Estate & Trusts Lawyers

Types of Trusts in Minnesota

Living Trusts

Living trusts hold the trust maker’s assets and help them manage their affairs while alive. Assets placed in this trust will continue to benefit you throughout your lifetime. The trust maker, trustee, and beneficiary are typically the same person. A successor trustee should be designated in the event of mental incapacity or death. Having a living trust will make it much easier for a trustee to take over the management of assets. The three most important reasons to have a living trust are to avoid probate, save money, and maintain the privacy of your estate.

Probate occurs when there is no trust or if things are unclear. With a living trust, estate planning is crucial to avoid probate and to have assets distributed quickly. Although there are costs associated with creating a living trust, a trust will save money in the long run. Finally, after death, a trust is not made public. Therefore, the trust will allow you to keep your privacy.

Special Needs Trusts

Supplemental Needs Trusts

Supplemental needs trusts and special needs trusts are essentially the same thing. The trust was first known as a supplemental needs trust because of its purpose to supplement the need for public government programs. However, it has since become known as a special needs trust which better expresses the beneficiary’s needs.

Revocable Trusts

Revocable living trusts are also known as living trusts. They are considered revocable because changes may be made to the trust as circumstances or wishes change over time. Trusts are “living” because they are created over your lifetime. Living trusts are a great way to avoid probate, which is when the court determines how a person’s estate is divided up.

When the trust maker is living, they can invest or spend any assets included in the trust. Since the trust is revocable, the owner can make changes along the way. When the trust maker becomes mentally incapacitated and can no longer make decisions, management of the trust then goes to the successor trustee. Whoever takes over responsibility can then manage the original trust maker’s estate. Revocable trusts automatically become irrevocable when the trust maker passes away; no additional changes may be made to the trust. The successor trustee then has the responsibility to distribute any remaining assets listed on the trust and pay any outstanding bills, taxes, and debt.

Irrevocable Living Trusts

Charitable Trusts

Charitable trusts are used to leave some or all of a person’s estate to charity. There are many ways to set up a charitable trust, so discussing these options with an experienced estate planning lawyer is best. Two common methods are to either leave a certain amount to be paid to the charity and the remainder to the beneficiaries or vice versa. These trusts are typically tax-exempt, and the IRS must approve the charity from which the assets will be received. One of the significant benefits of charitable trusts is the tax breaks received. The estate taxes are dramatically reduced when the trust is eventually passed on to the donor’s heirs.