Estate planning is a key part of ensuring that your assets are properly distributed after you’ve died. One of the many estate planning options available is to create a living trust in which you can put your assets and property. However the process for creating a living trust can vary from state to state, and Minnesota is no exception. If you’re just starting the process of planning your estate, it can be helpful to talk to a financial advisor. SmartAsset’s free tool can match you with advisors that fit your needs.
How to Create a Living Trust in Minnesota
Here’s how you can go about creating a living trust in the North Star State:
A living trust is a legal document that allows you to grant ownership of your property and assets to certain beneficiaries after you’ve died. As part of this arrangement, a trustee is in charge of managing the trust’s contents, following the instructions left in the trust and distributing the appropriate assets and property to the correct parties. You can be the trustee of your own trust, or you can nominate a friend or trusted relative to the role.
Living trusts can be revocable or irrevocable. If you create a revocable living trust, you’ll be able to remove property and assets and modify anything else as you see fit. An irrevocable trust cannot be altered once property or assets are placed in it without express permission from all parties named in the trust.
With a revocable trust, you personally owe taxes on everything placed in the trust, as it’s still under your ownership. On the other hand, an irrevocable trust is taxed as a separate entity.How Much Does It Cost to Create a Living Trust in Minnesota?
The cost of creating a living trust depends on whether you do it yourself or hire an attorney to help you. You can use software to put together one yourself for usually less than a couple hundred dollars, and an attorney often costs more than $1,000. While using an attorney is more expensive, there are risks to DIY estate planning, so consider all the factors before deciding to try it yourself.
If you do decide to seek the help of an attorney, make sure you use a trust specialist and not just a general estate planning attorney. Many estate planning attorneys only help with wills and probate, so its helpful to work with one who focuses on trusts.Why Should You Get a Living Trust in Minnesota?
One of the biggest reasons that living trusts are so popular is that they basically allow your beneficiaries to skip probate. Probate is the process of proving a will, and it can be time-consuming, stressful and expensive.
That said, Minnesota is one of only several states in the nation that uses Uniform Probate Code. This standardizes the probate process and avoids some of the headaches associated with it. So in many cases, creating a living trust in Minnesota may be more trouble than it’s worth.
Another reason to get a living trust is that it makes leaving property or assets to a minor far easier. With a living trust, you can specify that the successor trustee hold onto certain assets until a minor beneficiary reaches a certain age. A living will also allows you to avoid conservatorship should you become incapacitated, given that you’ll already have a successor chosen.Who Should Get a Living Trust in Minnesota?
You don’t need to be wealthy to get a living trust, but it’s important to consider the amount and complexity of your assets before deciding to create one. If your estate is fairly straightforward, a living trust may not be the best idea. This is especially true in Minnesota because of the state’s participation in Uniform Probate Code. If your estate is complicated and you have lots of different kinds of assets and property, a living trust may be a viable choice.Living Trusts vs. Wills
You’ll almost certainly need to create a will even if you do decide to go for a living trust. This will help take care of property that you don’t include in your living trust. It may also review other instructions that pertain to your estate.
Neither of these should be confused with a living will, which dictates what medical action should be taken if you become incapacitated. A will can also perform the following functions:
The following chart can help you better understand the difference between a will and a living trust:Living Trusts vs. Wills Situation Living Trusts Wills Names a property beneficiary Yes Yes Allows revisions to be made Depends on type Yes Avoids probate court Yes No Requires a notary Yes No Names guardians for children No Yes Names an executor No Yes Requires witnesses No Yes Living Trusts and Taxes in Minnesota
You should also know about the federal estate tax, which is applied to estates worth more than $11.4 million. These taxes apply to all estates regardless of whether they have a living trust or not.Bottom Line
A living trust can save your loved ones the trouble of going through the probate process, along with providing other benefits as well. Creating a living trust takes planning, time and money, but it can certainly be worth it for the right person. So do your research and see if a living trust makes sense for your situation. Don’t forget to consult with an attorney and your financial advisor before beginning the process.Tips for Estate Planning
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