Trust Types in Minnesota

Trust Types in Minnesota are Endless

Trust types in Minnesota are nearly endless. Whether you are set on a revocable trust or an irrevocable trust, there are far more than two trust types in Minnesota.

Always clarify the intended purpose of the trust. Then, picking a trust type is easier. The trust purpose is dependent on needs, the property being transferred, and the beneficiary. If you do not know the ideal purpose for your trust, seek help weighing the pros and cons.

What Is a Trust?

A trust is a document or legal instrument establishing the terms and conditions of our property, which is a legal arrangement where a trustee holds and manages assets on behalf of a beneficiary or beneficiaries. There are several types of trust documents, each with their own specific requirements and purposes.

A trust is a promise made by another person. The promise is exclusive to holding property safe on behalf of a beneficiary. The person making the promise is called a Trustee.  The Trustee is given access to the property by a person called a Grantor.  In many cases, the Grantor and Trustee are the same person. That is, until the Trustee is no longer able to manage their promise.  Ideally, the promise is expressed and described in written format. 

What makes a trust complicated is the fact that there are many types of trusts.  In fact, there are more than 100 different types of trusts.  The trust type is often specific to the Grantor, intentions for the Beneficiary, and a host of other planning goals.   For example, a trust can be used to avoid probate and navigate estate taxes. 

Also, a trust can be used to reduce stress when considering long term care, like a nursing home or skilled nursing facility.  Other times, a trust is used to manage their business affairs, real estate, a family cabin, and protect their assets from creditors or a former spouse.  Additional trust types might involve special needs, titled property, military veteran matters, and or agriculture. 

Before you start focusing on selecting the right type of trust(s) that fit you and your goals, consider reviewing other frequently asked questions herein or attending an upcoming seminar to learn more. 

Audio About Trust Types

Revocable Trust Types

One common type of trust document is a revocable living trust. A revocable trust can be used by a single person, a married couple, and unmarried partners. This trust type allows the grantor(s) to maintain control over their assets while they are alive, and transfer them to a designated beneficiary upon death.

There are many disposition options available for this trust type. Even better, it can be modified or revoked any time during the grantor’s lifetime. A Grantor has options regarding pre-residuary gifts for tangible personal property, real property, intangible personal property, pecuniary gifts, and of course, pets.

In addition, this type of trust supports see-through options, single options, and separate trust options for a spouse, descendants, grandchildren, nieces, and nephews.

Irrevocable Trust Types

An irrevocable trust is a legal arrangement where assets are transferred by the grantor into the trust, relinquishing ownership and control permanently.

Typically this type of planning document is used for asset protection and tax efficiency, and offering beneficiaries security and assurance of receiving designated assets according to the trust’s terms.

Single Beneficiary Trust

A common type of irrevocable trust is a single beneficiary trust. This is a one named beneficiary for a period of years or for life. Several options are available for the term of the trust and the disposition of the remainder including several optional powers of appointment. Supplemental Needs Trust and “see-through” (accumulation/conduit) trust options are also available.

Children’s Trust

A children’s trust is not what you think. From an irrevocable persecutive, a children’s trust is when a grantor doesn’t retains a right to income or principal. This kind of trust can be either a grantor trust or a non-grantor trust. with the intent of making assets non-countable, children trusts are used to protect assets when transitioning into a nursing care facility.

For families domiciled in Minnesota, this type of trust is used most often for life insurance. That said, this type of trust is also used with special needs, elderly care matters (shielding assets from nursing homes), veteran benefits, protecting assets from creditors, and installment sales and purchase agreements.

Irrevocable Life Insurance Trust or ILIT

Another opportunity is an irrevocable life insurance trust (ILIT). This kind of trust holds assets for life insurance. That said, a life insurance trust can hold more than insurance. Features of this kind include life insurance provisions intended to save on taxes, Crummey Powers, Installment Options, and contingent martial triggers.

Tax Planning Options for a Trust

Tax planning for any kind of trust is an exclusive conversation. Indeed, there are opportunities for tax planning with every trust. Because Minnesota has an estate tax, tax planning is especially important.

Nonetheless, tax planning for either a revocable or irrevocable trust types includes reviewing disclaimer options, credit shelter or marital deductions, seeking excess exemptions like the formation of a QTIP, Generation Skipping Transfers (GST), or optional direction for a deceased spouse’s unused exemption amounts (“DSUEA”). In all, tax planning is a critical step.

Testamentary Trusts in Minnesota

A less common type of trust is created and administered using a will. In previous decades, testamentary options were very popular. Today, families see the conflict of forcing loved ones into a probate court process to form and facilitate their assets.

For those deciding between a testamentary trust, this type of document is established through a will, and only takes effect after a person dies. It can be revocable or irrevocable, and is often used to provide for minor children or other beneficiaries who may not be able to manage their own assets. Additionally, there are stronger options. Other planning options allow for immediate impact versus waiting on court approval.

All this aside, each type of trust document requires careful consideration and expert legal advice to ensure that it meets the grantor’s needs and objectives.

More Minnesota Trust Types

Further, opportunities are endless, when working through the purpose of a trust and various estate planning needs. To assist with your research, here is list of various trust types worth considering:

Lawyer For Choosing a Trust Type

If you’re searching for a trust lawyer near you, consider contacting this law office for a free visionary meeting, such that you can share your goals and planning needs.

Twin Cities Trust Planning Attorney

I meet potential clients by phone, email, video, one-on-one, and through educational seminars. If you live or work in the Twin Cities, great!  Do not allow where you live prevent you from contacting this law office for help.

This law office serves individuals and families near and afar. Even if you are limited to a cell phone, this law office can help. As a result, residing near Edina, St. Louis Park, Richfield, Eden Prairie, Bloomington, Minneapolis, Hopkins, Minnetonka, Saint Paul, Woodbury, Eagan, Burnsville, Plymouth, Blaine, Wayzata, or a city in-between, this law office is ready to field your inquiry.

Trust Planning Lawyer in Edina, Minnesota

Although located in Edina, MN, it is very common that an attorney from this law office to meet with Clients outside the Twin Cities area and in rural areas. After all, assets are often located in multiple counties and jurisdictions.

Lawyer for Trusts Near Edina, Minnesota

Contact a Trust Attorney

When you decide to meet with a lawyer, know that their role is critical for the process of capturing your intended goals and purpose.

If you have more questions on trust types, consider contacting this law office for advisement.

No attorney-client relationship is formed by contacting this law office. If you contact IAJ Law, LLC by phone, text, social media, e-mail or through any other means, you may not necessarily receive a response.