Most people have heard of a trust, but few likely understand what the estate-planning tool is and whether they might benefit from having one of their own. There’s a common misconception that estate planning trusts are only useful for those with gobs of money. While it’s true that barebones estates may not benefit from a trust, you don’t have to be a Rockefeller to need one.
What is a trust and why does in matter in Minnesota?
Trusts are written agreements that create specific rules for how property is to be managed and distributed. Trusts can be created and funded while you are alive (living trusts) or after you have passed away (testamentary trusts). Living trusts can either be revocable (meaning you are allowed to change, add to, take away or terminate the trust) or irrevocable (meaning you can’t make changes).
What does a trust do?
So why would a person establish a trust in the first place? Well, there are many reasons why a Minnesotan might decide to create a trust to manage their assets, but lets walk through a few of the most important ones. First, avoiding probate. Assets that are held inside a trust can avoid probate completely which can save families lots of time, money and effort. A related benefit of trusts is that they allow for a much faster distribution of assets to heirs than would be possible in the probate process. If it’s important to you that certain property or a small business pass immediately to a loved one, then a trust might be one way to best facilitate that. Trusts are also useful because they offer privacy. While wills are put into the public record, trusts are private documents and not subjected to public scrutiny, something many families find invaluable.
When might I benefit from a trust in Minnesota?
As we’ve already said, trusts are not reserved only for those with boatloads of money, in fact, many people can benefit from the relatively common estate-planning tool. However, there are expenses associated with creating a trust and this means it may not be worth the time and money to establish one if the estate in question contains very few assets.
A good rule of thumb is that a person should have a net worth greater than $100,000 before a trust would make sense. Trusts are also beneficial to those holding large amounts of real estate or with unusually specific instructions for how property will be divided after their death. Finally, trusts are useful tools to help minimize estate taxes as well as to protect an estate from lawsuits or creditors.
The reality is that there are many kinds of trusts out there that can be used for a multitude of purposes. If you’re interested in learning more about the benefits of a trust, contact an experienced Minnesota estate planning attorney who can better explain the lay of the land.
An experienced Minnesota estate-planning lawyer can help walk you through the process of establishing or altering a comprehensive estate plan. For more information on estate planning in Minnesota, along with a variety of other topics, contact Joseph M. Flanders of Flanders Law Firm at (612) 424-0398.
Source: “Do I need a trust?,” published at Money.CNN.com.
See Our Related Blog Posts:
What Exactly Is A Codicil And How Does It Work In Minnesota?
How To Change A Will In Minnesota
