Q&A on estate planning with ATTORNEY JESSICA FOSS

1

WHAT IS ESTATE PLANNING?

Estate planning is the process of arranging for the management and disposition of your estate upon your death and can minimize gift, estate and income taxes as well as provide asset protection for the recipients of your estate.

2

WHAT IS THE CURRENT ESTATE AND GIFT TAX EXEMPTION?

The federal estate tax and gift tax exemption is $5,450,000 for each individual. In addition, the current annual federal gift tax exclusion is $14,000 per recipient for an unlimited number of recipients. Thus, you may give each recipient up to $14,000 per year (free of any taxes to the recipient) without affecting your lifetime exemption.

North Dakota does not have a state estate tax or a gift tax. Minnesota’s current state estate tax exemption is $1,600,000 per individual. In addition, certain farm assets and small business assets may also be exempt for Minnesota residents if certain requirements are met. Minnesota does not have a state gift tax. However, in Minnesota, certain gifts made within three years of death will be included in the taxable estate of the decedent. Non-resident decedents who own Minnesota real estate may be subject to the Minnesota estate tax.

3 WHO NEEDS A WILL?

If you want to decide who receives your assets upon your death and who should manage the disposition of those assets, then you most likely need a will. If you do not have a will, then state intestacy laws will determine the division of your property among your heirs at law. If you have minor children and want to nominate who would be the guardian of them if you die, you need a will. Without a guardian nomination, the court will make that decision.

4

WHAT IS A HEALTH CARE DIRECTIVE? A health care directive is a legal document in which you specify what actions should be taken with respect to your health if you are in a terminal condition and if you are unable or unwilling to make those decisions for yourself. You may also designate the person(s) (your health care agent(s)) who is in charge of carrying out your health care wishes and your wishes with respect to organ donation.

5

WHAT IS A DURABLE GENERAL POWER OF ATTORNEY?

A durable general power of attorney authorizes another individual (or financial institution) to act on your behalf with respect to any legal act that you could do for yourself, unless otherwise forbidden in the document. A power of attorney is effective the moment you sign it and remains in effect until you either revoke it or die. It is a very powerful document but an important one. If you become incompetent and do not have a power of attorney, then a court order will likely be needed to appoint a conservator and/or guardian, which is a timely and costly matter. Furthermore, if you do not have a power of attorney in this situation, then the choice of who will handle your affairs is no longer yours.

WHAT IS THE PROCESS OF GETTING ESTATE DOCUMENTS COMPLETED?

First, I ask prospective clients to provide some basic personal and financial information. This information is confidential and helps me to better understand your situation, as the intakes ask questions on topics that you may not think are important, but actually are.

At our first meeting we go over the intakes and discuss the questions, concerns and objectives of the clients, after which I can provide advice and recommendations. At the conclusion of that meeting we schedule our next appointment. I send draft documents to the clients about a week before that second appointment so that they have time to review the drafts prior to our meeting. At the second meeting, we review the drafts and make changes if needed. If the client feels comfortable in doing so, then we proceed to sign the documents.

Jessica Foss is an estate planning attorney at Fredrikson & Byron, P.A., a law firm located in Fargo. You can reach her at (701)237-8200 or jfoss@fredlaw.com. When Jessica isn’t working, she enjoys spending time with her husband, Sean, and their two daughters, Sienna (3) and Sierra (1) doing anything outdoors.