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Finding the right estate planning solution

There is not always one single way of handling most complicated issues in life. This is certainly true with estate planning, as different strategies may need to be employed between different Minnesota residents.

For instance, in handling the distribution of a cabin from one family member to another, some may choose to form a limited liability company, or LLC. The LLC can be set up to include different members, and it can own property as a legal entity.

However, there are some downsides to using a LLC, as with virtually any method for the distribution of assets. For example, Minnesota law now looks through an LLC to determine if it owns property in Minnesota. If it does, the property may be subject to estate tax, even if the LLC is not located in Minnesota.

Other individuals may choose to simply make an outright gift of a cabin or other property to family members. While this can provide benefits to estate planning to due gifting, it also results in a loss of control over the asset. Moreover, Minnesota law indicates that the value of the gift can be pulled back into a person's estate up to three years after his or her death, and estate taxes can then be paid on the property.

Ultimately, there are advantages and disadvantages to nearly every type of estate planning strategy. The key is to find a solution that works best for an individual's personal circumstances, which can only be done after careful consideration and thought. Once the right solution is determined, it must be implemented in an effective manner in order to ensure the person's goals are carried out.

Source: San Jose Mercury News, "Plan now for future of family cabin," Oct. 22, 2014

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