The Uncertain Future of the Estate Tax

Now that the 2016 election is behind us, some of the policies and proposals of the next administration are starting to take shape. One question that keeps coming up: what is going to happen with the estate tax? The short answer is, of course, we don’t know. However, we do have some ideas and some planning tips for those impacted by the federal estate tax.
Full Repeal Possible
President-elect Trump campaigned on and proposed a complete repeal of the federal estate tax. With Republican control of both the House and Senate, repeal certainly seems possible. The current estate tax exemption is $5.45 million for decedents dying in 2016 at a rate of 40% of the amount over the exemption. If the estate tax is repealed it is not clear whether that would be effective January 1, 2017, put off until 2018, or phased in gradually.
Permanency of repeal is another question. A repeal of the estate tax would require 60 votes in the Senate to avoid a filibuster. Republicans will control 52. Repeal could also be achieved through budget reconciliation. If that occurs, the repeal bill would sunset in 10 years and we could see a situation like that in 2010 when we had the “fiscal cliff”.
Step-up Rule
It is not clear what would happen with the basis “step-up” rule. The rule allows assets to receive a step-up in basis equal to the fair market value at the time of death if it is included in the person’s estate. Many individuals, especially farmers, hold on to assets like farm land so their heirs can get a step-up in basis at death. If the heir chooses to sell the property shortly after death, they can significantly minimize or even entirely eliminate any capital gains tax as a result from getting a stepped-up basis. If stepped-up basis goes away with the estate tax repeal it could result in some paying more in capital gains tax.
Under the proposal set out by the President-elect, some estates would still be subject to a tax at death. Trump has proposed a capital gains tax at death that would apply to transfers that exceed $10 million, with a possible rate of 20%. For many, planning for capital gains taxes will continue to be important.
Planning in the Near Term
Estate planning advice in the near term, as far as estate taxes are concerned, for most individuals will be to wait and see what happens. An immediate and full repeal of the estate tax could open up new planning techniques for many clients, and gifts that are made now are not reversible. Any high-wealth individuals contemplating making large gifts or establishing irrevocable trusts for avoiding the federal estate tax should likely sit back and see how everything settles out.
When changes are actually made, it would be a good idea to seek advice from an estate planning attorney and other advisers to determine how it will impact your particular situation. Existing wills and trusts would need to be reviewed and possibly updated. Estate planning documents that have QTIP/marital deduction and credit shelter trusts for estate tax purposes may need to be replaced with a more flexible plan. Irrevocable trusts established for estate tax avoidance should also be reviewed to weigh the options.
We will also be keeping a close eye on how any federal estate tax repeal effects state estate taxes. Minnesota and 15 other jurisdictions have estate taxes. Another six states have inheritance taxes. Many of these hinge on the federal estate tax. Minnesota’s estate tax exemption is $1.6 million for decedent’s dying in 2016, with an initial rate of 10% of the amount over the exemption. Planning for the Minnesota estate tax will still be important for anyone that would have been subject to the federal estate tax.
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Tax bill injects uncertainty into planning for farmers.

As part of the omnibus tax bill, HF 848, passed by the Minnesota legislature over the weekend, the legislature has directed the commissioner of revenue to review the estate tax’s definition of qualified farm property and its linkage to the property tax classification of the property during the three-year period following the death of the decedent. The commissioner is to issue a report to the legislature by February 1, 2017.

Specifically, the commissioner is to report on “alternative methods of ensuring that the use of the property by qualified heirs during the three-year period after the decedent’s death is consistent with the purpose of limiting the subtraction to properties where its use continues that of the decedent without any material change in its use by the qualified heirs and its ownership is consistent with maintaining family ownership of the farm” (emphasis added).

This estate tax review was prompted by the estate tax definition of “qualified farm property” and its limiting affect on traditional estate planning for farmers, specifically trusts. Minnesota’s estate tax code allows a deduction for qualified farm property, which can result in huge estate tax savings for Minnesota farmers. One of the requirements of qualifying the farm property is that it must be agricultural homestead in the year of death. However, some county assessors have interpreted the agricultural homestead linkage law so that estate and succession planning for farmers can result in farm land losing agricultural homestead. This interpretation arises from the requirement that property must be owned by the exact same ownership entity to maintain agricultural homestead.

Take this common scenario: Husband John and Wife Daisy decide it is time to do estate tax planning. They own a few hundred acres of quality farm land in Southeastern Minnesota. In order to avoid probate and to give them some flexibility in estate tax planning, they form revocable trusts to hold their farm land. They put half of the land in John’s trust and half in Dorothy’s trust. (This scenario would also apply in the event of the death of a spouse, where an interest in farm land is placed into a trust to use the estate tax credit of the deceased spouse.) In either case, the titling of the farm land in the trusts would split ownership of their farm land and it would no longer be owned by the exact same ownership entity. Moving the farmland into revocable trusts for estate planning reasons is of little use if it will cost thousands of dollars in increased property taxes year after year. (You can read about this example here and added to my firm’s blog here.)

Instead of looking at whether trust-owned properties can be linked together to preserve agricultural homestead, the new tax bill is aimed at the recapture tax under the qualified farm property deduction. The recapture tax basically imposes a tax on deducted property if the property does not meet the post-death requirements.

The tax bill includes this mandate regarding the recapture tax:

Prior to June 1, 2017, the commissioner of revenue shall not assess recapture tax  under Minnesota Statutes, section 291.03, subdivision 11, for a change in the property tax  classification of agricultural homestead property if the following conditions are satisfied:
(1) the property is held in a trust of which the surviving spouse is a beneficiary; and
(2) the property receives partial homestead classification because a beneficiary of  the trust is the owner of another agricultural homestead.

Upon reading this instruction to the commissioner to not impose recapture tax for a change in the agricultural homestead classification of the property, one would think that continuing to be classified as agricultural homestead is a post-death requirement of the qualified farm property deduction. It is not, at least as the law is written. The recapture tax provision of the qualified farm property deduction imposes a tax if, within three years after the decedent’s death, the property fails to be classified as class 2a property under section 273.13, subd. 23. Class 2a property is basically farm land as most people think of it (see the statute for complete definition), but it is not necessarily agricultural homestead! Thus, the mandate directs the commissioner to not impose a recapture tax in a scenario that would not have triggered a recapture tax in the first place. This change creates potential uncertainty in the law and its application.

As noted above, commissioner is to report on alternative methods of ensuring that the use of the property by qualified heirs following the decedent’s death is consistent with the purpose of limiting the subtraction to properties where its use continues that of the decedent without any material change in its use by the qualified heirs. The 2011 version of the qualified farm property law required qualified heirs continuously use the property in the operation of the trade or business for three years following the death of the decedent. It also imposed a recapture tax if the family member ceased to use the qualified property. However, this was later amended to remove the use requirement from the law. As the law is written now, qualified heirs are not required to continue the use of the farm. The new omnibus tax seems resurrect the use requirement through its instruction to the commissioner.

This estate tax review was absolutely added with the best intentions to give farmers more flexibility in their estate planning. Estate planning attorneys throughout Minnesota have been working on this issue for months for the benefit of their clients, and a review of the agricultural homestead linkage rules is needed. Unfortunately, in my view, the tax bill got the relationship between the taxes turned around and missed the mark. It remains to be seen if Governor Dayton will sign the omnibus tax bill into law, but further legislative fixes will be needed if it is. The focus for future legislation should be on allowing spouses to link farm land owned by their trusts and limited liability entities for agricultural homestead purposes and not homestead classification of farm land during the three-year period following the date of death. Allowing spouses to link farm land owned by their trusts and limited liability entities will in turn give farmers more flexibility for their estate plans in relation to the qualified farm property deduction.


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Guest Blog: Prince’s Estate and the Lessons for the Rest of Us

This post was featured first on See blogs from Ward & Oehler at!blog/c1tyy.

Everybody has an estate plan, or so the saying goes. What does that mean? It means that if you have not taken the time to prepare a will or trust, the laws of intestacy will dictate how your assets should be distributed upon your death.

The recent news about Prince’s unexpected death and his estate demonstrates how the laws of intestate succession work. According to his sister, Prince had no will. See the Star Tribune article: here. In Prince’s case, any assets that are subject to probate will be divided among his heirs according to Minnesota law. Since his parents are both deceased, the estate passes to his siblings (half-siblings included). One of Prince’s half-sisters did predecease him, but without children. If any of his siblings had predeceased him with children, their children would have taken by right of representation. Valuation and estate tax issues aside, intestacy complicates matters for his estate.

In situations of intestate succession there can be several problems. A common problem is when minors stand to inherit property. In that case a custodian will need to be appointed to manage the assets for the minor until he or she reaches the age of majority which is the age of 18 if there was no will. Most people are not comfortable leaving an 18 year old any sizable sum of money, let alone a lottery-prize-sized inheritance. Another problem is that the estate can pass to individuals that you would not want to inherit or would have left a smaller gift. This sometimes is the case with siblings. The trouble is that once the person has the right to inherit, it is in their total discretion to use, exhaust, or leave the asset in whatever way he or she decides.

What some people also do not realize is that Minnesota has an estate tax. Individuals dying in 2016 have an exemption of $1.6 million. This means that if the value of your taxable estate (which includes your retirement accounts, life insurance death benefit, house, etc.) is over the exemption amount of $1.6 million, your estate could owe an estate tax. The top rate bracket for Minnesota is 16% for estates over $10,100,000. The federal estate is an even higher rate of 40% for estates over $5.45 million. Large estates could end up paying both Minnesota and federal estate tax. 2016 tax rates.

Some advance planning can help minimize and even eliminate the estate tax. One simple way is to leave part of your estate to charity and deducting the amounts given from the taxable estate. If you have charitable goals and want to leave some funds to charity, you must take action to do so. You can leave gifts to charity in your will or through beneficiary designations. The people that end up inheriting under the laws of intestacy have no obligation to use their unexpected inheritance for your charitable intents. Even if they did use it for charity, it does not help the estate tax problem. There are many ways to reduce the size of your taxable estate. Charitable giving is just one way, but not having an estate plan leaves your estate totally exposed to the estate tax.

Finally, an estate plan can remove all of these proceedings from public view. In Prince’s case, there will be a public probate proceeding to administer his estate. Since probate is public record, the value of a decedent’s assets and liabilities, the identity and contact information of the heirs, and distributions of the estate will all be subject to public scrutiny. Recent changes in the accessibility of court records also allows more people than ever to have access to that information with ease. An estate plan that includes a revocable trust can effectively divert that whole process. Our blog post about trusts covers them in more detail.

While we mourn the loss of Minnesota’s own, Prince’s estate offers an illuminating example of the importance of drafting an estate plan before you need one.  Ensuring your estate passes according to your wishes must be done through thoughtful and deliberate planning with a qualified attorney.


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A Brief Summary of the Various Ways Assets Pass After Death


Everyone has an estate plan. The laws of intestacy lay out how assets pass after someone has died. This means that without a Will, everything will be divided up the way the law says it should. However, these laws of intestacy do not always line up with a person’s wishes and they leave an estate subject to a more burdensome and more expensive probate process.

An effective estate planning attorney can ensure your assets are distributed according to your wishes in an efficient way. There are three basic ways, other than intestacy, assets pass after someone has died:

  1. Last Will and Testament (a “Will”)
  2. Revocable/inter vivos Trust (a “Trust”)
  3. Beneficiary/pay-on-death/transfer-on-death/ designation or right of survivorship

Each of these methods can be used to pass assets from you to your beneficiaries, and they are often used in combination with each other. The table below gives a brief summary of each method:

Wills Trusts POD/TOD
Requires probate Yes No No
Cost Less More N/A
Protects assets for minors Sometimes Yes No
Protects assets from creditors No Sometimes No
Protects from estate tax Sometimes Sometimes No

One of the terms above is “probate”. Probate is the process of submitting your Will to the court, giving notice to creditors and heirs, and distributing your assets. It is required for all estates where the assets passing by Will are more than $50,000.00 total. As a court matter, it is a public record. This means any person can view the Will and reported assets. A Will eases the probate process by naming a “personal representative” to manage your affairs. Probate can be problematic if there are disgruntled heirs since they have the right to raise objections – costing the estate time and money.

A Trust can be set up during life (inter vivos) to avoid the probate process entirely. Trusts are private matters between you and the Trustee. The Trustee is a person named to manage the Trust assets. While you are alive, you can be the Trustee. When assets are held in a Trust, they can be protected from creditors of the beneficiaries. Holding assets in a Trust also prevents a beneficiary from inheriting assets before they are mature enough to handle it. For example, a Trust might hold assets until the beneficiaries reach age 35. Trusts can contain other special provisions expressing your values (e.g. educational, charitable trusts). Trusts are also an effective way to hold assets when the administration process needs to be more autonomous. This might be because of purchase options, estate tax concerns, quick sale of assets, or disproportional treatment of beneficiaries. Sometimes it makes sense to put Trust language in a Will – typically where the Trust will only be needed if there are young beneficiaries. An estate plan using a Trust will always also include a Will to direct any stray assets to the Trust. One of the drawbacks of a Trust is that it is more expensive to establish than a Will.

Beneficiary designations on bank accounts, life insurance policies, stock accounts, and the like complete the estate plan. When using a Trust, it often makes sense to name the Trust as primary or secondary beneficiary of an account. This ensures that the special provisions of the Trust apply to the assets. When using a Will, it often makes sense to name individuals as beneficiaries to keep those assets from passing through probate. If the assets passing by Will are kept below $50,000.00, the probate process can be avoided.

Your estate plan should be a reflection of your wishes and values. It should also be prepared in a way that best fits the realities of your situation. The right estate planning attorney can accomplish these goals.

For more information, contact the attorneys at Ward & Oehler, Ltd. or visit us on our facebook page

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Transitioning the Family Farm: An Overview of Strategies



In Southeastern Minnesota, family farms are not just the land, business, or way of life, but a direct link to the heritage and history of several generations.

In Southeastern Minnesota, family farms are not just the land, business, or way of life, but a direct link to the heritage and history of several generations. Ensuring the farm operation will be there for the next generation is often a top priority. The actual process of transitioning the farm begins many years before the change in ownership. Planning ahead can make the transition a smooth one.

There are a number of strategies that retiring farmers can use to pass the farm down to the next generation. A simple way is for the younger farmer to begin purchasing new machinery as the older machinery needs replacement. This gradually moves some of the operating assets of the farm from the retiring farmer to the younger farmer.

Another approach would be to use a limited liability entity, such as an LLC, to hold operating assets like machinery and livestock. The retiring farmer can then gift, sell, or bequeath ownership interests in the LLC to the younger farmer to steadily transition ownership of the assets. This strategy can be especially effective for newer, more expensive machinery and livestock operations since it eliminates the need to deal with specific assets. However, the new entity will require its own checking account, tax ID number, and tax return, so careful planning and consultation with trusted advisers should always go into this decision. 

A knowledgeable adviser should always be included in weighing these alternatives.

Land may or may not be in another entity, depending on the particular situation. Many times it makes more sense to keep land out of a business entity for tax or other practical reasons, though a family limited partnership can be a good choice sometimes. Like an LLC, a family limited partnership can allow for incremental ownership changes. Family limited partnerships can also be a good tool for managing ownership by several different family members. It might also make sense to put the land into a trust for estate planning reasons. Given the risk of increasing real estate taxes or losing the valuable family farm land estate tax deduction, a knowledgeable adviser should always be included in weighing these alternatives.

While tax and legal advisers can be extremely useful to the planning process, successful transition of the farm also depends on cooperation and good communication between the retiring farmer and the younger farmer.  At the end of the day, both careful planning and good communication will better equip the next generation for continuing the legacy.

For more information, contact the attorneys at Ward & Oehler, Ltd. or visit us on our facebook page.

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Property Taxes: Farmers Must Plan Carefully to Keep Agricultural Homestead

With the first half of real estate taxes recently being paid, most of us probably took a good look at our property tax statements. For farmers, the Agricultural Homestead classification represents significant tax savings. There are a number of ways to obtain Ag Homestead – the most common being simply living on and farming the land. Farmers can even “link” farms together to extend the same classification to farms that are further away from the homestead as long as the parcels are at least 40 acres and within 4 cities or townships of the home farm.

Ag Homestead classification extends some other very important benefits. Most important for many farmers is the qualified farm property deduction. Under the Minnesota estate tax laws, a farmer can deduct the value of his farmland from his Minnesota estate tax return if it meets certain requirements. One of those requirements is that the farm is classified as Ag Homestead in the year of death. Those claiming the deduction in 2015 can deduct up to $3.6 million of farm land from their Minnesota estate tax return – a huge deduction! This just reinforces the tax savings from Ag Homestead classification.

However, county assessors have recently begun paying much closer attention to how agricultural property is owned. Unless the property is owned by the exact same ownership entity, or can qualify some other way, the property will lose its Ag Homestead classification. Without taking the homestead rules into consideration, many estate plans that otherwise make sense can disrupt this tax preferred status.

Take this common scenario: Husband John and Wife Daisy decide it is time to do some estate planning. They own a few hundred acres of quality farm land in Southeastern Minnesota. In order to avoid probate and to give them some flexibility in estate tax planning, they form trusts to hold their farm land. They put half of the land in John’s trust and half in Dorothy’s trust. This is probably an otherwise good plan from an estate planning point of view. Unfortunately, this plan can be very costly for their overall tax planning if it does not include solutions for real estate taxes.

Here’s the problem: Ag Homestead classification can only “link” to property that is owned by the exact same ownership entity. Instead of John and Daisy owning the property together, we now have two separate entities (John’s trust and Daisy’s trust) owning the property. Even though the properties have only been reallocated for estate planning reasons, the county assessor will remove Ag Homestead classification for one of the trusts. John and Daisy need to find a plan at the intersection of estate, real estate, and income taxes. Moving the farmland into revocable trusts for estate planning reasons is of little use if it will cost them thousands of dollars year after year.

Farm couples need to find a plan at the intersection of estate, real estate, and income taxes.

This problem also arises when families put their farms into a corporation, LLC, or LLP. Putting land into one of these entities can be a great way for farmers to plan for taxes, centralize management, and transition ownership gradually. Without careful planning, all the land in the entity could be stripped of its Ag Homestead classification for the same reasons. Even though the properties owned by the different entities are part of the same farm, they do not qualify for “linkage”. Individually-owned parcels cannot be linked to partnership-owned parcels. 

Losing Ag Homestead classification can result not only in thousands of dollars of extra real estate taxes year after year, but also the loss of potential estate tax savings. Often times, plans that are beneficial for estate planning, business, or other reasons fail to take into account real estate taxes. There are a number of ways to ensure that these plans do not disrupt the Ag Homestead classification. The best estate plans take into account real estate taxes and income taxes, as well as estate taxes.

Sometimes, parcels that are further away qualify for Ag Homestead but have not been properly classified. Any farmer owning parcels of at least 40 acres within four cities or townships of the home farm should check to be sure their property has the right tax classification.

For more information, contact the attorneys at Ward & Oehler, Ltd.

Ag Hmstd chart

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Charitable Remainder Trusts Can Help Retiring Farmers

One of the most common situations facing retiring farmers is a looming income tax burden. From year to year, farmers are buying seed, fertilizer, and other inputs for next year’s operations while also deducting machinery and equipment. In the last year of business, the farmer often has assets with little tax basis and no offsetting input and business expenses  to reduce taxable income. Charitable remainder trusts can offer relief for farm owners in this situation.

A charitable remainder trust is an innovative way to eliminate the tax hit by spreading income out over a number of years, thereby decreasing the total tax burden while benefiting the farmer’s church, local library, or other favorite charity. With proper planning, the total after-tax benefit of a charitable remainder trust will be greater than just selling and paying the tax.

The way it works is the farmer transfers crops, inventory, livestock, or farm equipment to the trustee of the trust. The trustee then sells the assets. Since it is a charitable trust, neither the farmer nor the trust incur a capital gain. The proceeds can be used to invest in stocks, bonds, and mutual funds. The farmer then receives an annual income stream from the trust either for life or for a fixed number of years. When the trust is terminated, the remaining assets are distributed to the farmer’s chosen non-profit organization. In order to qualify as a charitable remainder trust, at least 10% of the contributed assets must be projected to eventually pass to the charity.

By using this arrangement the farmer has no gains from the sale of the farm assets and the income is spread out over a number of years, potentially at a lower tax rate. Charitable remainder trusts can even be structured to so that the income is deferred for a number of years or designed to benefit the next generation. There are a number of ways to customize charitable remainder trusts for each farmer’s situation.

Any farmer with highly depreciated assets looking at a retiring should discuss charitable remainder trusts with their tax or legal adviser.

For more information, contact the attorneys at Ward & Oehler, Ltd.

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Farm Equipment Repair Tax

Effective July 1, 2013, Minnesota farmers have started seeing bigger equipment repair bills. As part of the new tax legislation that was adopted this May, labor for repairs and maintenance of farm equipment is taxable. However, the replacement parts themselves remain nontaxable for farmers.

Governor Dayton has heard the complaints from the farm community. At a recent agriculture expo, the governor called for a repeal of the repair tax in a special session. Repeal of the tax could even be retroactive. In the meantime, however, farmers and farm-equipment-repair shops will need to work with the tax.

UPDATE: the farm equipment repair tax was repealed effective April 1, 2014, but was not retroactive.

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Legislative Changes to Minnesota Short Form Power of Attorney

The Minnesota legislature recently made some changes to Minnesota’s statutory Short Form Power of Attorney. The changes to the form apply to Power of Attorney forms executed on or after January 1, 2014. 

House File No. 232 amended Chapter 523 of Minnesota Statutes in the following ways:

  1. The principal and the attorney-in-fact must acknowledge and sign a notice included in the form that details the purpose of the form, powers given to the attorney-in-fact, duties of the attorney-in-fact, and termination of the relationship.
  2. The attorney-in-fact is no longer given the power to make health care decisions for the principal. The form specifically states that this must be accomplished through a Health Care Directive.
  3. The new form requires that the principal explicitly allow the attorney-in-fact to make gifts to the attorney-in-fact, or anyone the attorney-in-fact is legally obligated to support. The gifting limit is also now tied to the annual gift tax exclusion effective during the year when the gift was made ($14,000 currently), rather than the current $10,000 limit.

A new statute has also been enacted that gives the principal or any interested person the right to petition the court for judicial relief from actions of an attorney-in-fact. This section went into effect August 1, 2013, and applies to powers of attorney executed before, on, or after that date. 

These changes are only effective for forms executed after this year. While documents executed before January 1, 2014 will still be effective after that time, this is a good opportunity to review any existing Power of Attorney forms in place. 

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In re Estate of Butler: Convenient Ruling for Joint Accounts

 For farm and business families with large revolving accounts, the estate could be losing out on a significant portion of the decedent’s total assets by creating a joint account with right of survivorship. 

Joint accounts are a common tool used by older people to help them manage their finances. Typically, they add a child to the account to pay bills if they are unable to do so. However, these convenience accounts carry a certain risk if they are not carefully set up. If the account is set up as a joint account with right of survivorship rather than adding the second person as a signatory only, the second person gets the balance of the account upon the death of the older person. By Minnesota law, multi-party accounts are distributed per the terms of the account. When one owner dies, the account is automatically owned by the survivor. For farm and business families with large revolving accounts, the estate could be losing out on a significant portion of the decedent’s total assets by creating a joint account with right of survivorship. This could result in a contested probate if it is not what the other heirs to the estate were expecting. 

In 2011, the Minnesota Supreme Court established a bright-line rule for these types of accounts in the case In re Estate of Butler. The Court made clear that only evidence “specifically referring to such account” in regard to intention and disposition by will should be considered. In the Butler case, Patrick Butler was survived by three children and four stepchildren. The accounts in issue in the case were CD accounts that Mr. Butler had set up with his daughter Maureen. Even though Mr. Butler’s will divided his estate in equal shares between his children, the entire balance of the CD accounts went to Maureen. The other children did not think Mr. Butler intended for the accounts to pass directly and solely to Maureen, so they challenged it. However, the Court did not find that the evidence offered satisfied the standard.

Pertinently, the Court held that decedent’s will dividing his estate in equal shares was irrelevant for determining intent and disposition by will since it did not specifically refer to the joint accounts. The Court held that evidence that the survivor was not decedent’s favorite child and would not want to favor her over the other children was irrelevant since it did not specifically refer to the joint accounts. The Court held that evidence that the survivor referred to the joint accounts as “Dad’s” was irrelevant since it was a statement by the survivor and not decedent’s statement of intent. The Court found unpersuasive evidence that the decedent had funded the joint account with fire insurance proceeds from a cabin decedent’s wife owned as it provided little guidance in determining decedent’s intent. The Court declined to determine whether the form designating the joint accounts with right of survivorship provided “conclusive evidence” of the decedent’s intention to create a survivorship account under M.S. 524.6-213. The Court concluded that the respondents failed to produce sufficient evidence from which a reasonable jury could have concluded by clear and convincing evidence that decedent had a “different intention” than to have the surviving joint owner receive the proceeds of the joint account upon decedent’s death. Evidence offered must specifically refer to the joint accounts.

The Court relied almost exclusively on statutory interpretation for its decision. Previous caselaw has held that the presumption by surviving parties to a joint account does not arise if the account was created through a violation of fiduciary duty and that the joint account must be validly created by full disclosure from the principal to the fiduciary. See In re Estate of Nordorf and Carlson v. Carlson. Typically, this applied where the person creating the joint account did not understand the effect of transferring funds into joint tenancy. It seems with this stricter standard those with joint accounts should be very explicit in how their assets are to be divided. As the Court showed in the Butler case, only evidence that specifically relates or refers to the account will be considered. For farm and business owners, it is especially important to make sure large accounts are being transferred the way they are intended. 

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