Probate & Trust Law Section Conference Manual ... - Minnesota CLE

(A) Then do your other language—disclaimer language or
fractional formulas.
2. Simple/Non-tax plan.
a. This plan does not utilize the exemption amount on the first death.
b. When to use: Consider this type of plan when estate tax planning is not an issue.
c. Example: “I leave my residuary estate to my spouse, if my spouse survives me.”
d. Advantages: This plan is the most straightforward option. It is easy for the clients to
understand and results in the least complicated estate administration.
e. Disadvantages: This plan does not provide flexibility in the event the value of the
estate increases from the time of will execution to date of death. The best post-death planning
that could be done would be for the surviving spouse to disclaim a portion of the estate and
have it pass to any surviving children or pursuant to trust terms if a trust is provided. These
assets would then be unavailable to the spouse for health, education, maintenance or support.
f. Notes: Gifts may be made to the spouse in trust if appropriate, even though the plan is
not tax driven. Consider this option for couples in a second marriage or where the surviving
spouse is not able to manage assets.
3. Disclaimer plan
a. This plan typically provides for all assets to be distributed to the surviving spouse,
outright or in trust, using the marital deduction, but provides that if the spouse disclaims any
portion of the estate, the assets will be distributed in another manner, commonly to a credit
shelter trust.
b. This plan delays the decision regarding whether to use the exemption amount on the
first death. It allows the surviving spouse to determine whether any portion of the first
spouse’s exemption amount should be used after the first death.
c. When to use: Consider this type of plan where it is unclear whether estate tax
planning is necessary and when flexibility is important.
d. Example: “I give my residuary estate to my spouse, if my spouse survives me. If my
spouse survives me but disclaims any portion of my residuary estate, I give the disclaimed
portion to the trustee of the credit shelter trust under Article Four.”
e. Advantages: This plan is very flexible. It allows a decision to be made when the first
spouse dies based on the current financial information of the couple and based on the tax laws
on the date of death.
f. Disadvantages: To use the exemption amount on the first death, this plan requires
careful and detailed work after the first death. Both the surviving spouse and the attorney must
be willing and able to do post-mortem planning.
1) In Minnesota, a qualified disclaimer must be filed in the Probate Court within
9 months of the date of death.
5