Adults need to have a comprehensive estate plan in place, so their loved ones know their wishes. There are several components to consider during the process when crafting an estate plan. Passing down assets to beneficiaries is a major aspect of estate planning. One option to achieve this end is trusts, which are categorized as irrevocable or revocable.
Revocable trusts, often referred to as living trusts, allow the grantor to change or revoke the trust while they’re living. This is much different than the irrevocable trust, which can’t be changed without permission from the beneficiaries or court. Understanding the basic benefits of revocable trusts may help adults determine if this is a viable option for their estate plan.
Seamless asset management and probate avoidance
One of the key benefits of a revocable trust in Minnesota is its role in seamless asset management and probate avoidance. The revocable trust enables the grantor to pass down the assets in the trust without having to go through the public probate process. This feature is particularly appealing as it ensures privacy and reduces the potential for legal challenges that can arise during probate.
Because the grantor still has control over the assets placed in the trust, the contents of a revocable trust are considered part of the taxable estate. This type of trust also doesn’t have any protections against creditor claims because the grantor can determine how they want to use the assets and can change or revoke the trust at any point.
Incorporation into a comprehensive estate plan
In Minnesota, a revocable trust is often part of a comprehensive estate plan. Such an estate plan typically includes a will, which may contain a pour-over provision ensuring any assets not included in a trust at the time of death are transferred into it. The plan should also include powers of attorney covering financial and health care powers of attorney designation.
This comprehensive approach can help to ensure that all aspects of an individual’s estate are managed according to their wishes, and to provide greater peace of mind and clarity for their loved ones.