What are the roles in a Minnesota Trust?

One confusing aspect of any discussion about the creation of a Minnesota trust is terminology.

Lots of people are unfamiliar with the lingo and with good reason. After all, it’s not everyday that a person establishes a trust fund to manage their estate.

To help unravel some of the mystery surrounding the creation of a Minnesota trust, this article will define some of the words you will most commonly encounter in articles on the subject.

First things first, Minnesota law says that every trust has the following components:

1. The person creating the trust, known as the grantor, trustor, settlor, or maker.
2. The party the grantor names in the trust to care for and manage the trust property, known as the trustee. There may be one or several trustees and the trustee may be an individual or a corporation.
3. The party for whose benefit the trust was created, known as the beneficiary. The beneficiary receives the income from the trust.

While this is all well and good, you might not have any clue what these terms mean and what these people are responsible for. Let’s begin.

Minnesota Trust Grantor

All trusts begin with the donation of someone’s property. The person who creates the trust is known as the grantor. The term specifically applies to any person who either creates a trust or, directly or indirectly makes a transfer of property into a trust.

He or she decides what property to include and to exclude and who the beneficiaries will be. If the trust that is being created is a revocable trust (meaning that it can be changed or terminated) until the grantor dies, the grantor has the power to change any part of the trust as often as he or she likes. As if this isn’t confusing enough, the grantor is sometimes also called the trustor or the settlor.

Minnesota Trustee

Though we’ve mentioned trustees before, it won’t hurt to give another quick overview. At the most basic level, a trustee is someone who supervises the functioning of a trust. Trustees are individuals who hold legal title of property for other people, known as the beneficiaries.

Any mentally competent adult can be named trustee. Normally, in a revocable living trust the grantors and the trustees will be the same people, meaning you will often name yourself and your spouse as trustees. That’s because you want full control of the property while you are still alive.

If you become too ill or disabled to manage your property, your co-trustee or successor trustee is then empowered to do the management for you.

In many cases people name their children as successor trustees. However, this is not required, especially if you are not confident that your children would distribute the assets according to your instructions.

In such cases you are allowed to name a professional fiduciary as your successor trustee. This could be the trust department of a bank, a professional trust company or a private fiduciary. Thus, trustees do not have to be humans, but can instead be a company or collective of professionals.

Minnesota Trust Beneficiary

Quite simply the beneficiary is the person who gets the benefits of the trust.

This is the person for whom the trust fund was established and who stands to reap the rewards. It is intended that the assets in the trust, though not belonging to the beneficiary, will be managed in a way that will benefit him or her, as per the specifics laid out by the grantor when the trust fund was created.

An experienced Minnesota estate planning lawyer can help walk you through the complicated process of establishing a trust and selecting a competent trustee to oversee the fund. 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: “Probate and Planning,” published at AG.State.MN.US.

 

See Our Related Blog Posts:

What is a Trustee of a Minnesota Trust and what does one do?

What’s a living trust and how does it work in Minnesota?