A living trust is a legal document that allows you to place or transfer your assets into a trust for the benefit of the individuals you choose as beneficiaries. While you are alive, you typically serve as the trustee and maintain control over the assets in the trust. You should also appoint a successor trustee to manage the trust after your death. It is important to choose someone who is responsible, financially capable, and willing to act in the best interests of your beneficiaries. One of the main benefits of a living trust is that it allows your estate to avoid the probate process, which can be time-consuming, stressful, and public.
Planning for the future is one of the most important steps you can take to protect your family and your assets. For individuals and families in Minnesota and across Wisconsin, a living trust is a powerful estate planning tool that helps ensure your property is managed and distributed according to your wishes.
Unlike a will alone, a living trust can help you avoid probate, maintain privacy, and control how your assets are passed to beneficiaries. In this guide, we explain how living trusts work, what can be included, and why many people choose to establish one as part of their estate plan.
Quick Legal Insights
- A living trust is a legal estate planning tool that allows you to place assets into a trust for the benefit of chosen beneficiaries.
- In Minnesota and Wisconsin, a living trust can help avoid probate, which can be time-consuming and public.
- There are two main types of trusts: revocable trusts (flexible, changeable) and irrevocable trusts (more asset protection, limited control).
- You can place many assets into a trust, including real estate, bank accounts, investments, and personal property.
- A properly structured trust allows you to control how and when beneficiaries receive assets, including minor children.
- Working with an attorney helps ensure your trust complies with state estate planning laws and tax considerations.
Two types of living trusts exist: revocable and irrevocable. A revocable trust is when you control all assets in the trust, but the assets in the trust remain as part of your estate and could be subject to taxation if your estate’s value exceeds the estate tax exemption amount. With an irrevocable trust, you give up control of certain rights in the trust, and you can protect your assets from creditors who might come after they had your estate gone through probate. Once an irrevocable trust is set, no further changes can be made to it.
What Assets Can Be Placed in a Living Trust?
All kinds of assets can be placed in a living trust. These assets might include real estate, bank and savings accounts, brokerage accounts, or even fine art and jewelry. Annuities, certificates of deposit, and safe deposit boxes can also be added to your trust. If you opened a custodial brokerage account, you can transfer the funds in this account to the trust you set up for them. This is especially a good idea if you believe that their assets will grow significantly and you don’t want to give the funds to them outright when they reach their 18th or 21st birthday.
Benefits of Creating a Living Trust for Your Estate Plan
Aside from keeping your assets out of probate, there are other benefits of having a living trust. With a trust, you get to control which assets you want to transfer to your beneficiaries and when they will receive them. For example, if you set up a trust for your child, you establish a rule that keeps him/her from obtaining the assets all at once. Instead, he/she might receive them every few months or when he/she proves that he/she is a responsible adult who has a full-time job or starts a business. And you can keep your assets away from creditors. Having a will and living trust also ensures that all information about your assets is private.
Common Mistakes to Avoid When Setting Up a Trust
One mistake to avoid is not including all of your assets in the trust. Any assets you don’t include will be subject to probate. Another mistake is assuming that a living trust can replace your will, but it isn’t true. This document is good to have on hand in the event you pass away without adding certain assets to your trust. You can make provisions for the distribution of these assets in your will.
Do You Need a Lawyer to Create a Living Trust?
It might be tempting to DIY your living trust, but this is not a good idea. Stay away if you’re not knowledgeable about estate planning and your state’s estate tax and inheritance laws. It is better to get assistance from an experienced estate planning attorney. He can walk you through the process so that you set up the trust the right way.
Establishing a living trust can reduce the stress that your loved ones and beneficiaries may experience after your death. If you live in the Duluth area and need to create a trust, contact us. We are here to guide you in making the best decisions that will benefit you and your loved ones.
FAQ: Living Trusts in Minnesota & Wisconsin
What is the main purpose of a living trust?
A living trust is used to manage and distribute your assets during your lifetime and after death while avoiding probate.
Does a living trust avoid probate in Minnesota and Wisconsin?
Yes. A properly funded living trust can help avoid the probate process in both Minnesota and Wisconsin.
What is the difference between a will and a living trust?
A will goes through probate after death, while a living trust can transfer assets outside of probate and may take effect during your lifetime.
How much does it cost to set up a living trust in Minnesota?
The cost varies depending on complexity, but most professionally drafted living trusts are significantly less expensive than the cost and delays of probate.
Who should consider creating a living trust?
A living trust is often recommended for individuals who want to avoid probate, maintain privacy, or ensure controlled distribution of assets to family members or minor children.
Do I still need a will if I have a living trust?
Yes. A pour-over will is typically used to ensure any assets not included in the trust are still properly handled.
Can I change my living trust after it is created?
If it is a revocable living trust, you can modify it at any time. Irrevocable trusts generally cannot be changed once established.
A living trust is one of the most effective estate planning tools for individuals and families in Minnesota and Wisconsin who want to avoid probate, protect privacy, and ensure their assets are distributed according to their wishes.
Because trusts must be carefully structured and funded to be effective, working with an experienced Duluth estate planning attorney can help you avoid costly mistakes and ensure your plan is legally sound. Contact Duluth Family Lawyer today to start building your estate plan and secure your family’s future.