Minnesota attorneys should be aware of new probate and trust law legislation recently signed into law. I have listed the highlights of the new laws on a guest post over at the Practice Law Blawg.

Additionally, in the post, I’ve listed 5 ways you can prepare for the most important (and potentially controversial) provisions of the new laws– those redefining the scope of parent-child relationships.

As an aside: the MSBA’s Practice Blawg frequently has posts of interest even to out-of-state attorneys. Make sure you check out this blog and consider adding it to your blog reader.

Alonna Warns, one of Hennepin County’s Registrars, released today the latest issue of her newsletter, “Probate In Common.” In this issue (Vol. 7:1), she covers the following topics:

• Probates for Non-resident decedents
• Issues related to the Notice to Commissioner
• Dismissed Orders
• Common mistakes on Informal Applications

If you practice probate in Hennepin County, this newsletter is a must-read. It is distributed by email. To get on the email list, contact Alonna. I don’t know if this is still true or not, but in the past she had a few rules regarding getting on the list: non-attorneys/law firms were not allowed; only one email recipient per firm; and the email must go to a probate paralegal, unless a firm doesn’t have a paralegal– then it can go to an attorney.

Many of the back issues are eventually available for download here.

Even if you don’t practice in Hennepin County, you’ll want to download the back issues since they contain helpful tips regarding probate procedures in general, even if the information is mostly specific only to Hennepin County.

The Hennepin County Probate Registrars recently released an updated guide to informal probates. The guide contains helpful information when preparing an informal probate, including customs unique to Hennepin County. I frequently used the old guide when preparing probates.

Overall, there isn’t much new compared to the old version. But if you practice in Hennepin County, you’ll want to have the most recent one on hand. I did note with interest that apparently pro se applicants must sign a “Waiver of Legal Advice” attached as the last page of the guide. I don’t know whether this is a new requirement or not. This, of course, doesn’t apply to clients we would represent, but is interesting in that it indicates the court’s reticence about helping pro se applicants. This is worth mentioning to  potential clients of yours if they are trying to decide whether to hire you or go at it alone.

It doesn’t appear that the new guide is available yet on the Hennepin County Probate website, so I have made it available for download on my website at the link below. I will update the link to the court’s website when it becomes available. If you find the link before I do, let me know in the comments.

Download the guide here.

1/27/10: minor edits

Almost no one thought it would ever happen when 2009 began, but, as scheduled, the federal estate tax has been repealed beginning today (1/1/2010). Essentially the exclusion amount is now unlimited and the tax rate is 0%. As a result, those dying in 2010 may transfer at death an unlimited amount of property tax free.

Keep in mind, however, that Minnesota’s estate tax remains in force. Just like last year, if the decedent was a resident of Minnesota, a Minnesota estate tax return must be filed if the gross estate is $1 million or more. The same is true if a decedent is not a resident of Minnesota but held Minnesota sitused property.

As these changes filter down to the public, Minnesota estate planning attorneys will need to take extra care to educate their clients that Minnesota’s estate tax has not disappeared. There is likely to be confusion.

Additionally, attorneys will want to watch how this plays out in Congress this year. There is a good chance that Congress will act soon and repeal the repeal on the federal estate tax for 2010.

Minnesota’s new disclaimer laws go into effect today (1/1/2010). Under the new laws, compliance with the disclaimer requirements was made significantly easier. Three highlights of the new laws include:

1. The disclaimer under most circumstances does not need to be filed with a court.
2. The nonprobate and probate disclaimer statutes have been merged into one statutory section.
3. For Minnesota purposes, there is no time limit to disclaim (previously, it was 9 months from the date of death). However, tax-qualified disclaimers still must be completed within 9 months of the date of death under federal law. Therefore, it is important to be aware of the hard 9-month deadline if the purpose of the disclaimer is for federal tax reasons. If this is the case, be sure to review the appropriate sections of the internal revenue code (e.g. IRC Sec. 2518) to ensure that your disclaimer also meets the more stringent federal requirements.

As always, you should read the new statute for yourself prior to assisting a client in disclaiming assets. The new laws can be found at Minn. Stat. Sections 524.2-1101 to 524.2-1116.

The 2009 version of Form 706 has now been released on the IRS website. If you practice in this area, it is always a good idea to read through the updated form and its instructions each year.

Of course the main change this year is that the exemption level rose to $3.5 million at the federal level (recall that Minnesota’s exemption level has remained at $1 million).

I have only had time to glance through the 2009 Form and Instructions so far, but it seems that not much has changed since 2008 on the form itself. I did notice what I believe to be new instructions on Schedule F for certain types of life insurance policies and valuation discounts on miscellaneous property. The latter appears to be aimed at lack of control discounts for limited liability companies.

If you catch anything else that is a change from previous years, tell us about it in the comments. I’ll also make another post if I see anything major.

Download the new forms at the IRS website:

• Form 706 (2009)
• Form 706 Instructions (2009)

Minnesota’s 2009 706 forms are also available:

• M706 (2009)
• M706 Instructions (2009)

When it comes to joint ownership language on vehicle titles, Minnesota’s Driver and Vehicles Services Division operates within its own sphere of logic. The logic of the rules has perplexed more than one probate attorney.

Since this issue arises frequently and the DVS cipher is difficult to find even on its own website, I’m reproducing the secret code for easy future access.

The rules are as follows:

1. If two or more owners are joined on the title with one of the following magic words or phrases, the surviving owner(s) has the right of survivorship (joint tenancy):

• “or”
• “and/or”
• “right of survivorship” (though, I’ve never actually seen this designation)

2. If two or more owners are joined on the title with anything else (e.g. “and” or no conjunction), the surviving owner(s) has no right of survivorship (tenancy in common).

By way of examples, if the title reads:

• “Mary Roe or John Doe” = joint tenancy
• “Mary Roe and/or John Doe” = joint tenancy
• “Mary Roe and John Doe” = tenancy in common
• “Mary Roe, John Doe” = tenancy in common

Sources: “Just the Facts: Family of Deceased“, MN Dept. of Public Safety, published April 2009; and other sources.

Serving as a personal representative takes a lot of time. As a result, some personal representatives consider charging the estate for their time as permitted under Minn. Stat. 524.3-719.

As appealing as that can be, the attorney should help the personal representative consider all the consequences of that decision. One consequence that is often overlooked is that fees paid to the personal representative are taxable and must be included in their gross income. As a result, the estate may be required to generate a 1099.

Additionally, self-employment taxes may apply. Professional personal representatives always pay self-employment tax. Non-professional personal representatives do not pay self-employment tax unless the following conditions are met:

1. a trade or business is included in the estate’s assets;
2. the personal representative actively participates in the business; and
3. the fees are related to the operation of the business.

See IRS Publication 559 for more information.

As a footnote, always remember to include fees paid to the personal representative on the final account as required by Minn. Stat. 525.48.

Under recent changes to the guardianship and conservatorship statutes, guardians and conservators must now file an informational statement with the court prior to their initial appointment.

See 524.5-304(g) (guardianships) and 524.5-406(g) (conservatorships of persons under disability).

The informational statement must be a sworn affidavit stating:

1. the person’s educational background and relevant work and other experience;
2. an address and telephone number where the guardian/conservator can be contacted;
3. whether the person has ever been removed for cause from serving as a guardian or conservator and if so, the case number and court location;
4. any changes occurring that would affect the accuracy of information contained in the most recent criminal background study conducted pursuant to section 524.5-118; and
5. if applicable, the amount of reimbursement for services rendered to the ward that the person has received during the previous year.

Additionally, an informational statement must be filed “annually within 30 days after the anniversary date of the appointment.”

The “official” form is located on the Minnesota Courts website as GAC109. You will have to modify the form for the initial filing since it presumes that the guardian/conservator has already been appointed.

I’ve heard from multiple sources that judges/referees have been allowing attorneys to file the informational statement after the initial hearing, but before the appointment. Presumably, the courts will end this transitional grace-period sometime soon and require that it be filed with the court prior to the hearing or, perhaps, at the hearing. [Note: For what it's worth, the section headings of the statutes are entitled "Preliminaries to Hearing."]

Take the time now to update your checklists for your guardianships and conservatorships. My take: items 2-5 seem reasonable, but item 1 seems a bit overreaching and possibly irrelevant.

Special thanks to Jennifer Frantz of Richard D. Bunin Law Offices for bringing this issue to my attention.

Unlike informal probates in Hennepin County, proof of death documentation (e.g. a death certificate, an obituary, etc.) is not required to be submitted when filing for a formal probate. The reason is that the petitioner proves up the petition in court, testifying under oath the facts of the decedent’s death.

As a result, the proof of death requirement only applies to informals in Hennepin County. As far as I know, no other county in Minnesota has this requirement.