Limited
Liability Company (“LLC”).
The most common mistake individuals make in their
estate planning is believing the will they executed
prevents probate. The major benefit of a will, a very
important one, is assuring that the administration
of your estate will be conducted according to your unique
personal wishes, and not according to the “one-size fits all”
as directed by the government. However, your estate will
still have to go through probate unless you’ve either made
death beneficiary designations on your assets, or created
a trust which is administered outside the probate system.
With either a ‘cabin trust’ or an LLC, the rules of the
cabin can be set during the original owner’s life. There
are some important considerations for the future; who
will pay the bills, who will make major decisions, and
who gets to use the cabin and when. Often, schedules
are set in advance. Also, one scheduling option I
enjoy seeing is the “floating family time.” This is a time
where any and all family members can use the cabin, creating a de facto family reunion every year, long after the
original owners have been deceased. Now that’s leaving
a legacy!
Often, the best way to have your estate avoid the cost of
probate is to have transfer on death designations for your
various assets. Your home or other real estate can be transferred upon death through the use of a “Transfer on Death
Deed”. (see TODD below).
Was your Will created before 2008?
Transfer on Death Deed (“TODD”)
In 2008, Minnesota’s legislature passed a law allowing an
owner of real estate to have their real property transferred
to beneficiaries upon death. This is done by executing and
recording a deed known as a “Transfer on Death Deed“
(TODD).
The cabin trust can be a little less flexible. Once the
creators (generally parents) die, the trust becomes
irrevocable. Future changes become difficult. An
LLC allows members (future beneficiaries) to make
changes. There are often member restriction
agreements allowing beneficiaries to sell their interest but
providing family first options to buy.
I frequently advise my clients to use TODDs as part of their
estate planning. They are a relatively simple, straight-forward method to avoid the cost of probating real estate.
Parents, for example, through a TODD, can transfer to their
children their home upon death and little more work than
providing a death certificate is needed.
There are additional costs for a trust or LLC beyond the
drafting of a simple will. Yet, to many with a lifetime
of family memories around the cabin, it’s worth the
investment.
Here are the positives I like:
• They are relatively inexpensive to draft and record.
• They are totally revocable.
• Designated beneficiaries have no interest until the
owner’s death so creditors or a divorcing spouse of
a designated beneficiary cannot latch on to the
property during the initial owner’s lifetime.
• Your heirs or others (designated beneficiaries) will
not have to probate the real estate (generally a home).
That will save your estate thousands of dollars.
If you had your estate planning done prior to 2008, contact our law office to schedule an appointment to see if a
TODD is right for you.
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