A living trust shouldn’t feel like algebra. Regardless of your thoughts on math, the goal of this article is to introduce this thing called a living trust.
Thus, here is my simplified definition of a living trust in Minnesota.
A living trust is a piece of paper that gives directions on transferring property to another person or entity.
That was really, simple, right? Why then, is it called a living trust versus a dead trust or some other fancy name?
Why Is It Called A Living Trust?
In general, the piece of paper is called a living trust because the owner of the property usually has control while the owner is alive and competent.
I see a lot of people who are fearful that a trust makes life more complicated. And, I see a lot of families get scared off by fancy names like a conduit trust, grantor trust, a see through trust, or even a “complex” trust.
For now, keep it simple. Just like there are hundreds of different makes and models of cars, there are an infinite number of trusts and types. Every trust is different because every person is different.
Now is not the time to turn back. Remember, this is about keeping this simple and down to one sentence. Again, a living trust is a piece of paper with rules on when and how property will get transferred onto the next person or entity.
A Living Trust versus a Revocable Trust
Generally, a living trust and a revocable trust are one in the same. However, they don’t have to be. A living trust that is revocable too is a piece of paper that allows a person to terminate or end the trust.
Living Trust versus a Inter Vivos Trust
In Minnesota, a living trust and an inter vivos trust are the same. A living person who is at least 18 years of age creates a trust during their lifetime. The trust document be revocable or irrevocable, simple or otherwise.
Reasons for a Living Trust
In Minnesota, there are many reasons why a person or couple create a living trust. As a reminder, the reasons are different for every person and family.
In no particular order, a person entertains a living trust to:
- Avoid or reduce the risk of probate,
- Prevent the government from making decisions on their behalf,
- Make life easier for a spouse,
- Serve the needs of young children,
- Tax goals,
- Serve the needs of grandchildren,
- To assign a specific trustee,
- Avoid time delays,
- Land owned in more than one state, and
- Reduce conflict.
Indeed, there are more reasons for having a living trust. However, the reasons are generally specific to each person and family.