Estate Planning: Why a Will Might Not Be Enough

People don’t like to think about their own mortality. Why would they? Mulling over what happens when we die is hardly my idea of a fun time on Friday night when my kid is asleep. That said, it’s still a pretty critical thing to think about. A will is a key component to an estate plan. With a will, you tell the world where your stuff goes when you die. You can also use it to specify guardians for your minor kids in the event their other parent is also deceased or otherwise unable to care for them. It’s a very useful tool. It is, however, a very *limited* tool, and the remainder of this post will explore other estate planning tools you should consider implementing to make up for the flaws of having only a basic will. The first thing we need to do is identify those flaws.

PROBLEM ONE: Eighteen-Year-Olds Are Bad With Money

Raise your hand if you would put a high school senior in charge of a million dollars. Anyone? Anyone? No? Good, let’s move on. Life insurance policies often give large sums of money to our loved ones after we die. If those loved ones are the beneficiaries on the policy, those funds are not part of your probate estate – meaning that their distribution is not controlled by your will, but happens automatically. This means if you have a life insurance policy and name your child the beneficiary of that policy, they are getting that money when they turn 18 if you die before then. Full stop. Now think about that… is that really what you wanted?

For most people the answer is a resounding, “No.” Most people absolutely don’t want a teenager having large sums of money at their disposal. This makes perfect sense – biologically, they aren’t ready for the responsibility. The frontal lobe – the portion of the human brain responsible for analyzing the long-term effects of decisions before we make them – does not fully fuse until approximately 25 years of age. That means the average 18 year old has seven more years of brain growth and development before they can truly appreciate the long term impact of blowing $100,000 on a BMW 7 series instead of using it for college tuition or to buy a home.

PROBLEM TWO: Probate is Time Consuming and Expensive

A will tells the court system how your personal representative (we used to call this person the executor or executrix) should dispose of your assets through the probate process. This process takes at least six months, and typically requires the aid of an attorney to guide the personal representative through the process. Attorney fees can vary wildly for a probate, but on the low end you’re usually looking at $3,000.

In the meantime, the personal representative has to keep up with various expenses. Real estate has to be maintained, certain bills paid, etc., before the court will allow them to distribute assets to the people you want them to go to.

PROBLEM THREE: Assisted Living Facilities are Incredibly Expensive

As we get older, some of us will not be able to properly care for ourselves. We don’t want to put that burden on our family, so assisted living facilities come into play. They are wildly expensive. After a handful of years in one, people will commonly burn through any assets they had, only to rely on state Medical Assistance (MA) to pay their bill. After we die, MA has the right to come back during the probate process and ask to be compensated for funds expended on your behalf. They’ll get that by filing a lien against your estate. It doesn’t matter if you said that your child should get the house in your will, MA is going to have a claim against it. That claim can be delayed if your spouse inherits from you, or the recipient falls into another of a handful of exceptions, but ultimately MA will recover the funds spent on your behalf.


So, we see that the will, while a useful and necessary tool, doesn’t solve a lot of issues inherent in handling our assets after death. So what DOES?

Enter the TODD and the Trust.

Transfer on Death Deeds

In Minnesota, probate is triggered by either having at least $75,000.01 in assets that don’t automatically pass to someone else by operation of law, OR by owning any amount of real estate that doesn’t pass to someone else by operation of law. Financial accounts, insurance policies, and bank accounts are easy – you just name a payable on death beneficiary. But what do you do with real estate? Well, you have a couple options.

A TODD is a “Transfer on Death Deed.” The TODD says, in essence, “when the survivor of myself or my spouse should pass on, this property belongs to Person X.” This deed takes the real estate out of the probate estate, eliminating that probate trigger.

So, great! We have now avoided probate, which eliminated our second problem out of three. Unfortunately, the TODD does NOT fully protect the home from asset lien by MA. It also doesn’t keep an 18-year-old from coming into larger amounts of cash than they are emotionally ready for. To solve those problems, a trust is your best estate planning vehicle.


A trust is, for all intents and purposes, a fictional person. Kind of like a corporation, a trust must have assets to exist, but unlike a corporation it does not need to serve any purpose other than to hold those assets for the people eventually intended to receive them (the beneficiaries).

Let’s take that life insurance policy. If instead of naming my child the beneficiary, I set up a trust and name the Trustee (the person in charge of managing the trust’s assets) as the beneficiary, then when I die that money will go into the trust and the Trustee must use those assets in the manner I spelled out in the trust. I can tell the trustee to pay for my funeral costs with trust assets. The trust can specify that if the beneficiary wants money to pay college tuition that the trustee must pay that directly to the college of their choosing. Limits can be set on expenditures. I can also pick an age at which the balance of the trust would be distributed to the beneficiary so they don’t get *all* the money until they turn 25, or whatever age I want.

Additionally, assets held in trust are also what we call non-probate assets. Since you technically no longer own anything that’s given to the trust, the asset doesn’t have to go through probate when you die – it is not subject to the terms of your will. This means if we properly set up asset transfers so that whatever is *not* in the trust that you still own at your death is insufficient to trigger probate, your descendants and family can avoid the legal costs and time associated with probate.

Finally, assuming we transfer the assets into the trust far enough in advance, it will prevent MA from attaching a lien to them. MA has what they refer to as a “claw back” period of 5 years. Anything I transfer to another person or trust within 5 years of receiving MA benefits MA can still get at. Let’s say I’m 67 and transfer my home into the trust. If I start needing MA benefits at age 70, they can still file a lien for amounts expended on my behalf util I turned 72. What if I had done the transfer at age 65? Then my assets would be protected for my chosen beneficiaries no matter what MA spends on my behalf.

Why do we care?

So what’s the point of all this? If the goal of our estate plan is to make life as easy as possible for our loved ones after our death, a simple will isn’t going to cut it. Some combination of a will, TODDs, and trust will be more effective at achieving our goals, will save our family money, time, and headache after our death, and will ensure assets are properly protected for the people we intend to give them to.

If you don’t have an estate plan in place, it’s probably high time you called an attorney and made an appointment to talk about it.

Family law and estate planning attorney Anthony Toepfer practices in St. Cloud, Minnesota. He represents people during particularly difficult times in their lives, such as divorces and child custody or child support disputes. As a Toepfer at Law client, up-to-date information about your case will always be available to you, and we will be there when you need us to answer your questions or address your concerns. Please contact us today through our website, or give us a call at (320) 497-4416 to schedule a confidential consultation to see how we can help you.


Meet Tony Toepfer

Attorney Anthony (Tony) Toepfer began his legal career in the area of business and technology law. While successful in that field, he felt there was something missing. He turned down opportunities, because, as he says, “I wanted to see the faces of the people I was helping.” He transitioned into family law practice, and found what he was looking for.

About Tony Toepfer

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