A trust manages the distribution of your assets. A trust is created by the transfer of property by the owner to another person (the trustee). A trustee can be a professional with financial knowledge, a relative or friend, or a professional trust company. The trustee holds the title to the property and manages the property for the benefit of the beneficiaries who may be a specific person, a group of people, or an organization.
It is recommended that parents with minor children (under 18) should have some form of estate planning in place. This is often in the form of a Simple Will which has a provision nominating a Guardian who will physically care for the minor children if both parents die. Additionally, it is important to know that minor children cannot inherit property outright in Minnesota. Without proper estate planning, court proceedings will be necessary to appoint a conservator to manage your property for your child until the child reaches 18 years old. Therefore, another common facet to estate planning for parents is the creation of a Contingent Trust. This Trust is usually written right into the parent’s Will.
In a Contingent Trust situation, the Will has a provision providing that if both spouses are dead (or if the single parent dies), then the property passes into the Contingent Trust (rather than outright to the minor children) to be administered according to the terms of the trust. The Will also names a Trustee to administer the trust and carry out the terms of the trust. The trust comes into effect at your death. Contingent Trusts give parents a lot of control over the property post-death. Parents can specify at what ages they wish the children to inherit the property or perhaps distribution in installments.
What are the advantages of having a Living Trust?
Like a Will, a Living Trust is a legal document that provides for the management and distribution of your assets after you pass away. However, a Living Trust has certain advantages when compared to a Will. A Living Trust allows for the immediate transfer of assets after death without court interference. It also allows for the management of your affairs in case of incapacity, without the need for a guardianship or conservatorship process. With a properly funded Living Trust, there is no need to undergo a potentially expensive and time-consuming public probate process.
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We invite you to contact us to discuss setting up a Trust in Minnesota.