Funding Revocable Trusts in Minnesota

Perhaps the primary thing that you should be cautious about using a revocable trust for is laziness. If you can transfer an asset now by means of an irrevocable trust, that may be the route to take. Revocable trusts are the kind of trust for the stuff that you still want to own and you still want control over. They allow you to change them constantly and that’s a good thing in certain contexts.

Even if a certain asset can go into a revocable trust, however, it doesn’t mean that a certain should go inside a Minnesota revocable trust. Irrevocable trusts are sometimes the better option for taking full advantage of trust law. So, to help you pick what assets might be saved for some other kind of estate planning, keep reading. You can still use a revocable trust if you want. Just be wise with everything that you use it for.

Amending a Revocable Trust

Since revocable trusts are the kind of revocable trust that’s being discussed, things that must or should be passed on might not be the best assets to put here. This is only a recommendation, as a revocable trust can be the means to transfer a wide variety of assets. It may even be the primary kind of trust that you rely on. The real clincher, even so, lies in that revocable trusts can be changed at any time.

For those of you who have a habit of changing your mind, a revocable trust allows you to keep changing your mind. You don’t have to fret about everything being set in stone. Though, one consideration remains. If you retain the power to change the trust, you must trust yourself to make the right decision. Irrevocable trusts offer the assurance that you know where a given asset is going. If something must go now, err on the side of transferring the ownership immediately through an irrevocable trust.

Retirement Accounts in Revocable Trusts?

You don’t necessarily need a revocable trust for retirement accounts. Instead, what you probably need to do is change out the primary and/or secondary beneficiary on those accounts. Check out this possibility for every retirement account held under your name. Leave no bank account unturned. Say that you leave one retirement account without a beneficiary and place it into a revocable trust instead. Whoever has to do the dirty work of transferring those accounts might end up dealing with some nasty tax issues.

Here’s the big piece to that puzzle. Transferring retirement accounts through a revocable is treated as if you withdrew the entire contents of those accounts and gave those dollars to someone else. Every bit of that cash is subject to income tax as a result of that transaction. You might as well do the numbers now and see how much your benefactor loses to today’s income tax. Each cent goes against them, causing them to file more on taxes, prompting more cash to dissipate.

Spendthrift Provisions in Revocable Trusts

This section is meant to protect your beneficiary. Property that has been contaminated is just one example of what to be weary about putting in your revocable trust. Truly, anything that you own which might cause legal trouble for your beneficiary might be better off left outside of the trust. They can say that you gave it to them. But once they become the legal owner of that property, they may begin to feel the gravity of responsibility.

Revocable trusts aren’t loopholes for responsibility. For retirement accounts, they’re not even loopholes for dodging income tax.

Elbow grease and hard work might be the only antidotes to the contaminants on your property. If a benefactor is serious about inheriting the property, honesty is the best policy. Offer your help if you’re physically able to. Consider even talking with the benefactor about what costs this project will entail and if it’s worth spending money that would otherwise go towards them towards the property.

Vehicles in a Revocable Trust

If you’re putting your vehicle into your revocable trust, you might as well be selling it to your beneficiary. At least, that’s how some states treat this particular kind of ownership transference. Be ever mindful of property transference and the laws relative to the states in which your beneficiaries reside. Let this be a suggestion that you may want to take time and simply research how each state will treat the property your sending across state boundaries.

Generally speaking, title transfers may be the warning signs that you need to look for. Retirement accounts involve them. Motorized vehicles involve them. Saving these title transfers for your trusts may result in unexpected consequences. Your beneficiary might face a transfer tax if they accept the car or truck that you left for them. Treat this like your retirement accounts. Change the account so that their name is where it’s supposed to be.

Allocating Your Assets

Now that you have a general idea of what you might not want to have inside of your revocable trusts, it may be optimal to put the rest of your assets inside a will or trust. Some assets that may not work in a revocable trust might be better opted for an irrevocable trust.

With the help of the law firm of Flanders Law Firm LLC, you can get a grip on trust law from a Minnesota estate planning lawyer. Your assets can go where they need to go. Just call 612-424-0398 for your free quote.

Minnesota Estate planning can entail a lot of details, but that doesn’t mean that it has to be complex. And even if things get complex, you can have help.