Secure your legacy with expert insights on trust and succession planning. This blog category covers revocable and irrevocable trusts, estate succession strategies, asset protection, and legal guidance to help you plan for future generations. Stay informed with the latest trends and practices.
Niblings and their inheritance is another way of saying gifting assets to nephews and nieces. The term nibling is intended to be gender neutral term, versus locking an estate plan into rigid requirements.
Before taking yourself down the path of woke pronouns, this new aged term is not for that. Instead, this is a drafting strategy because identifying which nephews or nieces will be alive in the future, is unknown.
In my experience, estate planning for nephews and nieces is a common thing for adults without children or a spouse.
As the human experience can confirm, our estate plans need to change as our family dynamics change.
If you are wishing to give an inheritance to niblings and are working through the in’s and outs of this type of asset transfer, you found the right place.
Niblings as an Estate Planning Term
One of many reasons a trust or will might use the term nibling is because the oldest or youngest nephew and niece cannot be identified.
For example, a sibling may have more children after a trust or will is created. Instead of revising an estate document after each birth, using a gender neutral term can account for new additions to a family.
Also, drafting estate planning documents usually means creating back-up plans specific to a class of family member.
So, instead of worrying about the birth order of every nephew and niece, the term “niblings” can alleviate the stress of predicting.
How do you write a trust in Minnesota? Well, the easiest way is to make declaratory decisions on paper, with clear intent, and have the document notarized.
Unfortunately, lots of people do not know what to write or where to being. For those looking for DIY options, the rules for writing a trust in Minnesota are found under Chapter 501C.
Otherwise, if you need help writing a trust, you found the right place.
Hopefully you agree that there are many advantages to writing a trust versus depending on an oral trust.
First, the person creating the trust must have capacity. In other words, a sound mind, even for a brief moment, to understand their intentions.
Unfortunately, an elderly person can be under duress by relying on their adult children.
Other times, a person can have the lack of capacity due to medication or their health.
So, the first thing needed to write a trust is having the mental capacity to create such an agreement.
What else do you need to write a trust?
For a person to write a trust in one sentence or less, consider meeting with a professional first.
In other words, a person cannot accidentally or unknowingly transfer their stuff or money into a trust without knowing and intending to do so.
To assure this element of the process, this law office asks clients to initial or sign every page making up a trust document.
Do you need anything else to write a trust?
Yes, to write a trust, a person must also specifically identify a beneficiary of their stuff or money.
This means you need to identify a recipient. An unborn or unnamed person or entity cannot be a beneficiary without meeting very specific conditions not defined or outlined in this article.
Oral trusts are a risky and unreliable way to manage or transfer assets. While some jurisdictions may recognize them in limited circumstances, they are notoriously difficult to prove and enforce.
Obviously, oral trusts lack clear documentation, which makes it easy for misunderstandings, disputes, and legal challenges to arise—especially among heirs or beneficiaries.
In court, proving the existence and terms of an oral trust often relies on witness testimony or circumstantial evidence, which is vulnerable to contradiction or misinterpretation.
Without written instructions, there’s no definitive record of the settlor’s intent, the assets involved, or how they should be distributed. This can lead to prolonged litigation, strained family relationships, and unintended beneficiaries receiving property.
In short, an oral trust is a legal gamble. To protect your assets, ensure your wishes are carried out, and avoid unnecessary drama, always formalize your trust in writing with qualified legal guidance.
Trust drafting is as complicated as one’s family dynamic. Whether you consider yourself smart, educated, uneducated, prudent, or otherwise, avoid the temptation of DIY methods.
Of courses, saving money is an attractive feature when you found a trust drafting program online that costs $49.
Drafting your own trust is like performing surgery with a YouTube tutorial—technically possible, but you probably won’t like the outcome.
Determine the Purpose of the Trust. Decide whether the trust is for asset protection, estate planning, tax efficiency, charitable giving, or another specific goal.
Choose the Type of Trust. Select the appropriate trust structure (e.g., revocable vs. irrevocable, living trust, testamentary trust, asset protection trust).
Select the Trustee. Choose a responsible individual or institution to manage the trust assets according to your wishes.
Identify the Beneficiaries. Clearly name the individuals or entities who will benefit from the trust and how/when they will receive distributions.
Identify Assets. Identify which assets will be placed in the trust (real estate, accounts, investments, etc.) and ensure proper legal transfer.
Draft the Trust Document. Prepare a legally sound trust agreement that outlines the terms, powers, and responsibilities of the trustee and the distribution rules.
Review State and Tax Laws. Ensure the trust complies with applicable state laws and consider federal and state tax implications.
Sign and Notarize the Trust. Execute the trust with all required signatures and notarization to make it legally valid.
Fund the Trust. Officially transfer ownership of the designated assets into the trust (deeds, title changes, account re-titling, etc.).
Review and Update Periodically. Revisit the trust regularly or after major life events (marriage, divorce, birth, death, asset changes) to ensure it still meets your needs.
An Asset Protection Trust is intended to shield assets from creditors and litigation. The goal is to protect beneficiaries from legal harm while preserving monetary benefits.
The process of protecting assets starts with a purposefully drafted trust. Next, the trust is funded with assets. Then, the game plan is implemented by the trustee.
If you need support with addressing this type of legal document, you are in the right place.
Again, the goal is to surround trust assets with protection, such that the beneficiary’s creditors cannot reach any of the assets.
One way of accomplishing this level of protection is to impose conditions onto the trustee. When this is not desired, there are other trust types that allow significant advantages.
Other Advantages of an Asset Protection Trust
Another benefit of this type of document is the opportunity to separates ownership of assets from the individual. Of course, there are other ways to do this. Nonetheless, this means placing assets under the control of a trustee.
Legal separation is important because makes it more difficult for creditors or claimants to access the assets. This offers a layer of financial security.
This trust type is especially useful for professionals and business owners who face a higher risk of legal action. By placing assets into a trust, individuals can protect wealth intended for family inheritance, retirement, or long-term investments.
Additionally, these types of tools can help with estate planning, reducing estate taxes and ensuring a transition of wealth to beneficiaries.
Many of planning strategies are structured in jurisdictions with favorable trust laws—such as Nevada or South Dakota domestically, or offshore in countries like the Cook Islands—further enhancing their protective benefits.
While these trusts must be carefully structured to comply with laws and avoid fraudulent conveyance, when properly implemented, they offer robust protection.
Overall, an asset protection trust is a proactive strategy for individuals seeking to preserve wealth, maintain privacy, and minimize exposure to future legal and financial risks.
How long does a trust last depends whether the trust document grants a trustee to remove property or assets upon defined triggering events. Otherwise, the rule against perpetuities may decide for you.
As simple as this issue might appear, when or if a trust will end depends on a number of factors. This includes:
Type of Trust Created
Capacity of the Grantor
Assets Involved
Terms of the Trust
State Law of the Grantor
Residency of the Beneficiary/Trustee
Type of Trust Created
The first element in reviewing trust duration is identifying the type of trust created. For example, A testamentary trust is going to be subject to ongoing court supervision, creating less flexibility.
For those unfamiliar with a testamentary trust, this type of arrangement is created at death using a will. Because these types of documents are highly scrutinized, they have become increasingly unpopular through the years.
Compare this to an inter vivos trust, which allows for a Grantor to be more creative in their timing of asset distribution. When you put the power in the hands of the person or couple creating the trust, by default, have more options.
Trust Lifespan and the Grantor
The duration of an inter vivos trust, like a revocable trust, is closely linked to the lifespan of the grantor. A grantor is the individual who establishes the trust.
Unlike an irrevocable trust, which typically has a fixed lifespan, a revocable trust offers the grantor the flexibility to make changes or revoke the trust entirely while they are alive and have capacity. This feature makes the duration of a revocable trust inherently tied to the grantor’s lifetime.
Living Beneficiaries Impacts Trust Duration
When trust duration or when a trust can get continued, the number of living beneficiaries must be considered. In other words, the Rule Against Perpetuities (“RAP”). This is generally handled by the trustee and their representation.
In general, the rule against perpetuities says that a trust could last for the lives of all relevant people who were alive when the trust was formed, plus twenty-one years. Unfortunately, Minnesota’s RAP is a little more complicated.
Terms of the Trust
How long a trust might last can depend on the terms of the document too. For example, a grantor can end or terminate a trust upon a specific event like reaching a certain age.
Another reason that a trust might end or fail to continue is the result of an economic inefficiency. When trust assets fail to generate sufficient returns to cover administrative costs or sustain the intended distributions, perhaps this means dissolving the trust.
Further, trust duration may be impacted by the situs state of the trust too. The situs state of a trust holds paramount importance due to its legal and jurisdictional implications. It determines the governing law, tax regulations, and court jurisdiction for the trust.
How Long Can a Trust Last?
As you can imagine, trust duration is different in every state. Every state has their own rule on determining how long a trust instrument can last. Some states are favorable, while other states are not.
States that suggest giving trusts an opportunity to last up to 360 years include Alabama, Florida, Georgia, Mississippi, Nevada, and Tennessee.
A state that has hinted at granting trusts an opportunity to last up to 500 years is Arizona. States that have suggested a trust duration of up to 1,000 years are Alaska, Colorado, and Wyoming.
Believe it or not, there are other states that suggest an unlimited period that a trust can continue. This includes Arkansas, Delaware, District of Columbia, Hawaii, Idaho, Illinois, Kentucky, Maine, Maryland, Michigan, Missouri, Nebraska, New Hampshire, New Jersey, North Caroline, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Utah, Virginia, and Wisconsin.
Trust duration is a powerful tool in shaping one’s legacy and securing the future. By understanding the intricacies of trusts, individuals can navigate the complexities of estate planning with confidence.
A Veteran Benefits Trust is exclusive to former members of the military and their spouse. This type of trust is used for planning VA pension benefits or Medicaid.
Veteran Trusts for VA Benefits
Veteran Trusts are exclusive to those that served and designed to shield assets from creditors, like the State or a Nursing Home.
Even more importantly, they identifying assets as non-countable when addressing your eligibility for VA Benefits.
If you are a military family and you like the idea of protecting and preserving your assets or accounting for your Thrift Savings Plan, you found the right place.
Why VA Benefit Trusts Are Irrevocable
There is a very good reason why a Veteran Benefits Trust is irrevocable. This is done to protect and preserve the asset for beneficiaries.
In other words, it is a legal arrangement, where assets are transferred by the grantor. Then, the veteran relinquishes ownership and control permanently. This is done to protect the assets.
Ultimately, a VA benefit trust offers military families an opportunity to preserve and secure their legacy. This can be critical when considering the value of a home, cabin, gun collection, and or financial account.
Audio About a VA Benefits Trust
VA Forms for a Veteran Benefits Trust
In addition to the creation of the trust, a military veteran may need support with communicating the right message between them and the VA.
Here is a short list of related VA forms often needed when seeking protection under a VA benefit trust.
Appointment of Claimant’s Representative
The Veterans Administration uses Form 21-22A to allow a military veteran and or their family member to appointment an attorney as their representative.
This form is needed for the purpose of working with the VA throughout the eligibility determination process.
Unfortunately, Aid and Attendance is not a guaranteed benefit. Before applying for this benefit, many military families will seek and or set up a VA Benefit Trust.
Pension Applications and Non-Service Pensions
Specific to pension applications, VA Form 21-527EZ is used when the Veteran is applying for non-service connected pension benefits.
Application for DIC, Death Pension and or Accrued Benefits
VA Form 21-534EZ is used when the Surviving Spouse of a Veteran or a Veteran’s dependent is applying for non-service connected pension benefits.
Disclosing Personal Information to a Third Party
As veterans, our information has been stolen or lost more times than I am willing to acknowledge. To prevent this from reoccurring, VA Form 21-0845 is used to authorize the VA to release information to people other than the applicant.
Examination for Housebound Status or Permanent Need for Regular Aid and Attendance
Another difficult component to this process is finding a doctor what is trusted by the Military veteran. For some, this means turning to a VA medical facility.
For others, a private practice doctor is far better. In either case, documenting needs is governed through a specific VA form.
VA Form 21-2680 is used by an applicant’s physician to complete and is where the physician will document that the applicant needs assistance with activities of daily living.
Medical Expense Report
The military veterans form that details the applicant’s fixed recurring monthly expenses and is needed to demonstrate financial need for pension is called VA Form 21P-8416.
Request for Nursing Home Information in Connection with Claim for Aid and Attendance
VA Form 21-0779 must be completed by an administrator at the applicant’s nursing home and it details the type of care the applicant is receiving and confirms his or her residency in the facility.
Lawyer for a VA Benefits Trust
Did I mention that I am a military veteran too? Nonetheless, with my VA accreditation, I help and advise Clients with the VA forms referenced above. Again, prior to the completion of these forms, qualifying military veterans and their spouses may decide to seek out a lawyer for a VA benefits trust.
If you’re searching for an accredited VA attorney, consider contacting this law office for a free visionary meeting. Then, you can share your goals and planning needs.
Submitting Military Records and Documents
Of course, being able to review relevant estate matters and military records requires an attention for detail. Many military veterans are unable to utilize or access a computer.
This law office will facilitate the the most efficient and secure method to assist your needs.
Trust lawyers near , whether in Minnesota or otherwise, play a pivotal role in navigating the complex terrain of estate planning and asset management. If you are looking for a trust attorney, you found the right place.
As an introduction to trusts, the goal of meeting with an attorney practicing in this area is determining if the fit is right. If so, the lawyer you select can help you prioritize a trust type or purpose. Then, drafting and formalizing the trust, funding the trust, and administering it. Sometimes, there is a need to modify a trust document. Either way, this law office services these needs.
Role of a Trust Attorney
Being a trust lawyer, legal issues and matters often overlap. This includes real property, family dynamics, business succession, family farms, special needs, preserving veteran benefits, insurance, disabilities, tax issues, transfers, and many additional economic and fiduciary issues.
Whether crafting revocable or irrevocable trusts, charitable trusts, or special needs trusts, a trust trust lawyer provides personalized solutions tailored to a specific trust purpose.
Audio From a Trust Lawyer
Here is a simple message from a Trust Lawyer near:
Lawyer for a Trust and a Will
In every case, a lawyer drafting a trust is going to advise a person or family to include a will. When a person or family has a revocable trust, a there is a special type of will called a Pour Over Will. This specialized will type serves as a crucial component of an estate plan.
A pour over will ensures that any assets not previously transferred into the trust during the individual’s lifetime are “poured over” into the trust upon their death. Essentially, the pour-over will acts as a safety net. It captures any overlooked or newly acquired assets. Also, it directs the assets into the trust for distribution according to the individual’s wishes.
An attorney drafting a trust and will, is doing so to maintain the integrity and efficiency of the trust. This planning strategy provides continuity by ensuring that all assets, regardless of their nature or timing of acquisition, are ultimately governed by the provisions of the trust.
This streamlined approach simplifies the administration process for the executor and facilitates the seamless transfer of assets to designated beneficiaries. Further, it minimizes the risk of costly probate proceedings and ensuring the fulfillment of the individual’s estate planning objectives.
Services Offered
Estate Planning
Estate planning is a comprehensive process. It involves making arrangements for the management and distribution of one’s assets and affairs in the event of death or incapacitation. It encompasses a range of legal and financial strategies tailored to individual circumstances and goals.
At its core, estate planning aims to protect assets, minimize tax liabilities, and ensure the smooth transfer of wealth to chosen beneficiaries. This may involve drafting wills, establishing trusts, designating powers of attorney, and creating advance directives for healthcare decisions.
Estate planning is not solely about wealth transfer; it also addresses broader considerations. For example, guardianship for minor children, charitable giving, and end-of-life care preferences. By carefully crafting an estate plan, individuals maintain control. Even better, it provides loved ones’ with security of values and priorities.
Moreover, effective estate planning can alleviate family disputes, streamline the probate process, and provide peace of mind.
Trust Administration and Probate
The administration of a trust and court process like probate, manage the affairs of a deceased person in two distinct processes. Both involve settling a deceased person’s estate, each with its own procedures and implications.
Trust administration typically occurs when assets are held in a trust and bypass probate. A trustee, appointed by the trust creator, manages and distributes these assets according to the trust’s terms. This process is often more private, efficient, and cost-effective compared to probate.
In contrast, probate is the court-supervised process of distributing assets. Without a properly funded trust, a court must make certain validations.
While trust administration and probate serve similar purposes—settling a decedent’s affairs and distributing assets—they differ significantly in their procedures, timelines, and costs. Trust administration tends to be smoother and less time-consuming, while probate can be more complex and expensive, often involving court proceedings and potential disputes among heirs.
Trust Attorney in Minnesota
You found a trust attorney in Minnesota. When I meet with a potential client, I do so by phone, email, video, and one-on-one. If you live or work in the Twin Cities, great! Otherwise, where you live is not a roadblock, as this law office serves Clients in all areas of the world.
Again, this law office serves individuals and families with issues specific to a trust, near and afar. So, whether you are limited to a cell phone or reside in Minnesota, this law office is prepared to hear more about your planning goals or the administration of a trust already established.
Edina, Bloomington, Woodbury, Eden Prairie, St. Louis Park, Hopkins, Minnetonka, Minneapolis, Burnsville, Eagan, Plymouth, Wayzata, Blain, Anoka, Prior Lake, Chanhassen, and nearly ever city in-between.
Trust Planning Lawyer in Edina, Minnesota
If you’re seeking a trust lawyer in Edina, MN, consider scheduling consultations to discuss your specific needs and gauge compatibility. A skilled trust lawyer near you should offer personalized advice, transparent communication, and a commitment to protecting your assets and legacy.
By choosing a trusted local attorney, you can navigate the complexities of estate planning with confidence and peace of mind.
Lawyer for Trusts Near Edina, Minnesota
Contact a Trust Lawyer
Contacting a trust attorney about a consultation is as simple as completing the form below. Thus, if you are looking for personalized guidance, this law office looks forward to the opportunity to meet with you.
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.
Presently, the federal gift tax exemption is $13,610,000 per person or $27,220,000 for a married couple. This is scheduled to decrease on January 1, 2026, to about $7 million per person or $14 million for a married couple.
This means there is a significant planning opportunity to use the current high exemption amount. This is important because many parties which to avoid paying an estate or gift tax of 40% on the transfer. This planning opportunity will disappear after 2025 (unless Congress acts to change the law).
It is possible to create trusts that will ultimately benefit your chosen beneficiaries in a manner that is tax efficient. The idea is to protect them from future problems. for example, creditors and divorce. A trust allows for flexibility for the future.
Tax Avoidance Techniques
Estate tax avoidance involves employing legal strategies to minimize the impact of estate taxes on an individual’s wealth transfer to heirs upon death. Taking gift tax exemptions into account, various techniques exist to mitigate the estate tax burden. This ensures that a substantial portion of an individual’s assets passes on to beneficiaries.
One commonly used approach is establishing a revocable living trust. This allows an individual to maintain control over their assets during their lifetime. Also, this helps avoid probate and potentially reducing the taxable estate. Tax avoidance techniques requires an analysis of gifting opportunities, which can be managed through a trust.
Lifetime gifting is another effective technique, enabling individuals to transfer assets to heirs before death, thereby utilizing the annual gift tax exclusion and reducing the taxable estate.
Utilizing the marital deduction is a fundamental method for married couples, allowing the unlimited transfer of assets between spouses without incurring estate taxes. Charitable giving also plays a role in estate tax planning, as donations to qualified charitable organizations may reduce the taxable estate while benefiting the community.
Plan For Gift Taxes
Single persons and families with an interest in using their current high estate and gift tax exemption amount must start their planning process, before this opportunity is taken away by Uncle Sam.
This law office anticipates the rush for such estate planning will be quite high. As a result, consider this process before it is to late.
Recent estate law changes in Minnesota have been significant. Because the estate planning process is going to be exclusive and personal to each and every person, it is difficult to gage whether some of these law changes impact some or many. Nonetheless, here is a very high level outline of a few changes to Minnesota’s estate planning rules and laws.
One change was Minnesota’s adoption of the Revised Uniform Fiduciary Access to Digital Assets Act or “RUFADAA“. This law allows individuals to designate a fiduciary to manage their digital assets, including social media accounts, online banking, and email. Prior to this law, there was no clear legal framework for managing digital assets after a person’s death, which could lead to disputes among heirs and make it difficult to access important information.
Another change or new Minnesota estate planning law was the adoption of the Revised Uniform Trust Code (UTC). This law provides a standardized framework for creating and managing trusts, making it easier for individuals to create and administer these estate planning tools. The law includes provisions for creating a trust without a written document, allowing for greater flexibility in trust creation and management.
In addition, Minnesota has had estate law changes to their tax exemption. As of 2021, the state’s estate tax exemption is $3 million per person, up from $2.7 million in 2020. This means that individuals can pass on up to $3 million in assets without incurring state-level estate taxes. However, it’s important to note that the federal estate tax exemption is much higher, currently at $11.7 million per person, and may still impact larger estates.
Further, Minnesota has also made changes to its laws governing transfer-on-death deeds (TODDs). TODDs allow individuals to transfer real estate to designated beneficiaries without the need for probate. Minnesota has simplified the process for creating and revoking TODDs, making it easier for individuals to use this tool as part of their estate planning strategy.
Again, Minnesota’s estate law changes have been significant in recent years. Although some suggest this offers more flexibility, in reality, we have more regulation requiring our attention.
Funding your trust with Intangible property can be a smart strategy for managing these types of assets. A trust is a legal entity that allows an individual or entity to transfer property to a trustee.
A trustee manages the property on behalf of the beneficiaries. This can be useful for intangible property, which can be difficult to manage and protect on one’s own.
There are several benefits to funding or transferring an asset into a trust. One major advantage is that it can help protect the property from legal challenges or disputes. By placing the property into a trust, designers and entities can help shield the property from legal actions.
Another benefit of funding intangible property into a trust is to ensure the asset is utilized in accordance with the wishes of the grantor. The trustee can be instructed to use the property under specific conditions. This can be particularly important for intellectual property, which can be subject to infringement or misuse if not properly managed.
Funding a trust with property can also provide tax benefits. Depending on the type of trust and the nature of the property, it may be possible to reduce taxes or other liabilities.
It is important to note, however, that funding intangible property into a trust can be a complex process. For this reason, work with an attorney to ensure that the trust is properly established and managed. Additionally, ongoing management of the trust and the intangible property will be necessary to ensure that it continues to provide the intended benefits over time.
Overall, funding intangible property into a trust can be a powerful tool for managing and protecting these types of assets. With careful planning and management, it can help to ensure that intellectual property and other intangible assets are properly utilized and protected for years to come.
Music artists have been historically wrong about the intent of a trust or role of a trustee. If only they knew how certain types of trusts can protect music copyrights.
That aside, it is fun to see major hits calling out trusts. Here are a few songs that mention a trustee or trust:
“Trust Fund Baby” by Why Don’t We – This song is about a person who comes from a wealthy family and has a trust fund.
“Fortunate Son” by Creedence Clearwater Revival – This song talks about how people who are born into privilege and wealth have an easier path in life, and mentions “trust fund kings.”
“Rich Girl” by Hall & Oates – This song is about a wealthy woman who has a trust fund and doesn’t need to work for a living.
“Ain’t No Rest for the Wicked” by Cage the Elephant – This song mentions a “rich old man” who has a trust fund and still works because he enjoys it.
“Money Trees” by Kendrick Lamar– This song talks about the desire for wealth and financial security, and mentions “trust funds for the kids.”
If you need help with the trust drafting process, you found the right place.
It’s important to note that in many of these songs, the mention of a trust or trustee is simply a reference to wealth rather than a specific legal term.
That aside, there are many other reasons to have a trust that are far more significant than monetary issues.
Trust types in Minnesota are nearly endless. The first question to ask when picking a type of trust is to clarify the intended purpose.
The trust purpose is dependent on needs, the property being transferred, and the beneficiary. Before going to far into the different types of trust documents, it makes sense defining what having a trust means.
When or if you decide to meet with a lawyer, their role is to help a person find a trust type that aligns with the Grantor’s goals, while addressing many issues likely never considered.
Trusts are drafted to protect assets, but they are not foolproof in protecting against criminal indictment. The purpose of a trust is just as important as the trust corpus.
In Minnesota, we can turn to Trust Law 501C.0404 for guidance on an inditement. If a trust is established with the intent to defraud creditors for example, it may not be able to protect assets from seizure in the event of criminal charges. Additionally, if the trust is found to be involved in criminal activity or used to shield criminal proceeds, it may be subject to forfeiture by law enforcement authorities.
It’s important to note that simply creating a trust does not automatically protect assets from legal action. The legality and legitimacy of the trust, as well as the actions taken in establishing and managing it, are crucial factors that can impact its effectiveness in asset protection.
It’s always recommended to seek the advice of an experienced attorney with expertise in asset protection when or if you are charged with a crime or need support with asset protection issues.
Digital assets are part of the estate planning process. As a result, knowing the different types of assets can help you plan accordingly. Like any asset type, everybody has something different. Nonetheless, here are 10 key terms to help you get started:
1. Bitcoin
Bitcoin is a digital asset that uses encryption and blockchain technology to record transactions on a global distributed ledger. Created in 2008 as a peer-to-peer payment system, today it is the largest digital asset by market share, but it is not backed by any government, central bank, or physical asset.
2. Blockchain
Blockchain is a method of structuring and securing data into unchangeable blocks of transactions. Any attempt to make changes to an earlier block in the chain would change all the subsequent blocks and alert the network to the attempted change. Once a transaction is entered on the blockchain, it cannot be undone.
3. DeFi
DeFi or decentralized finance “DeFi” broadly refers to a variety of financial products, services, activities, and arrangements supported by smart-contract technology and designed to exist without intermediaries or third parties such as banks, brokers, or clearinghouses. But the degree of decentralization across DeFi applications can differ widely. In some cases, despite claims of decentralization, operations and activities can be highly concentrated in a small group of developers or investors.
4. Digital Wallet
A Digital wallet stores a digital asset owner’s private key—needed to use or spend the digital asset—and public keys, which is how the owner is identified on the blockchain. The private key serves as a digital signature unique to you and must be carefully protected. If your private key is lost or stolen, you will not be able to access your digital assets. There are many kinds of digital wallets, which includes custodial wallets, noncustodial wallets, and hardware wallets.
5. Distributed Ledger
A distributed ledger is a record used to track money coming in and money going out, like your monthly bank statement. A distributed ledger is a public database that runs on many computers around the world. Instead of being centralized—at your bank, for example—a distributed ledger is shared and synchronized among the network participants so there is no single point of failure.
6. Mining
Mining is a very strange type of digital asset. Just like there are gold, silver, and copper mines, there are digital mines as well. Mining is the process of receiving a reward of newly minted digital assets and transaction fees for the work of validating transactions and adding blocks to the blockchain. Miners also maintain copies of the distributed ledger.
7. Money Service Business or MSB
A money service business or “MSB” is a nonbank company that transmits money, offers currency exchange, or that issues or redeems travelers checks or money orders. Currently, digital asset exchanges offering service to customers in the U.S. are required to register as MSBs with the Financial Crimes Enforcement Center (FinCEN) and many states. Registration as an MSB won’t protect us from fraud or other problems, but most fraud is committed by unregistered entities.
8. Non-Fungible Token or NFT
A non-fungible token or “NFT” is a one-of-a-kind digital asset. It is a proof of ownership of a unique asset that is recorded on a blockchain. No NFT is exactly like another, so they cannot be traded one-for-one like virtual currency or other types of tokens.
9. Smart Contract
Another type of digital asset is a smart contract. A computer program that is stored and runs on a blockchain. They may incorporate the elements of a binding contract or run only under certain conditions.
10. Stablecoins
Stablecoins are digital assets that are designed to maintain a stable value relative to a national currency, a commodity, such as gold, or other reference assets.
Therefore, if you need help addressing digital assets as part of your estate plan, consider working with an estate attorney.
Backup planning for a trust or estate plan can sometimes cause a lot of stress. After all, the process means thinking through dooms day. Sometimes, addressing a contingency plan is confusing. Really though, there isn’t a one size fits all. A backup plan is going to be personal and specific to each individual or trust grantor. As a result, here are a few things people often mean when reviewing their trust backup plan.
First, a backup plan is going to be different for each estate planning tool. In terms of a trust, a backup plan starts by determining what will happen when or if a trustee declines the opportunity to serve as a fiduciary. Other times, we are talking about the scenario when a trustee dies. Selecting an alternate trustee is the first issue to many unrelated matters that need addressing during the planning process.
Unfortunately, a well drafted trust agreement also means selecting an alternate and secondary trustees in the event they can no longer serve. If the trust document fails to mention what will happen, a beneficiary might be forced to seek a trust modification under Minn. Stat. 501C.0410. In other words, getting help from a court.
Seeking court approval to modify a trust due to a failed backup plan is hardly an ideal situation. This is true because for many families, the point of creating a trust in the first place was to put in place a probate avoidance plan.
Another popular reason for forming a trust is privacy. In other words, we do not want our assets and distribution choices shared in an open forum, like probate court. Because public proceedings breach privacy, modifying a trust in a public forum due to poor planning can feel disastrous.
Second, a trust agreement or declaration should always close the circle on backup trustees. In other words, identifying three or more people who can serve as a trustee isn’t good enough. Instead, offering a final strategy like a corporate trustee can really reduce the need for trust administration by way of the judicial process. For families who do not like like the idea of engaging a corporate trustee, sometimes selecting the eldest heir can also put the grantor of a trust at ease.
Again though, backup planning for a trust is more than thinking through dooms day or the resignation of a trustee. Backup planning also means addressing changes to our tax code, accounting for inflation, disabilities encountered by beneficiaries, and marital conflicts just to name a few.
Therefore, working through the backup planning process to a trust is very much as critical as the primary plan.
Audio for Thrift Savings Plans and TSP Beneficiary Forms
Thrift savings plans are assets requiring a different attention to detail than other financial products. This is true because TSP Beneficiary Forms are designed and managed by our federal government.
Families contribute to these types of assets for obvious reasons. On the other hand, long term care issues, grandchildren, litigation, carelessness, and divorce are events that must be considered in various tools outside a beneficiary form.
FRTI states they spend participant money wisely; and
TSP Beneficiary Forms unfortunately use a block lettering system.
As great as these assets might be for Federal Employees and military families, I am fearful of unintended consequences.
For example, voiding a beneficiary form because a name could not fit into their block system. Or, placing assets in a trust that isn’t prepared for a TSP asset. In other words, a beneficiary form that is incorrectly completed, might inadvertently get taxed at a higher rate or offered to a nursing care facility. Other times, families incorrectly expose an asset to a divorced spouse or a divorced adult child that had once married into the family.
I like to see our military and civil service families weigh the following:
Has each Thrift Savings Plan or Beneficiary Form been updated?
Does the accumulation of wealth make a Bypass or Credit Shelter Trust more significant?
Could an accumulation or conduit trust help streamline a specific goal or outcome?
Does a durable power of attorney document address an opportunity to fix or change beneficiary forms in the future?
Unfortunately, occupational hazards make these issues important for the young and old.
Therefore, if you have a Thrift Savings Plan and need personal attention or advisement, or need support with certain estate planning tools, please consider the above mentioned issues as an introduction to Thrift Saving Plans.
Separate trusts are good for some and bad for others. The issue is whether a trust should hold an exclusive asset like a retirement benefit or included as part of an aggregate?
Really, the issue depends on answers to a handful of questions:
An all encompassing trust that commingle assets can stink. First, doing so can be difficult for the trustee to pin down whether a distribution came from one asset or another. Second, the trust agreement must be clear on distributions.
From the perspective of Trustees and Trust Administrators, putting all assets into one trust probably isn’t ideal. That said, the terms of the trust is going to be the most important factor in reducing administrative nightmares.
Are Separate Trusts Worth It?
On the other hand, separate trusts might not be the best response either. Although there isn’t necessarily a set level where dividing retirement benefits from other assets is ideal, long-term costs should be addressed.
This is especially true when the beneficiaries are minors and the Grantor or Donor cannot predict the long-term needs for each child.
For some, a family pot trust may be a better option than having a separate trust.
One of Many Goals for Retirement Benefits
One size does not fit all. And, each family should put their own goals and needs first.
Families considering one trust or weighing separate trusts have an important job. The job is putting loved ones first and making decisions on their behalf while there is still time.
Unfortunately, these types of decisions are layered with tax issues and finding the best path for an Eligible Designated Beneficiary.
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.
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:
Accumulation Trust
Active Trust
Alimony Trust
Animal Trust
Annuity Trust
Bank Account Trust
Bitcoin Trust
Blended Trust
Blind Trust
Bond Trust
Business Trust
Bypass Trust
Charitable Remainder Annuity Trust
Charitable Remainder Trust
Charitable Trust
Children Trust
Claflin Trust
Clifford Trust
Common Law Trust
Community Trust
Complete Voluntary Trust
Complex Trust
Constructive Trust
Contingent Trust
Credit Shelter Trust
Custodial Trust
Destructible Trust
Directory Trust
Direct Trust
Discretionary Trust
Donative Trust
Dry Trust
Educational Trust
Equipment Trust
Equipment Trust
Estate Trust
Ex Delicto Trust
Executed Trust
Executory Trust
Express Active Trust
Express Private Passive Trust
Express Trust
Fixed Trust
Foreign Situs Trust
Foreign Trust
Generation Skipping Trust
Governmental Trust
Grantor Trust
Gun Trust
Honorary Trust
Illusory Trust
Imperfect Trust
Imperfect Trust
Implied Trust
Indestructible Trust
Insurance Trust
Inter Vivos Trust
Investment Trust
Involuntary Trust
Irrevocable Trust
Land Trust
Life Insurance Trust
Limited Trust
Liquidating Trust
Living Trust
Marital Deduction Trust
Medicaid Qualifying Trust
Ministerial Trust
Minnesota Trust
Mixed Trust
Naked Land Trust
Nominal Trust
Nominee Trust
Nondiscretionary Trust
Oral Trust
Passive Trust
Pension Trust
Perpetual Trust
Personal Trust
Pour Over Trust
Power of Appointment Trust
Precatory Trust
Presumption Trust
Private Trust
Protective Trust
Public Trust
Purchase Money Resulting Trust
Qualified Terminable Interest Trust
Real Estate Investment Trust
Reciprocal Trust
Remedial Trust
Resulting Trust
Retirement Benefits Trust
Revocable Trust
Savings Account Trust
Secret Trust
Self-Setttled Trust
Shifting Trust
Short Term Trust
Special Trust
Spendthrift Trust
Split Interest Trust
Sprinkling Trust
Support Trust
Tentative Trust
Testamentary Trust
Totten Trust
Transgressive Trust
Unit Investment Trust
Unitrust
Vertical Trust
Veterans Trust
Voluntary Trust
Voting Trust
Wasting Trust
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.
A living trust shouldn’t feel like algebra. If you are considering a Living Trust or want to know more about what it means and how it works, then consider my simplified definition.
In general, this type of estate planning tool is a piece of paper that is controlled while we are alive. In other words, a document that allows flexibility.
When we die or become incapacitated, a living trust turns into an irrevocable trust. So, getting the living trust language right the first time is important.
If you need help addressing the good, the bad, and the in-between of this tool, you found the right place.
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 versus outlining everything that you should write.
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:
Transfering a house into a revocable trust is the process of funding the trust. When this process goes bad, mortgage payments can balloon and property can end up in the wrong hands.
To reduce these risks, there are generally 4 issues needing review before a home is moved into a revocable trust.
Even though each issues is specific to the property itself, knowing what to ask may help homeowners make longevity decisions in favor of their spouse, children, or heirs. Sometimes, even pets.
Perhaps i is obvious, but looking at the current deed of a property before moving a home into a revocable trust is an important step. Of course, there are others steps, but obtaining and reviewing the deed cannot be overlooked.
Reviewing the deed is important because the deed identifies the owner and legal description.
Then, these elements should be compared with other legal documents, like a marriage license or birth certificate or the County Recorder’s Office.
If either one of these elements are wrong, likely the deed should be corrected prior to a conveyance into a revocable trust.
Review the Mortgage
The next issue is determining whether the mortgage itself, supports a transfer. This is important because of the risk concerning due on sale clause. If there is more than one mortgage, then each mortgage needs to be reviewed.
Defaulting on a mortgage for an unauthorized transfer or breaching a due on sale clause are scary scenarios to be avoided at all cost. Likely, this means involving the mortgage company and asking the lender for an approval to certain documents.
Thus, double and triple checking the mortgage language before funding a revocable trust with a home is non negotiable.
Homeowners Insurance Problems
Yes, transfering a house into a revocable trust can cause insurance problem or a lapse in coverage. The answer to this issue is also found within long winded insurance policies.
For this reason, inquiring with the homeowner’s insurance agent or asking the insurance company to add a trustee of the trust can prevent insurance problems.
Conveyance Forms
Conveyance forms are specific pieces of paper used in Minnesota to track property transfers. Upon first glance, Minnesota has more than ten pages of possible forms. As a result, guessing is not an option.
When a revocable trust us funded with a home, many families weigh the pros and cons of a quit claim deed versus a warranty deed.
Other times, families forego a conveyance all together and seek out a Transfer on Death Deed (TODD).
As a result, transfering a home into an inter vivos trust requires reviewing which conveyance form is best.
Transfering a Home and Tax Consequences
Preventing a taxable event before transfering a residence into a revocable trust is a common goal. Before conveying real property into a trust, reviewing the tax consequences from the perspective of the Grantor, Trustee, and Beneficiary is a necessity.
Other issues to consider is the homestead creditor protection or property tax exemptions. Otherwise, here is another great resource created by the IRS.
Final Funding Thoughts for a Home
Perhaps funding a revocable trust with a house looks daunting. That said, this is all about reducing risk.
From a practical perspective, taking prudent steps to prevent problems is easier than fixing problems.
Patrons wishing to make a gift to their church are running into problems when they try to incorporate wishes into an estate plan. Luckily, there are some strong alternatives.
Legal Forms to Help Gift to a Church
Generally, an estate plan can utilize eight (8) different ways to make a gift to your Church. Unfortunately, each method or form can bring with it a different set of problems.
8. Prayer, 7. Your time, 6. Cash gift before death, 5. Transfer on death deed, 4. Beneficiary forms, 3. Irrevocable trust, 2. Revocable trust, and 1. Will
Estate Gifts versus Tithe or Tithing
I hope this doesn’t happen to your family, but entering an ICU or long term nursing care facility can really drain one’s assets. In my experience, identifying a specific cash donation within a will or trust is a poor plan. For one, nobody really knows how much we will have when we die.
Instead of adding an exclusive cash gift, I like the idea of designating a strict percentage. For example, I bequest five percent (5%)….to ___________. For some, the idea percentage is a set percentage called tithing.
Again, if we are lucky to die with assets, then contributing a specific percentage is easier to manage and is less likely to make life difficult for a Personal Representative.
Best and Worst Way to Gift to a Church
There isn’t a best way to make a gift to a church. If folks are able, then great. If they cannot, then that is okay too.
That said, there are a few methods of gift giving that I discourage.
The first method I discourage folks from making is the process of gifting their home. Quite frankly, very few churches want to manage real estate.
Personally, I like the idea of granting a Trustee an opportunity to sell a residence on behalf of a person and using the proceeds as desired. In other words, making it easy on a Church to accept a cash gift versus a home.
The second method I discharge folks from making is the process of making a church or a pastor an executor. Again, most folks would agree that a church is by our side for spiritual guidance versus the estate transfer process.
Thus, if gifting to a church is what a person desires, make the process easier by using a trust or will.
If you need help with this process, please contact me.
When I think about Grandma’s revocable trust, I think about her independence. Wow, she is unbelievably strong and mentally sharp. Like you, I love my grandmother.
That said, there will be a day, when a grandmother will need help from her trustees. On that day, her trustees will be asked to determine whether Grandma should fund a different kind of trust, to avoid the agony of handing her assets over to the State.
Here are two possible alternatives:
Supplemental Needs Trust
Special Needs Trust
If you have the time, lets take a quick look at these types of documents.
Supplemental Needs Trust for Grandma
As an alternative to Grandma’s revocable trust, consider a supplemental needs trust. A supplement needs trust helps grandma pay for needs not provided by a government-funded program. These types of trusts are for people of any age, provided they are not 65 years old or older, have a disability and are living in a long-term care facility.
In other words, if Grandma wants to utilize a supplemental needs trust, she needs to make it happen before she enters a nursing home. Between you and me, I wish this wasn’t the case. But, Minnesota law 256B.056 tells us differently. Otherwise, families risk a State audit or declaration document and exposing assets to creditors (like the nursing home).
Even more cool, is the fact these types of trusts allow for beneficiaries, like children and grandchildren. Provided the beneficiary themselves doesn’t establish the trust (or act as the trustee), this type of estate planning tool can provide a lot of relief.
Special Needs Trusts for Grandma
Another alternative to Grandma’s revocable trust is a special needs trust. Unfortunately, these types of trust documents are far more strict and less exciting. Why? Because Grandma’s assets usually end up with the State or health care provider.
None the less, a Special Needs Trust is for Grandma when she has a disability and is older than 65 years of age. The reason Grandma might like this type of setup is because it protects her assets through her lifetime. For those wondering, the rules applicable to a special needs trust is a fancy law called the Omnibus Budget Reconciliation Act of 1993, or OBRA.
Grandma’s Revocable Trust is Easy to Covert
If you stepped away to help your grandma with the cable tv, know that her trustee should be able to covert or transfer assets from a revocable trust to a trust document described above. Really, it boils down to whether or not Grandma has a disability and her age.
Personally, I like the idea of adding an amendment or clause to a revocable trust granting the trustee this type of control. Other times, people create a supplemental needs trust, fund it accordingly and lean on their trustee(s).
The rules for an IRA rollover change on an annual basis. Because an IRA cannot be owned by a trust outright, this post is about identifying a spouse as a beneficiary of an IRA and thinking through who or what should be the contingent beneficiary.
IRA Rollover: Why Do We Care?
It is very simple. We care because we want to reduce taxes. When our spouse dies, we have 60 days to roll the account over and reduce a tax penalty.
IRA Rollover Intentions
Assuming neither spouse has died, making choices to help reduce tax problems is a luxury. If a rollover is intended, I like the idea of identifying a spouse as a primary beneficiary.
I like this process for a few reasons. First, it grants my spouse an opportunity to complete a rollover of an IRA. Second, I want my spouse to utilize distribution options that favors prosperity.
Would you believe people identify their trust as the primary beneficiary of an IRA? Unfortunately, this is a huge mistake.
IRA Rollover into a Trust
The bad part about making a trust the primary beneficiary of an IRA is the fact doing so might accelerate withdrawal requirements.
Without including specific language within a trust like a “pas through” clause, dumping our assets into a revocable trust might create an even bigger tax burden. For this reason, I believe mapping out a distribution flow plan can help us and our loved ones from accidentally subjecting themselves to a 10% withholding penalty.
Handling An IRA Rollover
Ultimately, I believe there are three things to consider when discussing our estate with our spouse.
What happens if I die first,
What happens if we die at the same time, and
How can we preserve or reduce a tax burden for our children and grandchildren?
My IRA Rollover Process
When I meet with folks about these types of issues, the first thing I look for is obtaining written copies of the beneficiary designations for all retirement accounts. Often, people do not remember who is named on their accounts or whether they selected a back-up.
Additionally, I believe this process requires engaging a CPA or Certified Public Accountant.
Thus, before you start naming a trust as the primary beneficiary of an IRA Rollover, please contact this law office.
Yes, MN taxable estate laws are strict. Unfortunately, Minnesota is 1 of 14 states (including the District of Columbia) that have an estate tax.
In 2024, the state tax exemption amount is a math problem. As you can see under Minnesota Statute 291.016, the exemption amount is $5,000,000 minus an amount based on the date of death.
Luckily, a trust can be a powerful tool in estate planning to mitigate and reduce estate taxes, providing individuals with a strategic way to preserve and transfer their wealth to future generations. Estate taxes, also known as inheritance taxes, can significantly diminish the value of an estate passed on to heirs. Establishing a trust allows individuals to navigate the complexities of tax laws and optimize their estate for tax efficiency.
Credit Shelter Trusts Reduce Tax Liability
One common way to alleviate estate taxes is through a bypass trust or credit shelter trust. This type of trust is structured to leverage the available estate tax exemptions. These trusts allow individuals to make use of their applicable exclusion amount by sheltering a portion of their estate from taxation.
Bypass or credit shelter trusts are particularly beneficial for married couples, as it helps maximize the combined exemption amount, protecting a more significant portion of their wealth from estate taxes.
Irrevocable Trusts and a MN Taxable Estate
Another type of trust used to prevent a MN taxable estate is an irrevocable living trust. Unfortunately, placing assets into an irrevocable trust relinquishes ownership and control of those assets.
That said, it effectively removes them from their taxable estate. This can result in a substantial reduction in the overall value subject to estate taxes.
Other Taxing Reasons for a Trust
In addition to minimizing the taxable estate, trusts offer flexibility in distributing assets to heirs. Specific instructions can be outlined in the trust document, ensuring that the assets are distributed according to the individual’s wishes while taking into consideration potential tax implications for beneficiaries.
It’s crucial to consult with legal and financial professionals when considering the use of trusts in estate planning. They can provide personalized guidance based on the individual’s financial situation and goals, ensuring that the trust is structured in a manner that complies with tax laws and achieves the desired tax savings.
Overall, utilizing a trust as part of an estate plan can be a strategic approach to reduce estate taxes and preserve wealth for future generations.
A Minnesota Gun Trust is a strong move for any person wishing to protect their collection from landing in the wrong hands or subjecting their family to an expensive probate proceeding.
Yes, there are legal issues to consider like trigger points for the government, the age of trustees, and making sure your successor can pass a background check.
Also, a few extra forms to satisfy. But all in all, a worthwhile process to reduce the risk of probate and heartache.
To nobody’s surprise, these same rules apply to you and your list of trustees who handle the guns. Sometimes, the ATF refers to this person as the “Responsible Person”.
The number one issue for every person wishing to create a Minnesota gun trust is identifying a “trustee” that is authorized to take possession of the weapon(s) being transferred.
What type of firearms can you transfer into a Minnesota Gun Trust
As a general rule, if your firearm has a serial number, you can transfer your firearm into a Minnesota Gun Trust.
If the gun does not have a serial number, then I like the idea of preparing as if it had a serial number.
Minnesota Gun Trust for antique guns
Yes, antique guns and unserviceable weapons can be transferred into a Minnesota Gun Trust too.
Forms and documents for a Minnesota Gun Trust
There are many forms and documents needed to transfer a firearm into a Minnesota Gun Trust. Again though, filling out forms is a lot easier versus family members running to a court house to probate hunting weapons.
Here is a short non exclusive list of the forms generally needed to transfer a firearm into a Minnesota Gun Trust:
A formal list identifying all Responsible Persons,
Finger print card (FD-258) for all Responsible Persons [order this form versus printing it], and
ATF Form 5320.23, which is a questionnaire for each Responsible Person (order a form for each Responsible Person).
Who is a Responsible Person?
According to the ATF, a responsible person is any person associated with an entity or an estate or an individual.
For some, this means finding a military veteran in the family. For others, a responsible person is any person who might become a trustee for your Minnesota Gun Trust.
Minnesota Gun Trust Trustee vs Responsible Person
The person in charge of an estate is called a Trustee. A trustee for a Gun Trust is responsible for the firearms.
Yes, while a gun owner is living they are the trustee. On the other hand, a gun owner can identify reasons when or why they want to identify a different person as the trustee of a firearm.
On its face, I know this element seems confusing. As a result, I find consultations are extremely valuable during this process.
What information does the ATF need from the Responsible Person?
Here is what the ATF needs from the Responsible Person:
Full legal name,
Social security number,
Home address,
Address for the last five years,
Country of citizenship,
Place of birth (City and State),
Ethnicity,
Gender, and
Home telephone number.
Taxes to transfer a firearm into a Minnesota Gun Trust
The following types of transfers are tax exempt or less than $5 per transfer:
Your firearm is unserviceable,
Your firearm is being transferred to an heir or operation of law,
The term fund revocable trust can be scary for some and annoying for others. Unfortunately, funding laws in Minnesota keep changing.
In Minnesota, the process to transfer your assets into a revocable living trust depends on the asset. In general though, this can be outlined in a few straightforward steps.
Whether you like the idea of thinking through this like a cardboard box or otherwise, this is important to beneficiaries.
In other words, a critical step for any person having a trust is to “re-title” your assets and property such that they match the title and wishes expressed within your trust.
Fund Revocable Trust: Step 3
The third and final step for a person in Minnesota looking to fund a revocable trust is to determine who will complete the funding process.
Some seek out professional advisement to avoid pitfalls, while others prefer other methods.
Reviewing Federal Estate taxes in Minnesota is fun to explore. OK, perhaps this topic can be daunting. Death and taxes, right?
The intent of this article is to identify categories of Federal estate taxes many Minnesotans need help with when trying to create or manage an estate plan.
If you become lost or confused, lets not forget the significance of the self-hep section of the IRS website. Also, seek advice from your Certified Public Accountant or CPA. If you do not have a CPA, consider looking HERE.
Federal Estate Taxes and Gift Taxes
The first significant category of Federal Estate taxes in Minnesota are gift taxes. Gift taxes and generation skipping transfer taxes (GST) go hand in hand.
For the purpose of this section, gift taxes and GST are being reviewed before a person dies.
The annual gift tax exclusion amount in the year 2014, 2015, and 2016 is $14,000.
Yes, the IRS imposes a gift tax for each calendar year on the transfer of property by gift from any person to another person or trust. These types of taxes are reported on an IRS form called Form 709. Instructions for this form can be found HERE.
3 Gifts that are not Taxed
Right now, the gift tax rate is based on the year in which the gift is transferred. Luckily, we still have three types of gifts which are generally excluded from our taxable income:
Gifts to political organizations,
Gifts of tuition made to a qualifying educational institution on behalf of an individual are not taxable, as long as the payment is made directly to the educational institution,
And, medical expenses on behalf of an individual when paid directly to the individual or to the medical institution that provided care.
Federal Estate Taxes and Death Taxes
The second most significant category of Federal Estate taxes in Minnesota are death taxes. For the purpose of this section, death taxes occur after a person dies.
The person most likely stuck or required to manage this element of your estate plan is your Personal Representative. In case your personal rep does not know, death or estate taxes after a person dies are reported to the IRS using a form called Form 706.
At the date of this article, the basic exclusion amount is $5,430,000. Spouses wishing to take advantage of significant tax benefits should consider seeking advisement.
Estate Planning and Federal Estate Taxes
If you need help with your estate planning and are concerned with Federal Estate Taxes, contact this law office for help.
A revocable trust in Minnesota is not a document solely for the rich or wealthy.
Yes, a revocable trust is a fantastic way to reduce stress in your family and reduce the possibility of having your affairs managed by a probate court.
Minnesota has very specific rules governing trusts. If you need help or have questions about a revocable trust in Minnesota, contact this law office for help.
But wait, what is it? Keeping it simple, a revocable trust in Minnesota is a document that acts much like a cardboard box. A revocable trust allows you to put your “stuff” in a box and hand deliver or distribute it among your friends and family when you are no longer able to think on your own behalf or when you die.
Sticking to my box example, a revocable trust is an opportunity to move your stuff without needing a moving company like a probate court.
Still confused? Revocable trusts in Minnesota are documents used to transfer assets to friends, family, and entities without requiring your assets to be reviewed or managed by a Court. The use of a revocable trust keeps your distribute private and is implemented at your command.
Is a revocable trust in Minnesota complicated?
Your revocable trust can be as simple or as complicated as you desire. For example, some people want their stuff or assets divided equally among their children or grandchildren. Other people, like Coach Dean Smith, prefer to add details like paying for a dinner in their honor.
Yes, a person can have a revocable trust in Minnesota. However, a “trust” can mean many different things because they are documents used to describe a specific goal or process.
Yes, the most common type of trust is a Revocable Trust in Minnesota. However, people sometimes inquire about an irrevocable trust and or a special needs trust. If you have questions about the differences, please contact this law office for help.
What is the hardest part about a revocable trust?
The hardest part about a revocable trust in Minnesota is funding the trust.
Continuing with the analogy above, funding a revocable trust is the actual process of placing your stuff inside the box. Generally, a person seeks help building the box. The person in charge of placing your stuff inside the box can be you, your accountant, an attorney, etc.
How do you fund a revocable trust in Minnesota?
I may have simplified the funding process in 3 simple steps. That said, the process depends on the asset.
For example, adding your car to a revocable trust is different than adding a bank account to a revocable trust.
Also, a person will not necessarily put all of their assets into a Minnesota revocable trust because of tax consequences or to prevent their stuff from being distributed among other assets.
How long does it take to write a Revocable Trust in Minnesota?
The time required to draft, edit, and for a Client to formalize a revocable trust largely depends on a person’s organization. Some people are able to identify their assets very easily while others have not visited their bank for many years.
On the other hand, if a person is experiencing a medical issue, the process to draft, edit, and formalize a revocable trust in Minnesota should be expedited. Yes, it is very common for this law office to expedite the drafting process to accommodate the health of a Client.
How many beneficiaries can you list in a revocable trust?
Here is another wonderful benefit to a revocable trust versus not having a revocable trust – you can pick as many people (young and old) and entities (your Church, a park, scholarship fund, charitable organization, etc.) as you wish. Also, a revocable trust helps keep your wishes private.
However, if you do not have a revocable trust, your affairs may become public upon being distributed by a probate court.
Do you need an attorney to create a revocable trust?
This law office is biased. Yes, it is my opinion you should contact a lawyer to draft your revocable trust in Minnesota.
Given the legal rules and laws applicable to revocable trusts, keep it simple and don’t create more headaches for your family and friends.
