A will is a legal document that allows you to transfer your property at your death and designate who should receive your property. A personal representative to handle your estate and a guardian to care for your minor children can also be named in a will. A will is a simple way to ensure that your money, property, and personal belongings will be distributed as you wish after your death. A will also allows you to have full use of your property while you are alive.

The law does not require that you have a will. However, a will is a useful tool that provides you with the ability to control how your estate will be divided. If you die without a will, state inheritance laws control how your estate is divided. Your property goes to your closest relatives based upon a statutory table of heirship.

You may not need a will if you have made other provisions so that your assets will pass without one, for example, by establishing trusts, life insurance policies with named beneficiaries, or joint property interests such as real estate or bank accounts. A will is necessary if you want to leave property to a friend or a charity, to give certain items to certain people, or to leave someone out who would otherwise inherit from you based upon heirship. Also, you may wish to appoint a specific person to handle your estate. Thus, often it is best to write a will so your intentions can be met.

In Minnesota, the following rules apply to wills:

• You must be at least 18 years old and of sound mind to make a will;
• The will must be in writing;
• The will must be signed by you, or by another person at your direction and in your presence;
• The will must be witnessed by at least two people, both of whom must also sign the will;
• You must intend for the document to operate as a will.

A will is self-proved when you and witnesses acknowledge in affidavits that you signed and executed the will voluntarily, within the presence of at least two witnesses, that you are over 18 years old, not under undue influence, and of sound mind. A will may be made self-proved at the time it is executed or at any time thereafter. You may want to consider this procedure as it helps establish that your will was properly executed, should it be contested in court.

Generally, the following basic elements are included in a will:

• • Your name and place of residence;
• • A description of any assets you wish to give to specific people;
• • Names of spouse, children, and other beneficiaries, such as charities or friends;
• • Alternative beneficiaries, in the event a beneficiary dies before you do;
• • Establishment of trusts, if desired;
• • Name of a trustee for any trusts created;
• • Name of a personal representative to manage the estate;
• • Name of a guardian for minor children;
• • Name of an alternative guardian and personal representative, in the event your first choice is unable or unwilling to act;
• • Your signature and witnesses' signatures.

A personal representative (also known as an executor or administrator) is the person who oversees the payment of your debts and the distribution of your assets according to your will. A personal representative is considered a fiduciary, which means that he or she must observe a high standard of care when dealing with the estate. You should identify a personal representative by name in your will. Most people choose their spouse, an adult child, a relative, a friend, or a trust company to fulfill this duty, but anyone can be named personal representative in a will. Since your personal representative will handle your assets, you should always pick someone you trust.

You may also appoint more than one personal representative. When there is more than one personal representative, all representatives must agree on any decision regarding the estate unless the will provides otherwise. If no personal representative is named in a will, a judge will appoint one to oversee the distribution of your assets.

Responsibilities usually undertaken by a personal representative include:

• • Filing your will, an inventory of your assets, and other documents with the court;
• • Paying valid creditors;
• • Paying taxes;
• • Notifying Social Security and other agencies and companies of your death;
• • Canceling credit cards, magazine subscriptions, and similar consumer items;
• • Distributing assets according to your will.

If you have minor children at the time of your death, in most cases, a surviving parent assumes the role of sole guardian. However, if neither parent survives, or if neither is willing and able to act as guardian, it is very important to name a guardian in your will. The guardian you choose should be over 18 years of age and willing to assume the responsibility.

Talk to the potential guardian about what you are asking before naming that person in your will. You can name a couple as co-guardians, but that may not be advisable. It is always possible the guardians may choose to separate at some later date; if so, a custody battle could ensue. If you do not name a guardian to care for your children, a judge will appoint one.

You should outline your objectives, inventory your assets, estimate your outstanding debts, and prepare a list of family members and other beneficiaries. You should then use this information to consider how you want to distribute your assets. Assets that you do not specifically address may fall into a "catch-all" clause in your will. This catch-all provision is often called a "residuary clause" since it generally states, "I give the residue of my estate to ..." Without this clause, the items you do not specifically mention would be distributed in accordance with state law. It is a good idea to contact an attorney when it comes to actually writing your will.

You may want to update or change your will if:

• • Your marital status changes;
• • A child or grandchild is born;
• • There is a death in the family;
• • You move to a new state;
• • The value and kind of property you own changes substantially;
• • Your wishes on who should receive your property change;
• • Your personal representative moves away or dies;
• • Tax laws change;

Wills can be changed either by writing and executing a new one or by adding a "codicil," which is an amendment to a will. The codicil must be written, signed and witnessed the same way as the will, and should be kept with the original will.

Do not try to change your will by simply crossing out language or writing in new provisions. Crossing out language raises the question of whether you intended to revoke your whole will or just a part of it. Writing new provisions will be ineffective unless the provisions are signed by you and two witnesses. A will is effective until you formally change, revoke, or cancel it, so it is a good idea to periodically review your will.

Your will should be kept in a safe place. The original will should be placed where it can easily be found after your death. Make sure your personal representative, a close friend, or relative knows where to find it and can access it, particularly if you are considering storing it in a safe deposit box. In Minnesota, the probate court or court administrator's office accepts wills for safekeeping at no charge or for a nominal fee. You have the right to get your will back at any time.

A trust manages the distribution of your assets. A trust is created by the transfer of property by the owner (sometimes called the grantor, donor, or settlor) to another person (the trustee). A trustee can be a professional with financial knowledge, a relative or friend, or a professional trust company. The trustee holds the title to the property and manages the property for the benefit of the beneficiaries. The beneficiaries may be a specific person, a group of people, or an organization.

There are two basic types of trusts. A "living" or "intervivos" trust is created during your lifetime when all or part of your property is transferred into the trust. A "testamentary" or "afterdeath" trust is created by the settlor's will, which transfers property to the trust after your death.

Testamentary trusts. A testamentary trust is created by your will after your death. The assets to fund these trusts must usually go through the probate process, and the assets may be supervised by the court even after the estate is closed. An example of a testamentary trust would be one you create to leave land to a trust to benefit a minor child in your will. Your will establishes the trust to which the land is transferred, to be administered by a trustee until the child reaches a stated age, at which point title to the land is transferred to the child outright.

Living trusts. A living trust is a trust made while you are still alive. In this case, you could establish a trust for your child during your lifetime, designating yourself as trustee and your child as beneficiary. As the beneficiary, your child does not own the property, but instead receives income derived from it.

Living trusts can be revocable or irrevocable. The most popular type of trust is the revocable living trust, which allows you to make changes to the trust during your lifetime. A revocable trust usually directs the trustee to pay all income to you for life and to pay the trust assets to named persons after your death. Revocable living trusts avoid the often lengthy probate process but, by themselves, don't provide shelter for assets from federal or state taxes. These trusts are often considered tax-neutral as the tax consequences for you are usually the same whether or not the property is placed in a trust.

An irrevocable living trust is usually set up to reduce estate or income taxes. For tax purposes, the trust becomes a separate entity; the assets cannot be removed, nor can changes be made you. In most cases, you cannot be sole trustee of an irrevocable trust without losing the intended tax benefits.

Specific-use trusts. Trusts can be tailored to your goals. Here are a few special uses for trusts:

• • A charitable trust is used to make donations and realize tax savings for an estate. Typically, you transfer property, such as art or real estate to a trust. The trust holds the asset until it is transferred to a charity, usually after your death. This type of trust allows you to continue to enjoy the use of your property, and also realize estate tax savings by donating it to a charity.
• • A bypass trust allows a married couple, in certain cases, to shelter more of their estate from estate taxes. The first spouse to die can leave assets in a trust that provides income to the surviving spouse. Upon the death of the second spouse, the assets in the trust may be transferred to the children or other beneficiaries, without being taxed at the second spouse's death.
• • A spendthrift trust can be a good idea for you if the beneficiary is too young or does not have the mental capacity to handle money. The trust can be established so that the beneficiary receives small amounts of money at specified intervals. It is designed to prevent the young person from squandering money or losing the principal in a bad investment. Further, creditors will not be able to take a beneficiary's income from this trust.
• • A life insurance trust is often used to give liquidity to an estate. In this case, the trustee is named as the beneficiary of the life insurance policy. The trust then receives the life insurance proceeds upon your death.

A revocable living trust enables you to have a trustee who has financial expertise manage your assets during your lifetime. A trustee who has financial experience will likely charge a fee based on the amount of the property in the trust. This arrangement is particularly useful if you are having difficulty managing your financial affairs. A trustee could invest your assets, arrange for payment of bills and debts, and file your tax returns. If you wish, you can establish yourself as a co-trustee.

A revocable living trust can also protect your privacy regarding the distribution of your assets. With a will, the probate laws require that an inventory of the estate's assets be filed with the court. The will and the inventory are public information. With a revocable living trust, generally only the beneficiaries of the trust are informed of the nature and the value of the assets.

By placing your assets in a revocable living trust instead of a will, you can avoid the time delays that are typical of probating a will. Trust assets, in most situations, can be distributed to beneficiaries almost immediately after your death. If you own land in another state, a revocable living trust might help avoid a probate proceeding in the other state for that property. For example, if you live in Minnesota and own a cabin in Wisconsin and place it in a revocable living trust, you may be able to avoid a Wisconsin probate proceeding.

However, there are some potential drawbacks to a revocable living trust. Since a revocable living trust is a more complex legal document, it is often more costly to establish. Ownership of your assets must be transferred to the trust in order for it to be effective. Deeds and other documents required to transfer title must be prepared to transfer your assets to the trust, a process which can require a substantial amount of your time. In addition, the use of a revocable living trust requires more ongoing monitoring to ensure that your assets remain in the trust and that newly purchased assets are titled in the trust. Trusts are also subject to other tax rules that do not apply to probate estates. Further, when you are also the trustee, you have a fiduciary obligation to the beneficiaries for both present and future income. A fiduciary duty is a high standard that requires you as the trustee to follow the terms of the trust and the law in good faith and with loyalty, confidence and candor to the beneficiaries.

Establishing a trust requires a document that specifies your wishes, lists beneficiaries, names a trustee or trustees to manage the assets, and describes what the trustee or trustees may do. For a living trust, you can name yourself as trustee but, if you do, you also need to name a successor trustee to take over if you should become disabled or die. Once the document is completed, you must transfer the assets to the trust. Keep in mind that, in the case of certain assets, such as real estate, you may incur fees and transfer taxes.

You should also consider having a pour-over will in addition to a revocable living trust to transfer any overlooked property into the trust after your death. Also, a will can be used to distribute personal belongings, identify guardians for your children, and provide for a personal representative to handle any unfinished business. If assets are not put into a trust and are disposed of by will, they will have to be probated which negates the advantage of the living trust.

The trustee is considered a fiduciary and therefore must adhere to a high standard of care with respect to the trust. Included in this standard is the duty to protect trust property, to manage trust investments prudently, to refrain from engaging in self-dealing or receive improper benefits from the trust, and to not mingle trust assets with the trustee's own assets. The trustee has a duty to manage the trust's assets in the best interests of the beneficiary or beneficiaries. This might include managing rental properties, investing funds, or paying income to the beneficiary. Trusts differ in how a trustee can distribute trust income. A simple or mandatory trust requires the trustee to distribute income to the beneficiary; a complex or discretionary trust may afford the trustee discretion over the principal and income to be distributed. The requirements imposed on the trustee should be specified in the trust.

If you want to name someone as a trustee, talk with that individual or entity about the trust. Be sure the person not only agrees to serve as trustee, but can comply with the terms of the trust. Because the fiduciary standard imposes such a high standard of duty and corresponding potential liability, the trustee cannot be forced into becoming a trustee just because he or she is named in a trust document or will. If your designated trustee is unable or unwilling to perform, the court will appoint a trustee for you, unless a successor trustee, such as a corporate trustee, is designated.