WILLS & TRUSTS MN
Revocable Living Trusts
What is a ``Trust``?
A trust is where one person, the “trustee”, holds the title to and manages property for someone else’s benefit. The trust is established by the “grantor”, and benefits the “beneficiaries.” A trust can hold a house, personal property, money, insurance proceeds, or other personal or real property. A beneficiary can be almost anyone – a family member, a friend, a charity, or even in some cases, the trustee. Trusts are an incredibly powerful tool for protecting your legacy and ensuring that your wants and needs for estate planning are met.
What is a ``Trust``?
A trust is where one person, the “trustee”, holds the title to and manages property for someone else’s benefit. The trust is established by the “grantor”, and benefits the “beneficiaries.” A trust can hold a house, personal property, money, insurance proceeds, or other personal or real property. A beneficiary can be almost anyone – a family member, a friend, a charity, or even in some cases, the trustee. Trusts are an incredibly powerful tool for protecting your legacy and ensuring that your wants and needs for estate planning are met.
Essentially, if Bob gives ten dollars to Sue, telling her to hold it for 1 week then give it to Joe, a trust has been formed.
A trust can hold a house, personal property, money, insurance proceeds, or other personal or real property. A beneficiary can be almost anyone – a family member, a friend, a charity, or even in some cases, the trustee. Trusts are incredibly powerful tools for protecting your legacy and ensuring that your wants and needs for estate planning are met.
A common misconception is that trusts are only for the well-to-do who have large estates. But this is entirely wrong. Trusts have a place in the estate plans of all kinds of people, including those with only modest estates. Trusts can be used to protect assets from creditors, shield an estate from certain taxes, or preserve property for children. They can be used to allow a person on disability to receive an inheritance and not be kicked off of their government benefits. They can be used to manage assets and funds for those who are incapable of doing so themselves. Trusts are one of the most powerful tools in the estate planning toolkit, and, if used properly, can be used to secure your legacy.
Essentially, if Bob gives ten dollars to Sue, telling her to hold it for 1 week then give it to Joe, a trust has been formed.
A trust can hold a house, personal property, money, insurance proceeds, or other personal or real property. A beneficiary can be almost anyone – a family member, a friend, a charity, or even in some cases, the trustee. Trusts are incredibly powerful tools for protecting your legacy and ensuring that your wants and needs for estate planning are met.
A common misconception is that trusts are only for the well-to-do who have large estates. But this is entirely wrong. Trusts have a place in the estate plans of all kinds of people, including those with only modest estates. Trusts can be used to protect assets from creditors, shield an estate from certain taxes, or preserve property for children. They can be used to allow a person on disability to receive an inheritance and not be kicked off of their government benefits. They can be used to manage assets and funds for those who are incapable of doing so themselves. Trusts are one of the most powerful tools in the estate planning toolkit, and, if used properly, can be used to secure your legacy.
Types of Trusts
REVOCABLE LIVING TRUST
This is the granddaddy of trusts in estate planning. Essentially, a revocable living trust replaces a will and brings along with it some added benefits. One of the primary uses of revocable living trusts is to avoid probate.
TESTAMENTARY TRUSTS OR SUB-TRUSTS
A testamentary or sub-trust is a trust built into the body of a will or revocable living trust, respectively. They can be used to control assets after the death of the person who wrote the will or the trust. For example, when a person dies, they may want to hold and controls assets for their minor children until the children are old enough to handle their own money. To do this, one would build a testamentary or sub-trust.
TRUSTS FOR MINORS
This is a trust that holds and helps manage money for children until they reach the age of majority (or an age that the parents think the children will be responsible enough to manage the inheritance). Courts require that inheritances for children be placed in trust. Without proper planning, assets will pay out from the trust in their entirety when the child turns 21. With proper planning, the money can be held in trust until the child is much older, say 30. While the assets are in trust, they can be used on behalf of the child (the beneficiary) for their health, education, maintenance, and support – basically everything the child needs save for a Corvette and a pony. This way, in event of a parent’s untimely death, their children will have enough assets to be cared for.
SUPPLEMENTAL NEEDS TRUSTS & SPECIAL NEEDS TRUSTS
When a person becomes disabled they often are in need of Medicare or funding from another government program. But to qualify for such programs, people are prohibited from having above a certain amount of “available” assets. Supplemental Needs Trusts and Special Needs Trusts can be used to allow the person with disabilities to have access to additional funds that are not categorized as “available” – in other words, a person on disability benefits would be kicked off their benefits if they receive a large inheritance. If, however, instead they were given an inheritance in a Supplemental Needs Trust or Special Needs Trust, then they would be able to both receive the inheritance and not lose their disability benefits.
MARITAL TRUSTS FOR TAX PLANNING
Married couples will often use trusts for a variety of reasons. Not the least of which includes asset protection and avoiding taxes. In 2025, the tax exemption in Minnesota is $3 million, and on the Federal level, the exemption is $13.99 million (or, for married couples, $27.98 million!). Marital trusts can allow married couples to take full advantage of the available exemptions (for example, turning a $3 million exemption into a $6 million exemption).
MARITAL TRUSTS FOR INHERITANCE PROTECTION
Testamentary and sub-trusts can be used to guarantee that inheritances go where you want them to go. For example, imagine you have children from a previous marriage. If you have a will and give everything to your spouse with the presumption (and agreement) that upon your spouse’s death, your share will go to your children, there is no guarantee that your children will get anything. Your spouse could disinherit your children after your death, or perhaps remarry and be swindled out of all her assets (including those intended for your children). If, instead, you use a revocable living trust and sub-trusts to protect assets for your children, then no matter what happens your children will be taken care of.
COMPULSIVE BEHAVIOR TRUST
Compulsive behavior trusts hold money for someone, a beneficiary, who has a need for protecting the assets. The beneficiary could be a drug addict, alcoholic, compulsive gambler, or could just be really bad with money. Testamentary and sub-trusts can be used to manage the money for the beneficiary and avoid giving them a large amount of money all at once – among other things. For example, if a person has a drug problem and they were to receive a large amount of money all at once, they could go on a binge. Instead, if the assets were protected in a compulsive behavior trust, the money could be doled out over time, or even directly to vendors, and if the beneficiary falls off the wagon, money could be withheld until the beneficiary completes a rehab program.
A Valuable Estate Planning Tool
Trusts can be incredibly powerful estate planning tools – I like to call them the most powerful tool in our estate planning toolkit. When used and set up properly, they can ensure that your legacy is what you want it to be. Used or set up improperly, and they can tie up your assets in court for years.
They do, however, need to be used judiciously. Some attorneys, for example, are “trust attorneys”, who work under the philosophy that everyone needs a revocable living trust. This is just plain not true; even if your goal is avoiding probate, there may be strategies using a will that are just as good if not better than using a revocable living trust. When you work with Signature Law, we’ll carefully evaluate your circumstances and goals and make sure the right estate planning tools are used in planning your estate.
A Valuable Estate Planning Tool
Trusts can be incredibly powerful estate planning tools – I like to call them the most powerful tool in our estate planning toolkit. When used and set up properly, they can ensure that your legacy is what you want it to be. Used or set up improperly, and they can tie up your assets in court for years.
They do, however, need to be used judiciously. Some attorneys, for example, are “trust attorneys”, who work under the philosophy that everyone needs a revocable living trust. This is just plain not true; even if your goal is avoiding probate, there may be strategies using a will that are just as good if not better than using a revocable living trust. When you work with Signature Law, we’ll carefully evaluate your circumstances and goals and make sure the right estate planning tools are used in planning your estate.
Greg helped us update our will to a trust. He also helped my wife with her health directive. We were impressed with his depth of knowledge about trusts. He had a very helpful approach to a challenging aspect of our particular situation. He was always able to find time meet with us on short notice. The final documents seem very comprehensive and give us confidence that our wishes will be followed in the future.
– Corry D.
Ready to Learn More About Trusts?
At Signature Law, our goal is to make sure that your estate plan fits your needs and does what you want it to do. Using trusts may be the way to make sure this happens. If you would like to discuss the best ways to structure your estate, possibly with trusts, then schedule a free consultation.