Living Trusts in Minnesota

A revocable living trust is a unique component of estate planning that offers numerous advantages beyond a traditional will. If you have a large estate or want to protect the future financial needs of minor children, you may consider creating a living trust. Each state has specific requirements regarding living trusts and residents should understand the guidelines for establishing one. In Minnesota, trusts are covered under Chapter 501B of the state legislative code.

Establishing a Trust

A qualified estate planning attorney can assist you in establishing a living trust. Typically, the process involves two steps. First, you must legally create the trust by drafting a trust agreement or declaration of trust. In this document, you are designated as the settlor or grantor. You must also name a trustee and specify your beneficiaries, if any. Once the trust is created, you or your attorney must take steps to transfer your assets into the trust's control. Typically, the types of assets you may transfer would include such things as real estate, bank holdings, stocks, bonds and life insurance policies.

Duties of the Trustee

The trustee's primary duty is to manage the assets of the trust in accordance with the grantor's wishes. Typical functions of a trustee may include buying and selling property on behalf of the trust, liquidating assets, distributing income or property to beneficiaries, managing the payment of bills, pursuing claims on behalf of the trust, defending the trust against creditor claims or mediating disputes on behalf of the trust. The trustee is required by law to act in good faith and in the best interests of the estate's beneficiaries. The trustee may not use assets of the trust for his own benefit without express authorization from the grantor.

Advantages of Living Trusts

A living trust can benefit you in a number of ways. In the event that you become incapacitated, the trustee can continue to manage your financial affairs without court supervision or intervention. A living trust does not require your estate to go through the probate process after your death. During probate, your assets are inventoried and distributed to your beneficiaries, either according to your will or state inheritance laws if you do not have one. Probate can significantly delay the distribution of your assets and it can be costly in terms of the state's fees. A living trust also grants your beneficiaries greater privacy in that the contents of your estate do not become a matter of public record.

Considerations

You will need to draft a separate pour-over will to provide for the distribution of any assets or property not included in the trust. A living trust does not guarantee a reduction in the amount of estate or inheritance taxes your beneficiaries will have to pay after your death. A living trust also does not prevent creditors from pursuing claims against your estate.

References

• Office of the Minnesota Attorney General: Probate and Planning
• University of Minnesota Extension; Revocable Living Trusts; Gary A. Hachfeld, David B. Bau, C. Robert Holcomb, and James N. Kurtz; October 2007
• Nolo: Make a Living Trust in Minnesota
• Minnesota Office of the Revisor of Statutes: Chapter 501B Trusts