Updated January 25, 2024
The Minnesota living trust is a document which allows a declarant (Grantor) to place all of their property and income into a trust and provide instructions on how their assets should be divided upon their death or incapacitation. By doing this, the person creating the trust can protect their estate and avoid estate taxes charged on large estates. Creating a living trust also allows beneficiaries to avoid probation. However, due to the fact that Minnesota is among the 18 States which have adopted the Uniform Probate Code (an act that simplifies the probation code), it may not be worth forming a living trust in this State if it is only to avoid probation.
Laws – Chapter 529 (Uniform Custodial Trust Act)
Will (Last Will and Testament) – All property not included in the living trust will have to be written into the Grantor’s Will with instructions of how to divest all implicated property.
Individual Roles
Grantor – The person creating the trust.
Trustee – During the Grantor’s lifetime, a Trustee is appointed (usually the Grantor) to control the trust.
Successor Trustee – A Successor Trustee is indicated to become trustee in the event of the Grantor’s death/incapacitation.
Beneficiaries – The person or persons who are indicated to be the recipients of the Grantor’s assets and property as according to instructions contained within the living trust.
Types
Irrevocable – An Irrevocable Trust is a living trust which, once created, cannot be altered or amended in any way (except to change beneficiaries). With this type of trust, the Grantor can protect their estate, avoid estate taxes, and allow their beneficiaries to avoid probation.
Revocable – A Revocable Trust can be revoked or amended at any time. However, it does not carry the same benefits as the Irrevocable Trust. This option only allows the beneficiaries to avoid probation.
How to Make a Living Trust in Minnesota
As stipulated in statutes 529.01-529.19, a “custodial trust” (Irrevocable Trust) is created by describing the declarant’s property which is to be transferred to another person(s) (the beneficiary) and naming a custodial trustee to control the divestment of the trust. It is advisable to have an authorized notary present at the signing of the trust document. A Revocable Trust is created in much the same way, without the same protections and benefits. The Grantor will need to put any property not included in the trust into their Last Will and Testament in order to have it divested according to their wishes. The beneficiary can terminate a custodial trust by delivering a signed declaration of termination to the custodial trustee. At such a time that the Declarant/Grantor becomes deceased or incapacitated, the custodial trustee will have the power to divest the trust according to the stipulations of the living trust document.
Motor Vehicles – To transfer a motor vehicle into the trust, the vehicle title should be put in name of the trust by contacting Minnesota Driver and Vehicle Services.
Real Estate Deeds – Any real estate to be transferred into the trust must be made with a Minnesota Deed which then needs to be filed with the local county recorder of deeds.
Financial Accounts – In order to transfer their bank accounts to the living trust, the Grantor will show their account manager the trust documents and transfer ownership over to the trust, in some cases opening a new account in the trust’s name.
Do I Need a Living Trust?
It is perhaps inadvisable to create a Minnesota living trust if you have a small estate or if the reason is to avoid the probation process. As per law § 524.3-1201, beneficiaries can file a Small Estate Affidavit, for estates of $50,000 or less, in order to avoid the probation process. Also, Minnesota uses the Uniform Probate Code which simplifies the probation process, making it perhaps more costly to maintain a living trust. The main reasons to create a living trust in Minnesota would be in order to protect a large estate from creditors and other threats and to lessen estate taxes. In some cases, having your property in an Irrevocable Trust can also help to make you eligible for Medicaid and certain related benefits.