Benefits of Revocable Trusts in Minnesota
As estate planning lawyers, we often have conversations with clients about the differences between wills and revocable trusts. This article will focus on benefits of revocable trusts in Minnesota.
Some of the common reasons to use a revocable trust are:
- Avoiding probate
- Holding land or real estate
- Having spendthrift provisions for heirs
- Protecting your assets from creditors
Revocable Trusts and Avoiding Probate
Revocable trusts can be a great way to avoid a Minnesota probate. Why is this? When a person dies, if that person has assets only in his or her name, and those assets are valued at over $75,000.00, a probate is necessary in Minnesota.
The key issue to avoid probate is titling of assets. That means not having assets in your own name. Titling often refers to whether there are beneficiary designations on accounts. Another example is pay-on-death designations. Finally, real estate designation and transfer on death can be made.
Titling shows legal ownership interest. Minnesota law allows for transfer of assets to a revocable trust. The benefit of a revocable trust is that assets can be transferred from the name of the prior owner to the trust. It is that simple.
For example, if you own a home in Minnesota, it is often titled in your name or your name and your spouse’s name. This is fine. However, it will eventually lead to a probate to allow for the transfer title to heirs, upon your death(s). This is due to Minnesota probate law.
One way to avoid this issue is deeding the property to the revocable trust. The trust then would exist as a separate legal entity with a separate tax identification number. It would hold title to the real estate.
Furthermore, revocable trusts can hold money too. Again, the trust is a separate legal entity and all assets held in the trust are governed only by the trust – not by Minnesota probate law. There is a revocable trust code in Minnesota. However, with a revocable trust, there is often no court supervision.
Revocable Trusts and Real Estate
Another reason to have a Minnesota revocable trust is to transfer real estate to the trust. This issue was described above. Revocable trusts can hold “title” to assets such as rental properties, farmland, homes, investment properties, or other real estate. The trust holds title to that real estate and does not belong to you, individually. It “belongs” to the trust. You simply manage the real estate as a trustee.
There are various rules and regulations that come with managing real estate in a trust. Trusts can be a beneficial estate planning tools to help you avoid probate and tax issues that may arise.
Consulting with a qualified revocable trust attorney would be a good first step.
Revocable Trusts with Spendthrift Provisions
Revocable trusts can be set-up to help an heir or beneficiary who may not be the best at managing money. Attorneys often refer to revocable trusts that are drafted for this reason as spendthrift trust.
Essentially, the revocable trust and trustee will handle the spendthrift’s money without the spendthrift having control over it. The trustee manages the assets for them.
You can be the trustee during your lifetime. However, you will need to choose a responsible party to serve as the trustee after you die.
Often, our office counsels people to have their most responsible child be the trustee. You don’t have to do that, but it is common. Other options for trustees include corporate trustees, or independent, professional trustees. Depending on your situation, either a child serving as a trustee or a professional trustee may be ideal. The facts of your particular case will need to be reviewed by an experienced revocable trust lawyer.
Revocable Trusts and Protecting Assets
Revocable trust can be beneficial for protecting assets. A revocable trust can protect assets from a spendthrift, from taxes, real estate, or other money. Revocable trusts can also avoid probate. When assets are titled in the name of the trust, the trust owns those assets.
The trustee manages asset. A trust can hold many different kinds of assets including bank accounts, investment accounts, life insurance, and real estate. However, there are some exceptions, 401(k)s or other IRAs may not qualify to be held by a revocable trust. An experienced estate planning attorney should be consulted so that your retirement accounts are not affected.
Revocable trusts are not always right for everyone. Some people do not need revocable trusts. Every situation is different. Every person’s life is different. People have different situations involving children or loved ones. There may be a person with special needs or disabilities. There may be significant debt or other retirement account issues. All of these factors can effect whether revocable trust is advisable. It goes without saying that consulting a qualified revocable trust lawyer is a must.
Minnesota Revocable Trust Lawyers
Joseph M Flanders, Flanders Law Firm LLC have years of experience drafting revocable trusts for clients. Estate planning lawyers at the office are happy to work with individuals from all walks of life and situations. Your situation is unique and we would like to help you with it.
Please contact the law firm today. For your free initial consultation at 612-424-0398.
